DLM » Topics » Cash Flow

This excerpt taken from the DLM 10-K filed Jun 25, 2008.

Cash Flow

In fiscal 2008, our cash and cash equivalents increased by $12.7 million. Cash provided by operating activities, provided by (used in) investing activities, and provided by (used in) financing activities for fiscal 2008, 2007 and 2006 is presented in the table below.

 

    Fiscal Year  
     2008     2007     2006  
    (in millions)  

Net Cash Provided by Operating Activities

  $ 286.9     $ 230.1     $ 261.2  

Net Cash Provided by (Used in) Investing Activities

    (79.7 )     (1,344.8 )     182.4  

Net Cash Provided by (Used in) Financing Activities

    (194.5 )     667.7       (129.0 )

Operating Activities

Cash provided by operating activities during fiscal 2008 was $286.9 million compared to $230.1 million in fiscal 2007. This $56.8 million increase was primarily driven by the increase in net income and the favorable timing of cash tax payments.

Cash provided by operating activities during fiscal 2007 was $31.1 million less than cash provided by operating activities during fiscal 2006. The decrease in cash provided by operating activities was primarily driven by the decrease in net income and the payment of fiscal 2006 employee annual incentive awards of $17.9 million in fiscal 2007; there were no such payments in fiscal 2006.

Investing Activities

Cash used in investing activities was $79.7 million during fiscal 2008, which primarily consisted of capital expenditures of $96.7 million driven by spending associated with the execution of our transformation plan and other capital projects, partially offset by the proceeds from the sale of assets.

Cash used in investing activities was $1,344.8 million during fiscal 2007, which primarily consisted of $1,310.6 million used for the Meow Mix and Milk-Bone acquisitions along with capital expenditures of $95.0 million driven by increased overall spending associated with the execution of our transformation plan and other capital projects.

Cash provided by investing activities was $182.4 million during fiscal 2006, which primarily consisted of net proceeds from the disposal of assets of $295.5 million which was partially offset by capital expenditures of $69.1 million and an increase in restricted cash of $43.3 million representing a mandatory debt pre-payment associated with the divestiture of the Soup and Infant Feeding Businesses.

Capital expenditures in fiscal 2008 fiscal 2007, and fiscal 2006 were $96.7 million, $95.0 million and $69.1 million, respectively. In addition to capital expenditures, we enter into operating leases to support our ongoing operations. The decision to lease, rather than purchase, an asset is the result of a number of considerations, including the cost of funds, the useful life of the asset, its residual value and technological obsolescence. Additionally, some equipment is proprietary to the lessor and cannot be purchased. All material asset-financing decisions include an evaluation of the potential impact of the financing on our debt agreements, including applicable financial covenants.

 

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Financing Activities

During fiscal 2008, we used $194.5 million in financing activities, which consisted primarily of the net repayment of $21.5 million in short-term borrowings, Term Facility loan repayments of $89.4 million, $32.2 million in dividend payments and $50.0 million in stock repurchases.

During fiscal 2007, cash provided by financing activities was $667.7 million, which consisted primarily of $20.1 million in net short-term borrowings as a result of financing the acquisitions and incurring normal seasonal borrowings for operations, Term B loan borrowings of $745.0 million, Term Facility loan scheduled principal repayments of $64.8 million, and $32.1 million in dividend payments.

During fiscal 2006, we used $129.0 million in financing activities, which consisted primarily of the $125 million share repurchase. See “Note 16. Share Repurchasesof our consolidated financial statements in this annual report on Form 10-K.

This excerpt taken from the DLM 10-K filed Jun 27, 2007.

Cash Flow

In fiscal 2007, our cash and cash equivalents decreased by $446.9 million. Cash provided by operating activities, provided by (used in) investing activities, and provided by (used in) financing activities for fiscal 2007, 2006 and 2005 is presented in the table below.

 

     Fiscal Year  
      2007     2006     2005  
     (in millions)  

Net Cash Provided by Operating Activities

   $ 230.1     $ 261.2     $ 273.3  

Net Cash Provided by (Used in) Investing Activities

     (1,344.8 )     182.4       (71.8 )

Net Cash Provided by (Used in) Financing Activities

     667.7       (129.0 )     (92.6 )

Operating Activities

Cash provided by operating activities during fiscal 2007 was $230.1 million compared to $261.2 million in fiscal 2006. This $31.1 million decrease was primarily driven by the decrease in net income and the payment of fiscal 2006 employee annual incentive awards of $17.9 million in fiscal 2007; there were no such payments in fiscal 2006.

Cash provided by operating activities during fiscal 2006 was $12.1 million less than cash provided by operating activities during fiscal 2005. The decrease in cash provided by operating activities was largely driven by increased accounts receivable balances due to higher sales in the fourth quarter of fiscal 2006 than in fiscal 2005, partially offset by the absence of employee annual incentive award payments in fiscal 2006 (fiscal 2004 bonuses were paid in fiscal 2005).

Investing Activities

Cash used in investing activities was $1,344.8 million during fiscal 2007, which primarily consisted of $1,310.6 million used for the acquisitions as described in “Executive Overview” above along with capital expenditures of $95.0 million driven by increased overall spending associated with the execution of our transformation plan and other capital projects.

Cash provided by investing activities was $182.4 million during fiscal 2006, which primarily consisted of net proceeds from the disposal of assets of $295.5 million which was partially offset by capital expenditures of $69.1 million and an increase in restricted cash of $43.3 million representing a mandatory debt pre-payment associated with the divestiture of the Soup and Infant Feeding Businesses.

 

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Cash used in investing activities was $71.8 million during fiscal 2005, which primarily consisted of capital expenditures.

Capital expenditures in fiscal 2007, fiscal 2006 and fiscal 2005 were $95.0 million, $69.1 million and $73.1 million, respectively. In addition to capital expenditures, we enter into operating leases to support our ongoing operations. The decision to lease, rather than purchase, an asset is the result of a number of considerations, including the cost of funds, the useful life of the asset, its residual value and technological obsolescence. Additionally, some equipment is proprietary to the lessor and cannot be purchased. All material asset-financing decisions include an evaluation of the potential impact of the financing on our debt agreements, including applicable financial covenants.

Financing Activities

During fiscal 2007, cash provided by financing activities was $667.7 million, which consisted primarily of $20.1 million in net short-term borrowings as a result of financing the acquisitions and incurring normal seasonal borrowings for operations, Term B loan borrowings of $745.0 million, Term B loan scheduled principal repayments of $64.8 million, and $32.1 million in dividend payments.

During fiscal 2006, we used $129.0 million in financing activities, which consisted primarily of the $125 million share repurchase described in “Off-Balance Sheet Arrangements” below.

During fiscal 2005, we used $92.6 million in financing activities. We repaid $4.7 million of long-term debt, spent $42.2 million to refinance our senior credit facilities and repaid an additional $55.0 million of long-term debt in connection with the Refinancing.

This excerpt taken from the DLM 10-K filed Jul 11, 2006.

Cash Flow

In fiscal 2006, our cash and cash equivalents increased by $314.0 million. Cash provided by operating activities, provided by (used in) investing activities, and used in financing activities for fiscal 2006, 2005 and 2004 is presented in the table below.

 

     Fiscal Year  
     2006     2005     2004  
     (in millions)  

Net Cash Provided by Operating Activities

   $ 261.2     $ 273.3     $ 277.5  

Net Cash Provided by (Used in) Investing Activities

     182.4       (71.8 )     (1.2 )

Net Cash Used in Financing Activities

     (129.0 )     (92.6 )     (283.0 )

 

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Operating Activities

Cash provided by operating activities during fiscal 2006 was $12.1 million less than cash provided by operating activities during fiscal 2005. The decrease in cash provided by operating activities was largely driven by increased accounts receivable balances due to higher sales in the fourth quarter of fiscal 2006 than in fiscal 2005, partially offset by the absence of bonus payments in fiscal 2006 (fiscal 2004 bonuses were paid in fiscal 2005).

Cash provided by operating activities during fiscal 2005 was $4.2 million less than cash provided by operating activities during fiscal 2004. The decrease in cash provided by operating activities was largely driven by a decrease in net income and deferred taxes, partially offset by the absence of a buildup in inventory balances which resulted primarily from a build up of tuna inventory in fiscal 2004 that did not recur in fiscal 2005.

Investing Activities

Cash provided by investing activities was $182.4 million during fiscal 2006, which primarily consisted of net proceeds from the disposal of assets of $295.5 million which was partially offset by capital expenditures of $69.1 million and an increase in restricted cash of $43.3 million representing a mandatory debt pre-payment associated with the divestiture of the Soup and Infant Feeding Businesses.

Cash used in investing activities was $71.8 million during fiscal 2005, which primarily consisted of capital expenditures.

Cash used in investing activities was $1.2 million during fiscal 2004, which consisted of capital expenditures of $82.7 million offset by $81.5 million in proceeds received from the sale of assets, net of transaction costs paid. The asset sale proceeds primarily related to the sale of our rights in the IVD and Medi-Cal brands, as well as our rights in the Techni-Cal brand in the United States and Canada, along with related inventories on April 16, 2004.

Capital expenditures in fiscal 2006, fiscal 2005 and fiscal 2004 were $69.1 million, $73.1 million and $82.7 million, respectively. In addition to capital expenditures, we enter into operating leases to support our ongoing operations. The decision to lease, rather than purchase, an asset is the result of a number of considerations, including the cost of funds, the useful life of the asset, its residual value and technological obsolescence. Additionally, some equipment is proprietary to the lessor and cannot be purchased. All material asset-financing decisions include an evaluation of the potential impact of the financing on our debt agreements, including applicable financial covenants.

Financing Activities

During fiscal 2006, we used $129.0 million in financing activities, which consisted primarily of the $125 million share repurchase described above.

During fiscal 2005, we used $92.6 million in financing activities. We repaid $4.7 million of long-term debt, spent $42.2 million to refinance our senior credit facilities during fiscal 2005 and repaid an additional $55.0 million of long-term debt in connection with the Refinancing. The decrease in cash used in financing activities in fiscal 2005 compared to fiscal 2004 resulted primarily from the decision to retain cash for the share repurchase program rather than use such cash to pay down debt as was done in fiscal 2004.

During fiscal 2004, we used $283.0 million in financing activities. We repaid $276.2 million of long-term debt and spent $9.1 million to amend our senior credit facilities during fiscal 2004. We achieved

 

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this significant pay down through a combination of earnings and $64.0 million of proceeds from the asset sales, net of expenses and taxes.

This excerpt taken from the DLM 10-K filed Jul 11, 2005.

Cash Flow

 

In fiscal 2005, our cash and cash equivalents increased by $109.6 million, primarily due to a $216.5 million lower amount of net long-term debt repayments as compared to fiscal 2004, partially offset by a decrease of proceeds from the sale of assets of $72.9 million. The lower debt repayments in fiscal 2005 resulted from the decision to retain cash for the share repurchase program or other alternatives rather than use the excess cash to pay down debt as was done in fiscal 2004

 

Cash provided by operating activities, used in investing activities, and used in financing activities for fiscal 2005, 2004 and 2003 is presented in the table below.

 

     Fiscal Year

 
     2005

    2004

    2003

 
     (in millions)  

Net Cash Provided by Operating Activities

   $ 274.0     $ 273.0     $ 490.9  

Net Cash Used in Investing Activities

     (71.8 )     (1.2 )     (173.5 )

Net Cash Used in Financing Activities

     (92.6 )     (283.0 )     (285.2 )

 

Operating Activities

 

Cash provided by operating activities during fiscal 2005 was $1.0 million greater than cash provided by operating activities during fiscal 2004. The increase in cash provided by operating activities was largely driven by the absence of a buildup in inventory balances which resulted primarily from a build up of tuna inventory in fiscal 2004 that did not recur in fiscal 2005. This increase was partially offset by a decrease in net income and a decrease in deferred taxes.

 

Cash provided by operating activities during fiscal 2004 was $217.9 million lower than cash provided by operating activities during fiscal 2003. This was primarily because during fiscal 2003, the December 20, 2002 fruit, vegetable and tomato inventories and receivable balances were acquired as a result of the Merger. These assets were converted into cash following the Merger and are reflected as a component of cash provided by operating activities. In fiscal 2004, the creation of inventory and receivables in the fruit, vegetables and tomato businesses was reflected as cash used in operating activities. The cash requirements of the Del Monte Brands operating segment businesses fluctuate significantly throughout the year to coincide with the seasonal growing cycles of fruit, vegetables and tomatoes. The vast majority of the Del Monte Brands operating segment’s inventories are produced during the packing months, from June through October, and then depleted during the remaining seven months. Our inventory balance increased by $55.5 million from the end of fiscal 2003 to the end of fiscal 2004. This increase was primarily caused by the build-up of tuna pouch

 

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inventory in anticipation of fiscal 2005 sales, other tuna production increases in anticipation of rising costs and the build-up of pet products inventory to support the significant number of new pet product introductions.

 

Investing Activities

 

Cash used in investing activities was $71.8 million during fiscal 2005, which primarily consisted of capital expenditures.

 

Cash used in investing activities was $1.2 million during fiscal 2004, which consisted of capital expenditures of $82.7 million offset by $81.5 million in proceeds received from the sale of assets, net of transaction costs paid. The asset sale proceeds primarily related to the sale of our rights in the IVD and Medi-Cal brands, as well as our rights in the Techni-Cal brand in the United States and Canada, along with related inventories on April 16, 2004.

 

Capital expenditures in fiscal 2005, fiscal 2004 and fiscal 2003 were $73.1 million, $82.7 million and $195.8 million, respectively. In fiscal 2003, capital expenditures included $135.5 million related to the buyout of all of our synthetic lease obligations. In addition to capital expenditures, we enter into operating leases to support our ongoing operations. The decision to lease, rather than purchase, an asset is the result of a number of considerations, including the cost of funds, the useful life of the asset, its residual value and technological obsolescence. Additionally, some equipment is proprietary to the lessor and cannot be purchased. All material asset-financing decisions include an evaluation of the potential impact of the financing on our debt agreements, including applicable financial covenants.

 

Financing Activities

 

During fiscal 2005, we used $92.6 million in financing activities. We repaid $4.7 million of long-term debt, spent $42.2 million to refinance our senior credit facilities during fiscal 2005 and repaid an additional $55.0 million of long-term debt in connection with the Refinancing. The decrease in cash used in financing activities in fiscal 2005 compared to fiscal 2004 resulted primarily from the decision to retain cash for the share repurchase program rather than use such cash to pay down debt as was done in fiscal 2004.

 

During fiscal 2004, we used $283.0 million in financing activities. We repaid $276.2 million of long-term debt and spent $9.1 million to amend our senior credit facilities during fiscal 2004. We achieved this significant pay down through a combination of earnings and approximately $64.0 million of proceeds from the asset sales, net of expenses and taxes.

 

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