SWY » Topics » Liquidity and Capital Resources

This excerpt taken from the SWY 10-Q filed Oct 20, 2005.

Liquidity and Capital Resources

 

Net cash flow from operating activities was $1,287.4 million in the first 36 weeks of 2005 compared to $1,526.0 million in the first 36 weeks of 2004. This change was primarily because of higher income tax payments in 2005 and lower prepaid expense in 2004.

 

Net cash flow used by investing activities, which consists principally of cash paid for property additions, was $835.7 million for the first 36 weeks of 2005 compared to $646.6 million in 2004.

 

Financing activities, which consist primarily of cash used to pay down debt, used cash flow of $386.9 million in the first 36 weeks of 2005 compared to $577.2 million in 2004.

 

On June 1, 2005, the Company entered into a $1,600.0 million credit agreement (the “Credit Agreement”) with a syndicate of banks. The Credit Agreement provides (i) to Safeway a $1,350.0 million five-year revolving credit facility (the “Domestic Facility”), (ii) to Safeway and Canada Safeway Limited (“CSL”) a Canadian facility of up to $250.0 million for U.S. Dollar and Canadian Dollar advances and (iii) to Safeway a $400.0 million subfacility of the Domestic Facility for issuance of standby and commercial letters of credit. The Credit Agreement also provides for an increase in the credit facility commitments up to an additional $500.0 million, subject to the satisfaction of certain conditions. Safeway will guarantee the obligations of CSL under the Credit Agreement. The restrictive covenants of the Credit Agreement limit Safeway with respect to, among other things, creating liens upon its assets and disposing of material amounts of assets other than in the ordinary course of business. Additionally, the Company is required to maintain a minimum Adjusted EBITDA, as defined in the Credit Agreement, to interest expense ratio of 2.0 to 1 and not exceed an Adjusted Debt (total consolidated debt less cash and cash equivalents in excess of $75.0 million) to Adjusted EBITDA ratio of 3.5 to 1. As of September 10, 2005, the Company was in compliance with the covenant requirements. The Credit Agreement is scheduled to expire on June 1, 2010 and replaced the former credit agreement that was scheduled to expire in 2006. No borrowings, as of the end of the third quarter, have been made under this agreement. However, letters of credit have reduced borrowings available by $38.4 million.

 

In 2004, the Company filed a shelf registration statement covering the issuance from time to time of up to $2.3 billion of debt securities and/or common stock. The Company may issue debt or equity securities in the future depending on market conditions, the need to refinance existing debt and capital expenditure plans. At September 10, 2005, $1.6 billion of securities were available for issuance under the shelf registration.

 

Safeway paid a quarterly dividend of $0.05 per common share on July 7, 2005 and September 28, 2005 to stockholders of record as of June 16, 2005 and September 7, 2005, respectively. The payouts totaled $44.9 million, of which $22.5 million occurred in the fourth quarter of 2005. Assuming the Company continues to pay the same per share quarterly dividends, annual dividends on common stock would approximate $90 million.

 

Based upon the current level of operations, Safeway believes that net cash flow from operating activities and other sources of liquidity, including potential borrowing under Safeway’s commercial paper program and Credit Agreement, will be adequate to meet anticipated requirements for working capital, capital expenditures, interest payments, dividend payments and scheduled principal payments for the foreseeable future. There can be no assurance, however, that Safeway’s business will continue to generate cash flow at or above current levels or that the Company will maintain its ability to borrow under the commercial paper program and Credit Agreement.

 

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SAFEWAY INC. AND SUBSIDIARIES

This excerpt taken from the SWY 10-Q filed Jul 28, 2005.

Liquidity and Capital Resources

 

Net cash flow from operating activities was $671.8 million in the first 24 weeks of 2005 compared to $1,047.7 million in the first 24 weeks of 2004. This change was primarily because of higher income tax payments in 2005 and lower prepaid expense and receivables in 2004.

 

Net cash flow used by investing activities, which consists principally of cash paid for property additions, was $484.7 million for the first 24 weeks of 2005 compared to $432.1 million in 2004.

 

Financing activities, which consist primarily of cash used to pay down debt, used cash flow of $131.9 million in the first 24 weeks of 2005 compared to $576.4 million in 2004.

 

On June 1, 2005, the Company entered into a $1,600.0 million credit agreement (the “Credit Agreement”) with a syndicate of banks. The Credit Agreement provides (i) to Safeway a $1,350.0 million five-year revolving credit facility (the “Domestic Facility”), (ii) to Safeway and Canada Safeway Limited (“CSL”) a Canadian facility of up to $250.0 million for U.S. Dollar and Canadian Dollar advances and (iii) to Safeway a $400.0 million subfacility of the Domestic Facility for issuance of standby and commercial letters of credit. The Credit Agreement also provides for an increase in the credit facility commitments up to an additional $500.0 million, subject to the satisfaction of certain conditions. Safeway will guaranty the obligations of CSL under the Credit Agreement. The restrictive covenants of the Credit Agreement limit Safeway with respect to, among other things, creating liens upon its assets and disposing of material amounts of assets other than in the ordinary course of business. Additionally, the Company is required to maintain a minimum Adjusted EBITDA, as defined in the Credit Agreement, to interest expense ratio of 2.0 to 1 and not exceed an Adjusted Debt (total consolidated debt less cash and cash equivalents in excess of $75 million) to Adjusted EBITDA ratio of 3.5 to 1. As of June 18, 2005, the Company was in compliance with the covenant requirements. The Credit Agreement is scheduled to expire on June 1, 2010 and replaced the former credit agreement that was scheduled to expire in 2006. No borrowings, as of the end of the second quarter, have been made under this agreement. However, letters of credit have reduced borrowings available by $38.4 million.

 

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SAFEWAY INC. AND SUBSIDIARIES

EXCERPTS ON THIS PAGE:

10-Q
Oct 20, 2005
10-Q
Jul 28, 2005
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