Big Lots 2010 Annual Report Download - page 104

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third fiscal quarter or early in our fourth fiscal quarter. We have typically funded those requirements with
borrowings under our credit facility. At January 29, 2011, we had no borrowings outstanding under the 2009
Credit Agreement and, after taking into account the reduction in availability resulting from outstanding letters
of credit totaling $49.8 million, the borrowings available under the 2009 Credit Agreement were $450.2 million.
We anticipate total indebtedness under the facility will be less than $75.0 million through the end of June
2011, all of which will be comprised of letters of credit, including any impact from the execution of the 2010
Repurchase Program. In 2010, our total indebtedness (outstanding borrowings and letters of credit) peaked at
approximately $200 million in November. Working capital was $509.8 million at January 29, 2011.
Whenever our liquidity position requires us to borrow funds under the 2009 Credit Agreement, we typically
repay and/or borrow on a daily basis. The daily activity is a net result of our liquidity position, which is
generally driven by the following components of our operations: 1) cash inflows such as cash or credit card
receipts collected from stores for merchandise sales and other miscellaneous deposits; and 2) cash outflows such
as check clearings for the acquisition of merchandise, wire and other electronic transactions for the acquisition
of merchandise, payroll and other operating expenses, income and other taxes, employee benefits, and other
miscellaneous disbursements.
We use the 2009 Credit Agreement, as necessary, to provide funds for ongoing and seasonal working capital,
capital expenditures, share repurchase programs, and other expenditures. In addition, we use the 2009 Credit
Agreement to provide letters of credit for various operating and regulatory requirements, a significant portion
of which consists of letters of credit required as a result of our self-funded insurance programs. Given the
seasonality of our business, the amount of borrowings under the 2009 Credit Agreement may fluctuate
materially depending on various factors, including our operating financial performance, the time of year, and
our need to increase merchandise inventory levels prior to the peak selling season.
Cash provided by operating activities was $315.3 million, $392.0 million, and $211.1 million in 2010, 2009, and
2008, respectively. The 2010 decrease in cash provided by operating activities of $76.7 million was primarily the
result of reduced accounts payable leverage (accounts payable divided by inventories), partially offset by higher
net income. The decline in accounts payable leverage was the result of receiving merchandise in the third and
fourth fiscal quarters of 2010 earlier as compared to 2009, which resulted in more payments during the fourth
quarter reducing our accounts payable balance at January 29, 2011. The 2009 increase in cash provided by
operating activities of $180.9 was principally due to higher net income and improved accounts payable leverage.
Accounts payable leverage improved due to the lower amount of inventories and our efforts to continue to work
with our import and domestic vendors to further extend payment terms. Our cash paid for income taxes was
$101.0, $106.0 million, and $92.4 million during 2010, 2009, and 2008, respectively. The increases in income
taxes paid were a direct result of higher operating profits and partly impacted by the timing of required tax
payments relative to the fiscal years in which these profits were earned. Our total contributions to the Pension
Plan were $1.1 million, $10.8 million, and $11.3 million in 2010, 2009, and 2008 respectively. The 2009 and
2008 contributions were made to increase the funded level of the Pension Plan. Based on assumptions about our
2011 operating performance that we have discussed above in MD&A, we expect cash provided by operating
activities to be approximately $330 million to $335 million in 2011.
Cash used in investing activities was $114.6 million, $77.9 million, and $88.2 million in 2010, 2009, and 2008,
respectively. The 2010 increase in cash used in investing activities of $36.7 million and the 2009 decrease in
cash used in investing activities of $10.3 million was principally due to fluctuations in capital expenditures
year from year. The 2010 capital expenditures were driven by the investments in 80 new store openings, the
installation of energy management systems in approximately 700 stores, and the continued development of
our SAP® for Retail system. The 2009 capital expenditures were driven by the investments in 52 new store
openings and the continued development of our SAP for Retail system. The 2008 capital expenditures were
driven by the investments in 21 new store openings, our SAP for Retail system, which included development
costs and additional payments for hardware and licensing fees, the completion of the installation of a new point
of sale system in all of our stores, and the acquisition of two store properties that were previously leased. We
expect capital expenditures to be approximately $125 million to $130 million in 2011, comprised principally of
maintenance capital of approximately $40 million, real estate capital of approximately $50 million driven by our
plan to open 90 new stores, and other investments of approximately $35 million to $40 million which include,
among other things, capital to refresh stores, our continued software development of the SAP for Retail system,
and certain investment designed to improve expense leverage.