Albertsons 2006 Annual Report Download - page 23

LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $674.1 million, $791.6 million and $846.8 million in fiscal
2006, 2005 and 2004, respectively. The decrease in cash from operating activities in fiscal 2006 from fiscal 2005
is primarily related to changes in working capital.
Net cash used in investing activities was $258.5 million, $161.8 million and $271.6 million in fiscal 2006,
2005 and 2004, respectively. Fiscal 2006 and 2005 investing activities primarily reflect capital spending to fund
retail store expansion, store remodeling and technology enhancements. Fiscal 2006 activities also include capital
spending related to supply chain growth initiatives. Fiscal 2005 activities also include the acquisition of Total
Logistics and the proceeds from the sale of WinCo.
Net cash used in financing activities was $193.4 million, $457.8 million and $312.5 million in fiscal 2006,
2005 and 2004, respectively. Fiscal 2006 financing activities primarily reflect the repayments of long-term debt
of $69.8 million, the payment of dividends of $85.8 million and the purchase of treasury shares of 28.8 million.
Fiscal 2005 financing activities primarily reflect the early redemption of $250.0 million of the company’s 7.625
percent notes due in September 2004, the payment of approximately $60 million in Total Logistics assumed debt,
the payment of dividends of $80.2 million and the purchase of treasury shares of $56.0 million. Fiscal 2004
financing activities primarily reflect the early redemption of $100.0 million of the company’s 8.875 percent notes
due in 2022 at the redemption price of 103.956 percent of the principal amount of the notes, the net reduction in
notes payable of $80.0 million, the payment of dividends of $77.0 million and the purchase of treasury shares of
$14.6 million.
As of February 25, 2006, the company’s current portion of outstanding debt including obligations under
capital leases was $111.7 million. The company had no outstanding borrowings under its unsecured $750.0
million revolving credit facility. Letters of credit outstanding under the credit facility were $148.4 million and the
unused available credit under the facility was $601.6 million. The company also had $28.4 million of outstanding
letters of credit issued under separate agreements with financial institutions.
On February 28, 2005, the company executed a five year unsecured $750.0 million revolving credit
agreement replacing the previous $650.0 million revolving credit agreement which was terminated. Amounts
utilized under this credit agreement have rates tied to LIBOR plus 0.275 to 0.675 percent and there are facility
fees ranging from 0.10 to 0.20 percent on the total amount of the facility, both based on the company’s credit
ratings. The agreement contains various financial covenants including ratios for interest coverage and debt
leverage. All letters of credit that had been issued and outstanding under the previous credit facility were
transferred under the new credit facility.
In August 2005, the company renewed its annual accounts receivable securitization program, under which
the company can borrow up to $200.0 million on a revolving basis, with borrowings secured by eligible accounts
receivable. No borrowings were outstanding under this program at February 25, 2006 and February 26, 2005. The
company had no outstanding borrowings under this program at February 25, 2006 and February 26, 2005. The
agreement contains various covenants that are consistent with transactions of this nature, including a requirement
that the rating assigned to the company’s long-term unsecured debt by Standard & Poor’s rating service or
Moody’s rating service to be BB or higher or Ba2 or higher, respectively. The company has met the covenants
under the annual accounts receivable program as of February 25, 2006. See Subsequent Events note.
In November 2001, the company sold zero-coupon convertible debentures having an aggregate principal
amount at maturity of $811.0 million. The proceeds from the offering, net of approximately $5.0 million of
expenses, were $208.0 million. The debentures mature in 30 years and are callable at the company’s option on or
after October 1, 2006. Holders may require the company to purchase all or a portion of their debentures on
October 1, 2006 or October 1, 2011 at a purchase price equal to the accreted value of the debentures, which
includes accrued and unpaid cash interest. If the option is exercised, the company has the choice of paying the
holder in cash, common stock or a combination of the two. The debentures are convertible if the closing price of
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