Safeway 2013 Annual Report Download - page 34

Table of Contents
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Based upon the current level of operations, Safeway believes that net cash flow from operating activities and other sources of liquidity,
including potential proceeds from the monetization of the Company's investment in Casa Ley and potential borrowing under Safeway’s
commercial paper program, its credit agreement and debt offerings, will be adequate to meet anticipated requirements for working capital,
capital expenditures, interest payments, dividend payments, stock repurchases, if any, 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 its commercial paper program and credit agreement.
Free Cash Flow on Continuing Operations Free cash flow is calculated as (1) net cash flow from operating activities adjusted to exclude
payables related to third-party gift cards, net of receivables, less (2) net cash flow used by investing activities adjusted to exclude cash used by
investments and business acquisitions. 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. We add back cash used by investments and business acquisitions to our calculation of free cash flow in order to
provide a more accurate indication of our capacity to apply our available free cash flow to its intended uses.
Fiscal Year
(in millions)
 2012 2011
Net cash flow from operating activities
 $1,288.9 $1,570.0
Decrease (increase) in payables related to third-party gift cards, net of
receivables
 (26.4)(293.6)
Net cash flow from operating activities, as adjusted
 1,262.5 1,276.4
Net cash flow used by investing activities
(614.3)(923.2)
Business acquisitions, net of cash acquired
 —35.9
Net cash flow used by investing activities, as adjusted
(614.3)(887.3)
Free cash flow
 $648.2 $389.1
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-U.S. 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-U.S. 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 U.S. 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.
Bank Credit Agreement and Term Loan Agreement Information about the Company’s bank credit agreement and term loan agreement
appear in Note F to the consolidated financial statements set forth in Part II, Item 8 of this report.
Adjusted EBITDA from Continuing Operations Management believes that “Adjusted EBITDA from Continuing Operations” is a useful
measure of operating performance that facilitates management's evaluation of the Company's ability to service debt and capability to incur
more debt to generate the cash
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