Albertsons 2011 Annual Report Download - page 32

LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $1,163, $1,474 and $1,534 in fiscal 2011, 2010 and 2009,
respectively. The decrease in cash provided by operating activities in fiscal 2011 compared to fiscal 2010 is
primarily attributable to changes in deferred income taxes, operating assets and liabilities, and Net loss, adjusted
for the impact of non-cash impairment charges. The decrease in cash provided by operating activities in fiscal
2010 compared to fiscal 2009 is primarily attributable to decreased Net earnings, adjusted for the impact of non-
cash impairment charges, depreciation and amortization and LIFO expense, substantially offset by the changes in
deferred income taxes and operating assets and liabilities.
Net cash used in investing activities was $227, $459 and $1,014 in fiscal 2011, 2010 and 2009, respectively. The
decrease in cash used in investing activities in fiscal 2011 compared to fiscal 2010 and in fiscal 2010 compared
to fiscal 2009 is primarily attributable to higher proceeds from the sale of assets and lower capital spending.
Net cash used in financing activities was $975, $1,044 and $523 in fiscal 2011, 2010 and 2009, respectively.
The decrease in cash used in financing activities in fiscal 2011 compared to fiscal 2010 is primarily
attributable to lower dividends paid compared to last year. The increase in cash used in financing activities in
fiscal 2010 compared to fiscal 2009 is primarily attributable to higher levels of debt reduction.
Management expects that the Company will continue to replenish operating assets with internally generated
funds. There can be no assurance, however, that the Company’s business will continue to generate cash flow at
current levels. The Company will continue to obtain short-term or long-term financing from its credit
facilities. Long-term financing will be maintained through existing and new debt issuances and its credit
facilities. The Company’s short-term and long-term financing abilities are believed to be adequate as a
supplement to internally generated cash flows to fund capital expenditures and acquisitions as opportunities
arise. Maturities of debt issued will depend on management’s views with respect to the relative attractiveness
of interest rates at the time of issuance and other debt maturities.
Certain of the Company’s credit facilities and long-term debt agreements have restrictive covenants and cross-
default provisions which generally provide, subject to the Company’s right to cure, for the acceleration of
payments due in the event of a breach of the covenant or a default in the payment of a specified amount of
indebtedness due under certain other debt agreements. The Company was in compliance with all such
covenants and provisions for all periods presented.
On April 5, 2010, the Company entered into an Amended and Restated Credit Agreement (the “Credit
Agreement”). The Credit Agreement provides for an extension of the maturity of portions of the senior
secured credit facilities provided under the original credit agreement, which included a five-year revolving
credit facility (the “Revolving Credit Facility”), a five-year term loan (“Term Loan A”) and a six-year term
loan (“Term Loan B”). Under the Credit Agreement, $1,500 of the Revolving Credit Facility was extended
until April 5, 2015 and $500 of Term Loan B (“Term Loan B-2”) was extended until October 5, 2015. The
remaining $600 of the Revolving Credit Facility will expire on June 2, 2011 and the remaining $502 of Term
Loan B (“Term Loan B-1”) will mature on June 2, 2012. The maturity date of Term Loan A was not extended
and will mature on June 2, 2011.
The fees and rates in effect on outstanding borrowings under the Credit Agreement are based on the
Company’s current credit ratings. Borrowings under the non-extended portion of the Revolving Credit Facility,
if any, carry an interest rate of LIBOR plus 1.25 percent, borrowings under Term Loan A carry an interest rate
of LIBOR plus 1.125 percent and borrowings under Term Loan B-1 carry an interest rate of LIBOR plus
1.375 percent. Borrowings under the extended portion of the Revolving Credit Facility, if any, carry an interest
rate of LIBOR plus 2.50 percent and borrowings under Term Loan B-2 carry an interest rate of LIBOR plus
3.25 percent. Facility fees under the non-extended and extended portions of the Revolving Credit Facility are
0.30 percent and 0.625 percent, respectively. The Company pays fees of up to 2.75 percent on the outstanding
balance of the letters of credit issued under the extended Revolving Credit Facility. Borrowings under the term
loans may be repaid, in full or in part, at any time without penalty.
The Credit Agreement reset covenants which are generally less restrictive than the covenants that existed prior
to April 5, 2010. Specifically, the Company must maintain a leverage ratio no greater than 4.25 to 1.0 through
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