Lumber Liquidators 2008 Annual Report Download - page 48

Cash and Cash Equivalents
In 2008, cash and cash equivalents increased $2.0 million to $35.1 million. The primary contributor to the
increase in cash and cash equivalents was $9.4 million of cash provided by operating activities, partially offset by
the use of $6.6 million to purchase property and equipment and $0.8 million to purchase the phone number
1-800-HARDWOOD and related internet domain names. During 2007, cash and cash equivalents increased $29.2
million to $33.2 million. We received $36.2 million from our IPO in November 2007 and operating activities
provided $8.5 million. These increases of cash and cash equivalents were partially offset by the use of $6.0
million to purchase property and equipment and $9.5 million of net repayments of long-term debt and capital
leases. The primary contributors to the $2.1 million decrease in cash and cash equivalents during 2006 were the
use of $2.7 million of cash for purchases of property and equipment and $2.2 million of cash to repay scheduled
long-term debt and capital lease payments, partially offset by $1.4 million of cash provided by operating
activities and borrowings of $1.5 million under our revolving loan agreement.
Cash Flows
Operating Activities. Net cash provided by operating activities was $9.4 million for 2008, and $8.5 million
for 2007 compared to $1.4 million for 2006. The $0.8 million increase from 2007 to 2008 reflects more
profitable operations and a lesser build in inventory net of accounts payable, partially offset by the timing of
changes in certain other assets and liabilities. The $7.1 million increase in comparing 2007 to 2006 was primarily
attributable to more profitable operations, exclusive of the $4.8 million increase in non-cash stock-based
compensation expense, a greater build in inventory net of accounts payable and the timing of the changes in
certain other assets and liabilities.
The annual build in merchandise inventories primarily relates to the growth in our store base, and represents
the most significant use of operating cash. We consider merchandise inventories either “available for sale” or
“inbound in-transit,” based on whether we have physically received the products at either our central distribution
center in Toano, Virginia or at an individual store location. Merchandise inventories and available inventory per
store in operation on December 31 were as follows:
2008 2007 2006
(in thousands)
Inventory – Available for Sale ......................................... $75,521 $60,273 $44,605
Inventory – Inbound In-Transit ........................................ 13,210 11,751 7,153
Total Merchandise Inventories ....................................... $88,731 $72,024 $51,758
Available Inventory Per Store ........................................ $ 503 $ 520 $ 490
Investing Activities. Net cash used in investing activities was $7.4 million for 2008, $6.0 million for 2007
and $2.7 million for 2006. Net cash used in investing activities during 2008 primarily related to capital purchases
of store fixtures, equipment and leasehold improvements for the 34 new stores opened in 2008, $1.4 million of
upgrades to our website and routine capital purchases of computer hardware and software, and $1.1 million in
leasehold improvements and certain equipment at our corporate headquarters. In addition, we purchased the
phone number 1-800-HARDWOOD and related internet domain names for $0.8 million for use in our marketing
and branding programs.
Net cash used in investing activities during 2007 primarily related to capital purchases of truck trailers that
we used to move our merchandise from our warehouse to our stores, capital purchases of store fixtures,
equipment and leasehold improvements for the 25 new stores opened in 2007 and certain IT costs, including
certain point of sale hardware and routine purchases of computer hardware and software. Net cash used in
investing activities in 2006 primarily related to the opening of 16 new stores and to certain IT costs, including
new hardware and upgrades to our telephone system and website.
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