OfficeMax 2014 Annual Report Download - page 44

Table of Contents
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In accordance with certain OfficeMax Merger-related agreements, which we entered into with the holders of our preferred stock concurrently with the
execution of the Merger Agreement, in 2013, we redeemed the preferred stock, with 50 percent redeemed upon shareholder approval in July 2013 and the
remaining 50 percent redeemed immediately prior to closing of the Merger in November 2013. The $431 million in cash payments for full redemption of the
preferred stock in 2013 included the liquidation preference of $407 million and redemption premium of $24 million measured at 6% of the liquidation
preference.
Preferred stock dividends for 2013 in our Consolidated Statement of Operations were $73 million, including $28 million regular dividends and $45 million
related to the redemptions. The $45 million is comprised of $24 million redemption premium and $21 million representing the difference between
liquidation preference and carrying value of the preferred stock. The liquidation preference exceeded the carrying value because of initial issuance costs and
paid-in-kind dividends recorded for accounting purposes at fair value.
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In 2011, we entered into an Amended and Restated Credit Agreement with a group of lenders. Additional amendments to the Amended and Restated Credit
Agreement have been entered into and were effective February 2012 and November 2013 (the Amended and Restated Credit Agreement including all
amendments is referred to as the “Amended Credit Agreement”). The Amended Credit Agreement provides for an asset based, multi-currency revolving credit
facility of up to $1.25 billion and expires May 25, 2016. Refer to Note 8, “Debt,” of our Consolidated Financial Statements for additional information.
At December 27, 2014, we had approximately $1.1 billion in cash and cash equivalents and approximately $1.1 billion available under the Amended Credit
Agreement based on the December 2014 borrowing base certificate, for a total liquidity of approximately $2.2 billion. Approximately $309 million of cash
and cash equivalents was held outside the United States and could result in additional tax expense if repatriated. Refer to Note 9, “Income Taxes” of the
Consolidated Financial Statements for additional information. We consider our resources adequate to satisfy our cash needs for at least the next twelve
months.
No amounts were drawn under the Amended Credit Agreement during 2014 and no amounts were outstanding at December 27, 2014. There were letters of
credit outstanding under the Amended Credit Agreement at the end of the year totaling $92 million.
The Company had short-term borrowings of $1 million at December 27, 2014 under various local currency credit facilities for international subsidiaries that
had an effective interest rate at the end of the year of approximately 5%. The maximum month end balance occurred in March 2014 at approximately $10
million and the maximum monthly average amount occurred in March 2014 at approximately $6 million. The majority of these short-term borrowings
represent outstanding balances on uncommitted lines of credit, which do not contain financial covenants.
The Company was in compliance with all applicable financial covenants at December 27, 2014.
In 2014, we have incurred $332 million in expenses associated primarily with the Merger integration activities and $71 million in expenses associated
primarily with restructuring actions taken in Europe. Significant Merger and restructuring expenses are expected to continue to be incurred in 2015 and
2016. In 2015, the Company expects capital expenditures to be approximately $250 million, including approximately $100 million related to merger
integration.
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