Lumber Liquidators 2009 Annual Report Download - page 41

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Investing Activities. Net cash used in investing activities was $11.4 million for 2009, $7.4 million for 2008 and $6.0
million for 2007. Net cash used in investing activities during 2009 primarily related to capital purchases of store fixtures,
equipment and leasehold improvements for the 36 new stores opened in 2009, capital purchases of computer software
relating to our integrated information technology solution and certain leasehold improvements in our Corporate
Headquarters.
In June 2009, we completed a thorough assessment of integrated information technology solutions and their providers,
and signed a software license agreement with SAP Retail, Inc. (“SAP”) for a broad scope of SAP retail software products.
We intend to utilize SAP’s “Best Practices” approach to implement an integrated business solution in multiple phases
beginning no earlier than the second half of 2010. We estimate capital expenditures for the project, including
implementation, to total approximately $8.0 million to $11.0 million by the end of 2010, which we anticipate will be
amortized over 10 years. Approximately $3.9 million was capitalized in 2009.
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.
Financing Activities. Net cash provided by financing activities was $4.2 million during 2009 and was primarily due to
equity activity, including $3.3 million of proceeds received from stock option exercises. Net cash used in financing activities
was less than $0.1 million during 2008 and was primarily due to equity activity. Net cash provided by financing activities
was $26.7 million during 2007, primarily from the $36.2 million net proceeds from our IPO in November 2007, offset by
scheduled monthly principal payments under the term portion of our senior secured loan agreement prior to the IPO, and the
pay off of the $6.6 million balance that remained outstanding after the IPO.
Revolving Credit Agreement
A revolving credit agreement (the “Revolver”) providing for borrowings up to $25.0 million is available to us through
expiration on August 10, 2012. During 2009 and 2008, we did not borrow against the Revolver and at December 31, 2009
and 2008, there were no outstanding commitments under letters of credit. The Revolver is primarily available to fund
inventory purchases, including the support of up to $5.0 million for letters of credit, and for general operations. The Revolver
is secured by our inventory, has no mandated payment provisions and we pay a fee of 0.125% per annum, subject to
adjustment based on certain financial performance criteria, on any unused portion of the Revolver. Amounts outstanding
under the Revolver would be subject to an interest rate of LIBOR (reset on the 10th of the month) plus 0.50%, subject to
adjustment based on certain financial performance criteria. The Revolver has certain defined covenants and restrictions,
including the maintenance of certain defined financial ratios. We are in compliance with these financial covenants at
December 31, 2009.
Related Party Transactions
See the discussion of related party transactions in Note 5 and Note 10 to the consolidated financial statements included
in Item 8 of this report and within Certain Relationships, Related Transactions and Director Independence in Item 13 of this
report.
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