Liquidity and cash flows
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Ahold
Annual Report 2010
Group performance continued
Group at a glance
Performance
Governance
Fi nancials
Investors
Gross and net debt billion)
(at year end)
Gross debt
Cash and short-term deposits
Net debt
Free cash flow million)
1 Includes the settlement of the securities class
action of €536 million in 2006 and €284 million
in 2007.
In 2010, gross debt decreased €139 million to €3.6 billion as a result of loan repayments of
€0.4 billion, partially offset by the strengthening of the U.S. dollar against the euro. Ahold's net
debt was €737 million as of January 2, 2011, virtually unchanged compared to last year. Net debt
does not include our commitments under operating lease contracts, which, on an undiscounted
basis, amount to €6.0 billion.
Liquidity
Ahold relies on cash provided by operating activities as a primary source of liquidity, in addition to
debt and equity issuances in the capital markets, letters of credit under credit facilities, and
available cash balances. Based on our current operating performance and liquidity position, we
believe that cash provided by operating activities and available cash balances (including short
term deposits) will be sufficient for working capital, capital expenditures, dividend payments,
interest payments, and scheduled debt repayment requirements for the next 12 months and the
foreseeable future. A total of €19 million in loans will mature in 2011, €0.5 billion in 2012 through
2015, and €1.4 billion after 2015.
Our strategy over the past several years has positively impacted the credit ratings assigned to
Ahold by Moody's and Standard Poor's (S&P). In June 2009, S&P upgraded Ahold's corporate
credit rating to BBB with a stable outlook. Moody's affirmed Ahold's Baa3 issuer credit rating and
changed its outlook from stable to positive in November 2009. Both ratings were unchanged in
2010. Maintaining investment grade credit ratings is a cornerstone of our strategy as they serve to
lower the cost of funds and to facilitate access to a variety of lenders and markets.
Group credit facility
Ahold's €1.2 billion committed, unsecured, multi-currency, and syndicated credit facility has a
base term of five years ending in August 2012. The credit facility may be used for working capital
and for general corporate purposes and provides for the issuance of $550 million (€411 million)
in letters of credit. As of January 2, 2011, there were no outstanding borrowings under the credit
facility other than letters of credit to an aggregate amount of $392 million (€293 million).
Free cash flow
2010
million
2009
million
Operating cash flows from continuing operations
2,111
1,906
Purchase of non-current assets
(870)
(770)
Divestment of assets and disposal groups held for sale
32
22
Dividends from joint ventures
111
69
Interest received
15
31
Interest paid
(287)
(310)
Free cash flow
1,112
948
Repayments of loans
(419)
(524)
Dividends paid on common shares
(272)
(212)
Share buyback
(386)
Acquisition of businesses, net of cash acquired
(159)
(4)
(Investment in) divestment of short-term deposits
85
(289)
Other
(118)
(88)
Net cash from operating, investing, and financing activities
(157)
(169)
Free cash flow, at €1.1 billion, increased by €164 million compared to 2009. Higher cash
generated from operations, up €294 million, and a higher dividend received from ICA, were
partially offset by a higher level of both capital expenditures and income taxes paid.
The free cash flow was used to return €658 million to shareholders (through our annual dividend
and the share buyback program), for repayment of loans (€419 million), and for business
acquisitions, primarily of 25 stores from Ukrop's by Giant Carlisle.
