OfficeMax 2012 Annual Report Download - page 68

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Financing Activities
Our financing activities used cash of $34.8 million in 2012, $18.0 million in 2011 and $28.5 million in
2010. Dividend payments totaled $5.6 million in 2012, $3.3 million in 2011 and $2.7 million in 2010. We had net
debt payments of $32.5 million, $6.1 million and $22.5 million in 2012, 2011 and 2010, respectively.
We suspended our dividend to shareholders of common stock on December 18, 2008. In the third quarter of
2012, we reinstated the payment of quarterly cash dividends on our common stock, given progress in executing
our strategic plan to achieve sustainable, profitable growth. The quarterly dividends are expected to be $0.02 per
common share, or $0.08 per common share on an annualized basis. During 2012, we paid $3.5 million in
common stock dividends.
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 October 7, 2011, we entered into a Second Amended and Restated Loan and Security Agreement (the
“Credit Agreement”) with a group of banks. The Credit Agreement amended both our then existing credit
agreement to which we were a party along with certain of our subsidiaries in the U.S. and our then existing credit
agreement to which our subsidiary in Canada was a party and consolidated them into a single credit agreement.
The Credit Agreement permits us to borrow up to a maximum of $650 million, of which $50 million is allocated
to our Canadian subsidiary, and $600 million is allocated to the Company and its other participating U.S.
subsidiaries, subject to a borrowing base calculation that limits availability to a percentage of eligible trade and
credit card receivables plus a percentage of the value of eligible inventory less certain reserves. The Credit
Agreement may be increased (up to a maximum of $850 million) at our request and the approval of the lenders
participating in the increase, or may be reduced from time to time at our request, in each case according to the
terms detailed in the Credit Agreement. Letters of credit, which may be issued under the Credit Agreement up to
a maximum of $250 million, reduce available borrowing capacity. Stand-by letters of credit issued under the
Credit Agreement totaled $41.0 million at the end of fiscal year 2012. At the end of fiscal year 2012, the
maximum aggregate borrowing amount available under the Credit Agreement was $621.2 million and
availability under the Credit Agreement totaled $580.2 million. At the end of fiscal year 2012, we were in
compliance with all covenants under the Credit Agreement. The Credit Agreement expires on October 7, 2016
and allows the payment of dividends, subject to availability restrictions and if no default has occurred.
Borrowings under the Credit Agreement are subject to interest at rates based on either the prime rate, the
federal funds rate, LIBOR or the Canadian Dealer Offered Rate. An additional percentage, which varies
depending on the level of average borrowing availability, is added to the applicable rates. Fees on letters of credit
issued under the Credit Agreement are charged at rates between 1.25% and 2.25% depending on the type of letter
of credit (i.e., stand-by or commercial) and the level of average borrowing availability. The Company is also
charged an unused line fee of between 0.375% and 0.5% on the amount by which the maximum available credit
exceeds the average daily outstanding borrowings and letters of credit. The fees on letters of credit were 1.75%
and the unused line fee was 0.5% at December 29, 2012.
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