OfficeMax 2010 Annual Report Download - page 47

Investing Activities
In 2010, capital spending of $93.5 million consisted of technology enhancements including an upgrade to
our financial systems platform and improvements in the telephony software and hardware used by our call
centers. We also invested in leasehold improvements and replacement maintenance. This spending was partially
offset by proceeds from the sale of assets associated with closed facilities. During 2009, we incurred capital
expenditures of $38.3 million, which was offset by the receipts of $25.1 million in cash from the distribution of a
tax escrow balance established in a prior period in connection with our legacy Voyageur Panel business sold in
2004, and $15.0 million related to withdrawals from the principal balance of our COLI policies. Details of the
capital investment by segment are included in the following table:
Capital Investment
2010 2009 2008
(millions)
Contract ............................................................. $61.2 $ 18.0 $ 34.2
Retail ............................................................... 32.3 20.3 109.8
Total ................................................................ $93.5 $ 38.3 $144.0
We expect our capital investments in 2011 to be approximately $100 million. Our capital spending in 2011
will be primarily for maintenance and investment in our systems, infrastructure and growth and profitability
initiatives. In 2011, we expect to have approximately five new store openings in Mexico, offset by approximately
15 store closings in the U.S.
Financing Activities
Our financing activities used cash of $28.5 million in 2010, $60.6 million in 2009 and $86.1 million in
2008. Common and preferred dividend payments totaled $2.7 million in 2010, $3.1 million in 2009 and
$47.5 million in 2008. In 2008, our quarterly cash dividend was 15 cents per common share. Due to the
challenging economic environment, and to conserve cash, our quarterly cash dividend on our common stock was
suspended in December 2008. We had net debt payments of $22.5 million, $57.7 million and $40.0 million in
2010, 2009 and 2008, 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. Our 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 the “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
“U.S. Credit Agreement”) with a group of banks. The U.S. Credit Agreement permits us 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
U.S. Credit Agreement may be increased (up to a maximum of $800 million) at our request or reduced from time
to time, in each case according to the terms detailed in the U.S. Credit Agreement. There were no borrowings
outstanding under our U.S. Credit Agreement at the end of fiscal year 2010, and there were no borrowings
outstanding under this facility during 2010 or 2009. Letters of credit, which may be issued under the U.S. Credit
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