Big Lots 2013 Annual Report Download - page 175

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At February 1, 2014, we had $77.0 million in outstanding borrowings under the 2011 Credit Agreement and $617.4 million
borrowings available under the 2011 Credit Agreement, after taking into account the reduction in availability resulting from
outstanding letters of credit totaling $5.6 million. We anticipate that total indebtedness under the 2011 Credit Agreement
through June 15, 2014, will not exceed $85 million, which includes our estimate of outstanding letters of credit and the
estimated impact of cash needs of Big Lots Canada, but excludes the impact of any potential share repurchase activity under the
2014 Repurchase Program. Working capital was $543.6 million at February 1, 2014.
Whenever our liquidity position requires us to borrow funds under the 2011 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.
Cash provided by operating activities decreased by $82.8 million to $198.3 million in 2013 compared to $281.1 million in
2012. The decrease was primarily driven by the decrease in net income of $51.8 million to $125.3 million in 2013 from $177.1
million in 2012. Additionally, the change in our income tax related assets impacted our operating cash flows. Our net deferred
tax assets increased more substantially during 2013 as compared to 2012 principally due to (1) the recognition of a U.S.
deferred tax benefit associated with the excess tax basis related to our investment in our Canadian segment, (2) an increase in
the deferred tax assets associated with nonvested restricted stock as no material vesting of restricted stock has occurred in 2013,
(3) the impact of fewer stock option exercises in 2013 compared to 2012, and (4) the reduction of deferred tax liabilities
associated with greater book depreciation compared to flat tax depreciation. These deferred tax items impacted our operating
cash flows by $44.6 million. Our current income taxes payable decreased more substantially during 2013 as compared to 2012,
primarily due to our generation of higher taxable income during the first three quarters of 2013 as compared to the first three
quarters of 2012, which resulted in higher estimated income tax installment payments during 2013 compared to 2012, coupled
with the generation of lower taxable income in the fourth quarter of 2013 as compared to the fourth quarter of 2012. The result
of the higher estimated income tax payments was a reduction of $38.3 million of cash provided by operating activities.
Partially offsetting these decreases in cash flows from operations were a net reduced amount of net cash used by certain
operating asset and liabilities and an increase in non-cash impairment charges. During 2013, we generated cash from our
inventories as we reduced our inventory levels as a result of the wind down of our Canadian segment and wholesale business,
while during 2012, we used cash to grow our inventory levels. Our accounts payable have a direct correlation with our
inventory; therefore as we reduced our inventory position during 2013, we also reduced our accounts payable, which required
the use of cash, and during 2012, when we grew our inventory balances, our accounts payable increased, which provided cash
flows. The impact of the movement in our inventory and accounts payable balances provided for $23.1 million of net cash
within operating activities. Non-cash impairment charges increased $20.1 million, which were principally associated with the
wind down of the operations of our Canadian segment, including the impairments of goodwill, fixed assets, and tradename
intangible assets.
Cash used in investing activities decreased by $32.9 million to $97.5 million in 2013 compared to $130.4 million in 2012. The
decrease was primarily due to lower capital expenditures in 2013 as compared to 2012, which were $104.8 million and $131.3
million, respectively. The decrease in capital expenditures was principally driven by a reduction in new store openings in 2013
as compared to 2012, which decreased to 57 new stores in 2013 from 87 new stores in 2012. Additionally, we received greater
proceeds on the sale of property and equipment in 2013, as we sold an owned store location, as compared to 2012, when we
had no similar real estate transaction.
Cash used in financing activities decreased by $67.1 million to $91.2 million in 2013 compared to $158.3 million in 2012. The
decrease in the cash used in financing activities was principally due to the lack of an active share repurchase program during
2013. Our use of cash for share repurchase activities decreased by $303.8 million to $0.2 million in 2013 as compared to
$304.0 million in 2012. The majority of the shares repurchased in 2012 were acquired under a board-authorized share
repurchase program, while in 2013 no such program existed. In 2012, we utilized $105.3 million of net proceeds from
borrowings under our credit facility to partially fund our share repurchase activities. In 2013, we utilized a portion of our cash
provided by operating activities to repay $94.2 million of borrowings under our credit facility. Lastly, there was a reduction in
the proceeds from the exercise of stock options of $28.4 million, as fewer options were exercised in 2013 as compared to 2012.
Based on historical and expected financial results, we believe that we have or, if necessary, have the ability to obtain, adequate
resources to fund ongoing and seasonal working capital requirements, proposed capital expenditures, new projects, and
currently maturing obligations.