OfficeMax 2006 Annual Report Download - page 36

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In 2004, cash investing activities included cash expenditures of $298.2 million forproperty and
equipment andtimber and timberlands, and $175 million for our investment in the securities of
affiliates of Boise Cascade, L.L.C. These expenditures were offsetby $2,038.7 million of proceeds
from the Sale and $186.9 millionof proceeds from thesale of timberlands in Louisiana, the sale of our
Yakima, Washington, plywood and lumber facilities and the sale of our Barwick, Ontario, Canada,
OSB joint venture.
We expect our capital investments in2007 to total between $180 million and $200 million,
excluding acquisitions. Our capital spending in 2007 will be for leasehold improvements,new stores,
quality and efficiency projects, replacement projects and integrationprojects.
Financing Activities
Our financing activities used cash of $1.9million in 2006, $1,015.3 million in 2005 and
$76.3 million in 2004. Common and preferred dividend payments totaled $47.6million in 2006,
$54.2 million in 2005, and $64.1 million in 2004. In all three years, our quarterly cash dividend was
15 cents per commonshare. During 2006, we received $130.0 million in cash proceeds from stock
option exercises and used $84.3 million to reduce debt. In 2005, we used $780.4 million of cash for
the repurchase of 23.5 million shares of our common stock and used $198.7 million of cash to reduce
short-term borrowings and long-term debt. During 2004, we repaid $1.6 billion ofour debt, primarily
with the proceeds of the Sale, which included $1.47 billion in cash received inconnection with the
securitization ofthe timbernotes, and we redeemed $110 million of our Series D preferred stock and
paid related accrued dividends of $3 million. In addition, in 2004, we settled the purchase contracts
related to our adjustable conversion-rate equity units and received $172.5 million incash proceeds.
Our debt-to-equityratio, excludingthe securitized timber notes,was .21:1 and .28:1 at December 30,
2006 and December 31, 2005, respectively.
Financing Arrangements
We lease our store space and certain other property and equipment under operating leases.
Theseoperating leases are not included in debt; however, theyrepresent a significant commitment.
Obligations under operating leases are shown in the “Contractual Obligations” section ofthis
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
On September 23, 2005,Standard & Poor’s Rating Services downgraded ourcorporate credit
rating to B+. The downgrade increased the reporting requirements under our receivable sale
agreementand increased the annual cost of thatfacility byless than $1 million.
Our debt structure consists of credit agreements, note agreements, and other borrowingsas
described below. For more information, see “Contractual Obligations” and “Disclosures of Financial
Market Risks” in this Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
Credit Agreements
On June 24, 2005,weentered into a loan and security agreementfor anew revolving credit
facility. The revolvingcredit facility permits us to borrow up to the maximum aggregate borrowing
amount, which is equal to the lesser of (i) a percentage of the value ofcertain eligible inventory less
certain reserves or (ii)$500million. In the second quarter of 2006, we amended the revolving credit
facility to provide greater access to the borrowing base availability under the facility. There were no
borrowings outstanding under the revolving credit agreement as of December 30, 2006. There were
$18.7 million in borrowings outstanding under the revolving credit facility as ofDecember 31,2005.
The maximum amount outstanding under the revolving credit facility was $122.0 million and