Big Lots 2007 Annual Report Download - page 118

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Cash provided by operating activities was $381.5 million during 2006 and resulted primarily from net income
of $124.0 million, depreciation and amortization of $95.6 million, a reduction in inventories of $77.9 million,
timing associated with current income taxes of $44.1 million, and improved accounts payable leverage of $24.0
million. Lower inventories were principally due to our continued efforts to improve the inventory turnover
rate and to keep store merchandise fresh. Our income tax position was favorable because we received income
tax refunds in 2006 related primarily to the overpayment of taxes in 2005 and had income taxes payable of
approximately $28.0 million at the end of 2006. We improved our accounts payable leverage principally by
extending payment terms to foreign vendors.
Cash used in investing activities was $58.8 million in 2007 and $30.4 million in 2006 and was primarily
comprised of capital expenditures of $60.4 million in 2007 and $35.9 million in 2006. Capital expenditures in
2007 were principally costs related to the installation of the new point-of-sale register system in approximately
700 of our stores, costs for approximately 70 store retrofits to better feature some of our key merchandise
growth classifications, and seven new store openings. Capital expenditures in 2006 were primarily related to
opening 11 new stores, software development cost for our new point-of-sale system, and various distribution
center, store, or lease related requirements. Capital expenditure requirements in 2008 are anticipated to range
between $90 million and $95 million, focused on completing the installation of the new point-of-sale register
system in our stores, development and licensing cost associated with our SAP for Retail system implementation,
the completion of approximately 40 additional store retrofits, approximately 20 new store openings, and other
projects aimed at maintaining existing property and equipment.
Cash used in financing activities was $493.7 million in 2007 driven by $712.5 million of share repurchases
under our publicly announced share repurchase programs, which were partially offset by $163.7 million of
borrowings under the Credit Agreement, $35.9 million of proceeds from the exercise of stock options, and
$19.8 million for the excess tax benefit derived from share-based awards. Cash used in financing activities was
$71.1 million in 2006 and consisted primarily of share repurchases under the $150.0 million share repurchase
program, which were partially offset by $57.5 million of stock option exercise proceeds, $13.3 million of
proceeds from selling one of our owned store properties, and $11.9 million for the excess tax benefit derived
from the exercise of stock options by employees. See Item 5 of this Form 10-K for more information regarding
our share repurchase programs.
We continue to believe that we have, or, if necessary, have the ability to obtain adequate resources to fund our
ongoing operating requirements and future capital expenditures. Additionally, management is not aware of any
current trends, events, demands, commitments, or uncertainties which reasonably can be expected to have a
material impact on our capital resources or liquidity.
Contractual Obligations
The following table summarizes payments due under our contractual obligations at February 2, 2008:
Payments Due by Period (1)
Tot al
Less than
1 year 1 to 3 years 3 to 5 years
More than
5 years
(In thousands)
Long-term debt obligations (2) ................... $ 163,700 $ — $163,700 $ — $ —
Operating lease obligations (3) (4) ................. 878,429 247,974 359,875 185,089 85,491
Capital lease obligations (4) ..................... 2,497 923 1,432 142 —
Purchase obligations (4) (5) . . . . . . . . . . . . . . . . . . . . . . 747,874 540,713 91,626 61,799 53,736
Other long-term liabilities (6). . . . . . . . . . . . . . . . . . . . 52,528 16,474 6,495 11,180 18,379
Total contractual obligations (7) . . . . . . . . . . . . . . . . $1,845,028 $806,084 $623,128 $258,210 $157,606
(1) The disclosure of contractual obligations in this table is based on assumptions and estimates that we
believe to be reasonable as of the date of this report. Those assumptions and estimates may prove to be
inaccurate; consequently, the amounts provided in the table may differ materially from those amounts
that we ultimately incur. Variables that may cause the stated amounts to vary from those actually incurred
include, but are not limited to: the termination of a contractual obligation prior to its stated or anticipated