OfficeMax 2014 Annual Report Download - page 46

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Table of Contents
recovery is reclassified out of operating activities and reflected as a source of cash in investing activities. However, that cash was required by the original
purchase agreement to be contributed to the acquired pension plan. The pension funding during 2012 is presented as a use of cash in operating activities.
Changes in net working capital for 2014 resulted in a $10 million use of cash compared to $77 million in 2013 and $36 million in 2012. The working capital
factors in 2014 are largely attributable to timing, including the impact on certain payables of a one day shift in the retail calendar. The change in accounts
receivable in 2013 was influenced by the timing of certain vendor arrangements, largely offset by proceeds from an account receivable factoring agreement in
France. The increase in inventories in 2013 reflects building above prior year levels for the back to business selling cycle. Inventory balances were lower at
the end of 2012 as a result of initiatives to better manage working capital. The working capital changes in 2013 were also impacted by the timing of the
Merger, which caused the consolidated cash flows to reflect the changes in the OfficeMax working capital accounts from the Merger date through
December 27, 2014. Payment of the legal accrual will result in approximately $80 million use of operating cash in 2015.
The timing of changes in working capital is subject to variability during the year and across years depending on a variety of factors, including period end
sales, the flow of goods, credit terms, timing of promotions, vendor production planning, new product introductions and working capital management. For
our accounting policy on cash management, refer to Note 1, “Summary of Significant Accounting Policies,” of the Consolidated Financial Statements.
The Company expects total Company sales in 2015 to be lower than 2014, primarily due to challenging market trends, its decision to close certain stores, and
the negative impact of currency translation.
Investing Activities
Net cash used in investing activities was $28 million in 2014 and $30 million in 2012, compared to cash provided of $1,028 million in 2013. The use of cash
is 2014 reflects $123 million of capital expenditures, partially offset by $43 million proceeds from the disposition of Grupo OfficeMax, $43 million proceeds
from the sale of Boise Cascade Company common stock, and $12 million proceeds from the disposition of assets and other. The sale of a California
distribution center classified as an asset held for sale at December 27, 2014 was finalized in January 2015 and will provide $35 million of investing cash flow
in the first quarter of 2015.
The source of cash in 2013 results primarily from $675 million in net proceeds from the disposition of the joint venture Office Depot de Mexico and $460
million in cash acquired from OfficeMax at the Merger date. The cash proceeds from the sale of Office Depot de Mexico provided additional liquidity for the
preferred stock retirement, debt maturity and for the needs of the combined Company for Merger-related expenses. A $35 million return of investment in
Boise Cascade Holdings also contributed to the source of cash in 2013. Capital expenditures in 2013 were $137 million.
The $30 million net cash used in investing activities in 2012 reflects capital expenditures of $120 million, partially offset by $31 million from a sale lease
back and other asset dispositions. Also, as discussed above, $50 million was received in 2012 from a purchase price recovery, as well as a $9 million release
of restricted cash related to the same matter.
Financing Activities
Cash provided by financing activities was $15 million in 2014, compared to cash used by financing activities of $640 million in the 2013 and $55 million in
2012. The 2014 source of cash primarily was the net proceeds from exercise of employee share-based transactions. Proceeds from borrowings were $21
million and payments on long- and short-term borrowings were $45 million during 2014.
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