CompUSA 2010 Annual Report Download - page 74

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totaled $32.3 million primarily for the CircuitCity.com acquisition and for capital expenditures. Net cash used in investing activities
was $45.5 million during 2008, primarily for the CompUSA acquisition and for capital expenditures. Capital expenditures in 2010,
2009 and 2008 included upgrades and enhancements to our information and communications systems hardware and software and
expenditures in retail stores in North America.
Net cash used in financing activities was $4.7 million during 2010. We borrowed and repaid approximately $261.7 million against our
credit facilities. We repaid approximately $13.2 million in short term debt and approximately $1.5 million in capital lease obligations
and received proceeds of approximately $7.9 million from the Recovery Zone Facility Bond. Proceeds and excess tax benefits from
stock option exercises provided approximately $2.1 million of cash. Net cash used in financing activities was $31.5 million during
2009. We repaid approximately $3.6 million in short-term debt and approximately $0.8 million in capital lease obligations, paid a
special dividend of $27.6 million, and repurchased Company stock of approximately $1.2 million. Proceeds and excess tax benefits
from stock option exercises provided approximately $1.7 million of cash. Net cash used in financing activities was $45.0 million
during 2008, attributable to dividends paid of $37.1 million, repayment of short term debt of $3.9 million, repayment of $0.7 million
in capital lease obligations, repurchase of common stock of approximately $5.8 million, offset by proceeds of stock option exercises
and related excess tax benefits of $2.5 million.
We have a $125.0 million secured revolving credit agreement (which may be increased to $200.0 million, subject to certain
conditions). The facility has a five year term expiring in October 2015. The borrowings under the agreement are subject to borrowing
base limitations of up to 85% of eligible accounts receivable and up to 40% of qualified inventories. Borrowings are secured by
substantially all of the Company’ s assets, including accounts receivable, inventory and certain other assets, subject to limited
exceptions, including the exclusion of certain foreign assets from the collateral. The amended and restated credit agreement contains
certain operating, financial and other covenants, including limits on annual levels of capital expenditures, availability tests related to
payments of dividends and stock repurchases and fixed charge coverage tests related to acquisitions. The revolving credit agreement
requires that we maintain a minimum level of availability. If such availability is not maintained, we will then be required to maintain a
fixed charge coverage ratio (as defined). As of December 31, 2010, the Company was in compliance with all of the covenants under
the credit facility. Eligible collateral under the facility was $125.0 million, total availability was $115.9 million, outstanding letters of
credit of were $9.1 million and there were no outstanding advances.
The Company’ s Inmac WStore subsidiary maintains a secured revolving credit agreement with a financial institution in France which
is secured by WStore Europe SA accounts receivable balances. Available amounts for borrowing under this facility includes all
accounts receivable balances not over 60 days past due reduced by the greater of €4.0 million or 10% of the eligible accounts
receivable. As of December 31, 2010, there was availability under this credit facility of approximately €15.6 million ($20.9 million)
and there were no outstanding borrowings. The credit facility duration is indefinite; however either party may cancel the agreement
with ninety days notice. Under this agreement the Company is subject to certain non-financial covenants which it was in compliance
with at December 31, 2010.
The Company’ s WStore UK subsidiary maintained a £2 million secured revolving credit agreement with a financial institution in the
United Kingdom. The Company terminated this facility in July 2010.
On September 23, 2010, the Company (through a subsidiary) completed tax exempt Recovery Zone Facility Bond (the “Bonds”)
financing for up to $15 million with the Development Authority of Jefferson, Georgia (the “Authority”). The Bonds were issued by
the Authority and initially purchased by GE Government Finance Inc., and mature on October 1, 2018. Interest on the Bonds is
calculated at the rate of 4.15% per annum and principal and interest payments are due monthly. The proceeds of the Bonds are used
to finance or repay the costs of capital equipment purchased for the Company’ s distribution facility located in Jefferson, Georgia. The
purchase and installation of all the equipment for the facility is expected to be completed by December 31, 2011. Pursuant to the
transaction, the Company will transfer to the Authority for consideration consisting of the Bond proceeds ownership of the equipment
to be used at the distribution facility and the Authority in turn will lease the equipment to the Company’ s subsidiary pursuant to a
capital equipment lease expiring October 1, 2018. Under the capital equipment lease the Company has the right to acquire ownership
of the equipment at any time for a purchase price sufficient to pay off all principal and interest on the Bonds, plus $1.00.
Our earnings and cash flows are seasonal in nature, with the fourth quarter of the fiscal year generating higher earnings and cash flows
than the other quarters. Levels of earnings and cash flows are dependent on factors such as consolidated gross margin and selling,
general and administrative costs as a percentage of sales, product mix and relative levels of domestic and foreign sales. Unusual
expense items, such as one time charges and settlements, may impact earnings and are separately disclosed. We expect that past
performance may not be indicative of future performance due to the competitive nature of our Technology Products segment where
the need to adjust prices to gain or hold market share is prevalent.
Macroeconomic conditions, such as business and consumer sentiment, may affect our revenues, cash flows or financial condition.
However, we do not believe that there is a direct correlation between any specific macroeconomic indicator and our revenues, cash
flows or financial condition. We are not currently interest rate sensitive, as we have significant cash balances and minimal debt.
We anticipate cash needs to support our growth and expansion plans, continued investment in upgrading and expanding our