Management's discussion analysis
Debt
2005 1
The following table sets forth our net change in cash for
2005 and 2004:
2005
2004
Euros in millions
(52 weeks) 1
(53 weeks)
Net cash from operating activities
Net cash from investing activities
1,897
159
2,193
(164)
Net cash before financing activities
2,056
2,029
Net cash from financing activities
(3,193)
(2,004)
Net change in cash
(1,137)
25
Net cash from operating activities
Our operating cash flow from continuing operations declined
by EUR 99 million compared to 2004. Cash used for
working capital in 2005 was approximately EUR 1 million
lower than in 2004 and accounts payable improved. In
2005, the change in provisions included a cash contribution
of USD 288 million (EUR 236 million) that was made to the
pension plans in the U.S.
In addition, operating cash flow from discontinued
operations was significantly lower in 2005 (a decrease of
EUR 197 million compared to 2004) due to the completion
of our divestment program in 2005.
Net cash from investing activities
Net cash from investing activities in 2005 reflected a
EUR 323 million reduction in cash outflows compared to
2004. This was primarily caused by the higher divestments
of subsidiaries, net of cash divested, as well as the lower net
cash used for investments in joint ventures and associates
in 2005. In addition, 2004 reflected cash used for our
acquisition of an additional 20% interest in ICA (10% of
which we transferred to our joint venture partner), a
significant portion of which was offset by the receipt of the
extraordinary dividend of approximately EUR 364 million
from ICA. Cash used for business acquisitions was higher
compared to 2004, due to the acquisition of the Julius
Meinl stores in the Czech Republic. The total capital
expenditures were lower in 2005 compared to 2004 due to
lower purchases and higher divestments of property, plant
and equipment and intangible assets. Divestments of
property, plant and equipment are generally related to the
sale of individual stores, shopping centers or plots of land
that were no longer in use or were being held for sale and
also includes proceeds from sale-leaseback transactions.
The majority of the capital expenditures in 2005 were for
new stores, remodels, replacements and supply chain
infrastructure improvements. Of our total capital
expenditures in 2005, approximately 60% was related to
U.S. retail activities, approximately 25% was related to
retail activities in Europe and approximately 15% was
related to U.S. Foodservice.
Investing cash flow from continuing operations improved by
EUR 241 million compared to 2004 and investing cash flow
from discontinued operations improved by EUR 82 million
compared to 2004.
Net cash from financing activities
Net cash from financing activities in 2005 reflected higher
cash outflows of EUR 1,189 million, compared to 2004. In
2005, we redeemed total long-term debt of EUR 2.9 billion,
consisting mainly of the redemption in June 2005 of the
EUR 1,500 million 6.375% notes of Ahold Finance USA
and the bond buy back in October 2005 of EUR 1,000
million equivalent of portions of three series of our notes,
offset by a gain of EUR 481 million from unwinding swaps
related to the redemption and buy back of these notes.
For more disclosure about our debt redemption, see "Debt"
below. Our 2004 cash flow used for financing activities was
impacted by the early redemption in June 2004 of our 4%
EUR 920 million notes that otherwise would have matured
in May 2005.
Our total gross debt was approximately EUR 7.7 billion and
EUR 10 billion as of January 1, 2006 and January 2, 2005,
respectively.
The following table sets forth a breakdown of our gross debt:
Euros in millions
2004
Loans incl. current portion
5,123
7,578
Finance lease liabilities incl.
current portion
1,362
1,164
Cumulative preferred financing
shares
666
666
Short-term borrowings
597
612
Total gross debt
7,748
10,020
In 2005, our loans, including the current portion, decreased
by EUR 2.5 billion or 32.4%. Of this decrease, EUR 2.9
billion was attributable to the repayment of loans. Such
decrease was partially offset by unfavorable changes in
exchange rates, principally between the U.S. dollar and the
euro, of approximately EUR 0.3 billion. A total of EUR 0.3
billion of our long-term debt will mature in 2006 and
EUR 4.9 billion between 2007 and 2031, of which EUR
1.2 billion is due in 2008. The long-term debt due in 2006
is predominantly related to the 6.25% EUR 227 million
notes issued by Croesus, Inc. (which merged into Ahold
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