Safeway 2009 Annual Report Download - page 46

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SAFEWAY INC. AND SUBSIDIARIES
Free cash flow Free cash flow is calculated as net cash flow from operating activities, as adjusted to exclude payables
related to third-party gift cards, net of receivables, less net cash flow used by investing activities. Cash from the sale of
third-party gift cards is held for a short period of time and then remitted, less our commission, to card partners. Because
this cash flow is temporary, it is not available for other uses, and it is therefore excluded from our calculation of free cash
flow.
Fiscal Year
(in millions) 2009 2008 2007
Net cash flow from operating activities $2,549.7 $ 2,250.9 $ 2,190.5
Increase in payables related to third-party gift cards, net of receivables (170.4) (23.9) (84.1)
Net cash flow from operating activities, as adjusted 2,379.3 2,227.0 2,106.4
Net cash flow used by investing activities (889.0) (1,546.0) (1,686.4)
Free cash flow $1,490.3 $ 681.0 $ 420.0
Free cash flow provides information regarding the cash that the Company’s business generates, which management
believes is useful to understanding the Company’s business. Free cash flow is also a useful indicator of Safeway’s ability to
service debt and fund share repurchases that management believes will enhance stockholder value.
This non-GAAP financial measure should not be considered as an alternative to net cash flow from operating activities or
other increases and decreases in cash as shown on our Consolidated Statements of Cash Flows as a measure of liquidity.
Non-GAAP financial measures have limitations as analytical tools, and they should not be considered in isolation or as
substitutes for analysis of the Company’s results as reported under GAAP. Other companies in the Company’s industry
may calculate free cash flow differently , limiting its usefulness as a comparative measure. Because of these limitations,
free cash flow should not be considered as a measure of discretionary cash available to us to invest in the growth of our
business.
Income taxes During 2009, the Company received tax refunds of $413 million as follows: (1) the Company accelerated
certain tax deductions for its 2008 income tax returns resulting in approximately $224 million of tax refunds; and (2) the
resolution of certain other income tax matters resulted in tax refunds of approximately $189 million. These tax refunds
increased cash flow from operating activities by $396 million and reduced cash flow used by financing activities by $17
million.
Bank Credit Agreement Information about the Company’s bank credit agreement appears in Note D to the
consolidated financial statements set forth in Part II, Item 8 of this report.
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