OfficeMax 2008 Annual Report Download - page 34

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projects and replacement projects. Details of the capital investment by segment are included in the
table below:
Capital Investment
2008 2007 2006
(millions)
OfficeMax, Contract ...................................... $ 34.2 $ 42.5 $ 81.2
OfficeMax, Retail ........................................ 109.8 98.3 93.6
144.0 140.8 174.8
We expect our capital investments in 2009 to total between $50 million and $70 million. Our
capital spending in 2009 will be for leasehold improvements, new stores, and replacement and
maintenance projects. In 2009, we expect to open up to 13 new stores, mostly in existing markets.
Financing Activities
Our financing activities used cash of $86.1 million in 2008, $62.6 million in 2007 and
$1.9 million in 2006. Common and preferred dividend payments totaled $47.5 million in 2008,
$49.1 million in 2007, and $47.6 million in 2006. In all three years, our quarterly cash dividend was
15 cents per common share. Due to the challenging economic environment, and to conserve cash,
our quarterly cash dividend was suspended in December 2008.
In 2008, we paid down debt of $40.0 million, net of additional borrowings, primarily by Grupo
OfficeMax, our 51% owned joint venture in Mexico. Given the low market price of the Company’s
stock throughout 2008, there were no stock option exercises. We received $2.7 million and
$130.0 million in cash proceeds from stock option exercises in 2007 and 2006, respectively.
Financing Arrangements
We lease our store space and certain other property and equipment under operating leases.
These operating leases are not included in debt; however, they represent a significant commitment.
Obligations under operating leases are shown in the ‘‘Contractual Obligations’’ section of this
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Our debt structure consists of credit agreements, note agreements, and other borrowings as
described below. For more information, see ‘‘Contractual Obligations’’ and ‘‘Disclosures of Financial
Market Risks’’ sections of this Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
Credit Agreements
On July 12, 2007, we entered into an Amended and Restated Loan and Security Agreement
(the ‘‘Loan Agreement’’) with a group of banks. The Loan Agreement amended the Company’s
existing revolving credit facility and replaced our accounts receivable securitization program. The
Loan Agreement permits the Company to borrow up to a maximum of $700 million, subject to a
borrowing base calculation that limits availability to a percentage of eligible accounts receivable
plus a percentage of the value of eligible inventory less certain reserves. The revolving credit facility
may be increased (up to a maximum of $800 million) at the Company’s request or reduced from
time to time, in each case according to terms detailed in the Loan Agreement. There were no
borrowings outstanding under the Company’s revolving credit facility as of December 27, 2008 or
December 29, 2007. There were no borrowings under the revolving credit facility during 2008. The
maximum amount outstanding under the revolving credit facility was $103.0 million during 2007.
The average amount outstanding under the revolving credit facility was $6.8 million during 2007.
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