Lululemon 2011 Annual Report Download - page 43

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Table of Contents
Depreciation and amortization increased $5.6 million to $30.3 million in fiscal 2011 from $24.6 million in fiscal 2010. Depreciation for
our corporate-owned store segment was $18.5 million, $15.6 million, and $13.5 million in fiscal 2011, fiscal 2010 and fiscal 2009, respectively.
Depreciation for our direct to consumer segment was $2.4 million, $0.2 million and $0.2 million in fiscal 2011, fiscal 2010 and fiscal 2009,
respectively. Depreciation related to corporate activities was $9.4 million, $8.8 million, and $7.2 million fiscal 2011, fiscal 2010 and fiscal 2009,
respectively. We have not allocated any depreciation to our other segment as these amounts to date have been immaterial.
Investing Activities
Investing Activities relate entirely to capital expenditures, investments in and advances to franchises, and acquisitions of franchises.
Cash used in investing activities increased $79.5 million, to $122.3 million in fiscal 2011 from $42.8 million in fiscal 2010. This increase
in cash used in investing activities represents an increase in the number of new stores opened in fiscal 2011 compared to fiscal 2010, as well as
our reacquisition of our remaining four franchised stores. Capital expenditures for our corporate-owned stores segment were $34.1 million in
fiscal 2011 which included $21.9 million to open 41 corporate-owned stores and $14.5 million in fiscal 2010 which included $7.0 million to
open 14 corporate-owned stores. The remaining capital expenditures for our corporate-owned stores segment in each period were for ongoing
store refurbishment. Capital expenditures for our direct to consumer segment were $6.7 million and $4.6 in fiscal 2011 and fiscal 2010,
respectively. Capital expenditures related to corporate activities and administration were $76.1 million and $11.2 million in fiscal 2011 and fiscal
2010, respectively. The increase in capital expenditures related to corporate activities and administration compared to fiscal 2010 was primarily
due to the purchase of our principal executive and administrative offices for $65.1 million plus acquisition-
related costs. The capital expenditures
in each period for corporate activities and administration were for improvements at our head office and other corporate buildings as well as
investments in information technology and business systems.
Capital expenditures are expected to range between $70 million to $75 million in fiscal 2012, including approximately $25 million for
approximately 37 new stores and the remainder reflecting renovation capital for existing stores, information technology enhancements and other
corporate activities.
Financing Activities
Financing Activities consist primarily of cash received on the exercise of stock options and excess tax benefits from stock-based
compensation. Cash provided by financing activities increased $1.7 million, to cash provided of $15.4 million in fiscal 2011 from cash used of
$13.7 million in fiscal 2010.
We believe that our cash from operations and borrowings available to us under our revolving credit facility will be adequate to meet our
liquidity needs and capital expenditure requirements for at least the next 24 months. Our cash from operations may be negatively impacted by a
decrease in demand for our products as well as the other factors described in “Risk Factors.” In addition, we may make discretionary capital
improvements with respect to our stores, distribution facility, headquarters, or other systems, which we would expect to fund through the
issuance of debt or equity securities or other external financing sources to the extent we were unable to fund such capital expenditures out of our
cash from operations.
Revolving Credit Facility
In April 2007, we entered into an uncommitted senior secured demand revolving credit facility with Royal Bank of Canada. The revolving
credit facility provides us with available borrowings in an amount up to CDN$20.0 million. The revolving credit facility must be repaid in full on
demand and is available by way of prime loans in Canadian currency, U.S. base rate loans in U.S. currency, bankers’ acceptances, LIBOR based
loans in U.S. currency or Euro currency, letters of credit in Canadian currency or U.S. currency and letters of
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