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In the cash flow statement, the changes in operating
assets and liabilities are presented excluding the effects
of changes in foreign currency exchange rates, as these
do not reflect actual cash flows. Accordingly, the amounts
in the cash flow statement do not agree with changes in
the operating assets and liabilities that are presented in
the balance sheet.
Operating Cash Flow –When 2007 is compared to
2006, most of the decrease in operating cash flow was
due to $30 million in increased payments made in 2007
for incentive compensation based upon 2006 operating
results and $41 million in higher income tax payments
made in 2007 when compared to 2006. Also impacting
2007 cash flow is a higher level of receivables in 2007 due
to higher sales and the timing of sales within the year.
When 2006 cash provided by operations is compared to
2005, the decrease was primarily the result of spending
on restructuring of $55.9 million and lower dividends from
unconsolidated operations, offset by higher operating
income, exclusive of restructuring. In total, changes in
operating assets and liabilities were comparable between
2006 and 2005. However, increases in inventories attributable
to a build-up in anticipation of production transfer
from facilities that will be closed, as well as increased purchases
of certain raw materials, were offset by an increase
in other accrued liabilities in 2006 as compared to 2005.
The increase in other accrued liabilities was due to increased
incentive compensation and restructuring charges.
Investing Cash Flow – The reduction in investing cash
flows in 2007 compared to 2006 is due to a decrease in
cash used for acquisitions of businesses. Cash outflow for
the acquisitions of businesses was primarily the purchase
of Thai Kitchen in Europe in 2007, the Simply Asia Foods
asset purchase in 2006 and a small business purchase in
France in 2005 (see note 2 of the financial statements).
Also, included in 2006 was $9.2 million in net proceeds
from the redemption of a joint venture (see note 3 of the
financial statements). Net capital expenditures (capital
expenditures less proceeds from the sale of fixed assets)
were $76.9 million in 2007, $78.7 million in 2006 and
$64.5 million in 2005. The increase in net capital expenditures
for 2007 and 2006 compared to 2005 is mainly due
to increased spending under our restructuring program.
We expect 2008 net capital expenditures to be slightly in
excess of depreciation and amortization. |
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Financing Cash Flow –We increased our total borrowings
$65.5 million in 2007 compared to an increase of
$77.2 million in 2006 and a decrease of $67.6 million in
2005. The main cause of the increase in 2007 was to fund
our share repurchase program. The increase in 2006 was
to fund the Simply Asia Foods asset purchase for $97.6
million. In 2006, we issued $100 million of 5.80% senior
notes due 2011. Net interest payments are payable semi-annually
in arrears in January and July of each year. Also,
in 2006, we issued $200 million of 5.20% senior notes
due 2015. Net interest payments are payable semi-annually
in arrears in June and December of each year. The net
proceeds from the $200 million offering were used to pay
down $195 million of long-term debt which matured in
2006. In 2005, we paid off $30 million of medium-term
notes at maturity.
The following table outlines the activity in our share
repurchase programs: |
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