Albertsons 2007 Annual Report Download - page 34

o
n our estimate of whether, and the extent to which, additional tax payments will be required. If we ultimatel
y
d
eterm
i
ne t
h
at payment o
f
t
h
ese amounts
i
s unnecessary, we reverse t
h
e
li
a
bili
ty an
d
recogn
i
ze a tax
b
ene
fi
t
d
urin
g
the period in which we determine that the liabilit
y
is no lon
g
er necessar
y
. We record an additional char
g
e
in our provision for taxes in the period in which we determine that the recorded tax liability is less than w
e
expect t
h
eu
l
t
i
mate assessment to
b
e.
We record a valuation allowance to reduce the deferred tax assets to the amount that we are more likely than not
to rea
li
ze. We
h
ave cons
id
ere
df
orecaste
d
earn
i
ngs,
f
uture taxa
bl
e
i
ncome an
df
uture pru
d
ent an
df
eas
ibl
e tax
plannin
g
strate
g
ies in determinin
g
the need for a valuation allowance. In the event we were to determine that we
would not be able to realize all or
p
art of our net deferred tax assets in the future, we would increase th
e
v
a
l
uat
i
on a
ll
owance. L
ik
ew
i
se,
if
we
l
ater
d
eterm
i
ne t
h
at we are more
lik
e
l
yt
h
an not to rea
li
ze t
h
e net
d
e
f
erre
d
tax assets, we would reverse the a
pp
licable
p
ortion of the valuation allowance.
L
IQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was
$
801,
$
695 and
$
801 in fiscal 2007, 2006 and 2005, respectively
.
T
he increase in cash from operating activities in fiscal 2007 from fiscal 200
6
is primarily attributable t
o
increased Net earnin
g
s and Depreciation and amortization as a result of the Acquisition, which is partiall
y
offse
t
by changes in working capital and deferred income taxes.
Net cash used in investin
g
activities was $2,760, $258 and $162 in fiscal 2007, 2006 and 2005, respectivel
y.
Fiscal 2007 investing activities primarily relate to the net assets acquired in the Acquisition and capital spending
to fund retail store expansion and remodeling. Fiscal 200
6
investing activities primarily reflect capital spending
to fund retail store expansion, store remodelin
g
, technolo
gy
enhancements and suppl
y
chain
g
rowth initiatives
.
Fiscal 200
5
activities primarily reflect capital spending to fund retail store expansion, store remodeling and
tec
h
no
l
ogy en
h
ancements as we
ll
as t
h
e acqu
i
s
i
t
i
on o
f
Tota
l
Log
i
st
i
cs an
d
t
h
e procee
d
s
f
rom t
h
esa
l
eo
f
W
i
nCo.
Net cash provided (used) by financing activities was
$
1,443, (
$
193) and (
$
458) in fiscal 2007, 2006 and 2005,
respect
i
ve
l
y. F
i
sca
l
2007
fi
nanc
i
ng act
i
v
i
t
i
es re
l
ate pr
i
mar
il
ytot
h
e
d
e
b
t
i
ncurre
di
n connect
i
on w
i
t
h
t
he
Acquisition, and senior notes issued in October 200
6
partiall
y
offset b
y
repa
y
ment of lon
g
-term debt of
Albertsons standalone drug business payables related to the sale of Albertsons. Fiscal 2006 financing activities
pr
i
mar
il
yre
fl
ect t
h
e repayments o
fl
ong-term
d
e
b
t, t
h
e payment o
fdi
v
id
en
d
san
d
t
h
e purc
h
ase o
f
treasury s
h
ares
net of proceeds from the exercise of outstandin
g
options. Fiscal 200
5
financin
g
activities primaril
y
reflect the
payment of debt, the payment of dividends and the purchase of treasury shares net of proceeds from the exercise
of
outstan
di
ng opt
i
ons.
Management expects that the Company will continue to invest in capital expenditures with internally generated
f
un
d
s. T
h
ere can
b
e no assurance,
h
owever, t
h
at t
h
e Company’s
b
us
i
ness w
ill
cont
i
nue to generate cas
hfl
ow a
t
current levels. The Compan
y
will continue to obtain short-term financin
g
from its credit facilities. Lon
g
-term
f
inancing will be maintained through existing and new debt issuances. The Company’s short-term and long-term
fi
nanc
i
ng a
bili
t
i
es are
b
e
li
eve
d
to
b
ea
d
equate as a supp
l
ement to
i
nterna
ll
y generate
d
cas
hfl
ows to
f
un
di
ts
ca
p
ital ex
p
enditures and ac
q
uisitions as o
pp
ortunities arise. Maturities of debt issued will de
p
end o
n
management’s views with respect to the relative attractiveness of interest rates at the time of issuance and othe
r
d
e
b
t matur
i
t
i
es.
On October 31, 2006, the Company issued
$
500 in senior notes. The notes bear interest at a rate of 7.50 percen
t
a
n
d
are
d
ue
i
n 2014. T
h
e notes are sen
i
or o
bli
gat
i
ons an
d
ran
k
equa
ll
yw
i
t
h
a
ll
o
f
t
h
e Company’s ot
h
er sen
i
or
u
nsecured indebtedness
.
On June 1, 2006, the Company executed senior secured credit facilities in the amount of
$
4,000. These facilities
were provided b
y
a
g
roup of lenders and consist of a $2,000 five-
y
ear revolvin
g
credit facilit
y
(the “Revolvin
g
C
redit Facility”), a
$
750 five-year term loan (“Term Loan A”), and a
$
1,250 six-year term loan (“Term Loan
28