Circuit City 2009 Annual Report Download - page 32

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Table of Contents
Financial Condition, Liquidity and Capital Resources
Selected liquidity data (in thousands):
Our primary liquidity needs are to support working capital requirements in our business, including working capital for new retail stores, to fund
capital expenditures, to fund the payment of interest on outstanding debt, to fund special dividends declared by our Board of Directors and for
acquisitions. We rely principally upon operating cash flow to meet these needs. We believe that cash flow from operations and our availability
under credit facilities will be sufficient to fund our working capital and other cash requirements for the next twelve months.
Our working capital decreased in 2009 as the result of using cash balances of approximately $14.5 million for the purchase of the Circuit City
assets, payment of $27.6 million for a special dividend, the $4.5 million cash purchase of WStore and common stock repurchases of $1.2
million. Inventory balances increased related to warehousing additional products as a result in the growth of sales and the stocking our retail
stores. Accounts receivable balances increased as the result of growth in open account business to business sales, the WStore acquisition and
slight growth in accounts receivable days outstanding. Accounts payable and accrued expense balances increased due to inventory growth and
the WStore acquisition. The increase in short term debt was attributable to the assumption of the outstanding debt of WStore. Inventory turnover
was consistent at 9 times during 2009 and 2008. Our accounts receivable days outstanding were at 24 in 2009 up from 21 in 2008. We expect
that future accounts receivable and inventory balances will fluctuate with growth in net sales and the mix of our net sales between consumer and
business customers.
Net cash provided by operating activities was $4.8 million, $82.4 million, and $93.1 million during 2009, 2008, and 2007. The decrease in cash
provided by operating activities in 2009 over 2008 resulted from a $3.0 million decrease in net income adjusted by other non-cash items, such as
depreciation expense, and a decrease of $74.6 million in cash used for changes in our working capital accounts. The decrease in cash provided
by operating activities in 2008 compared to 2007 resulted from a $3.3 million decrease in net income adjusted by other non-cash items, such as
depreciation expense, and a decrease of $7.4 million in cash used for changes in working capital accounts.
Net cash used in investing activities was $32.3 million during 2009, primarily for the CircuitCity.com acquisition and capital expenditures. The
WStore acquisition used approximately $4.5 million and provided $5.4 million in cash acquired. Cash flows used in investing activities during
2008 totaled $45.5 million primarily for the CompUSA acquisition and for capital expenditures. Net cash used in investing activities was $7.7
million during 2007, primarily for capital expenditures. Capital expenditures in 2009, 2008, and 2007 included upgrades and enhancements to
our information and communications systems hardware and software and expenditures in retail stores in North America.
Net cash used in financing activities was $31.5 million during 2009. We repaid approximately $3.6 million in short term debt, repaid
approximately $0.8 million in capital lease obligations, paid a special dividend of $27.6 million and repurchased Company stock of
approximately $1.2 million. Proceeds from stock option exercises provided approximately $1.7 million of cash. Net cash used in financing
activities
29
December 31,
2009
2008
$ Change
Cash
$
58,309
$
115,967
$
(57,658
)
Accounts receivable, net
$
241,860
$
182,841
$
59,019
Inventories
$
365,725
$
290,594
$
75,131
Prepaid expenses and other current assets
$
20,066
$
12,667
$
7,399
Accounts payable
$
346,362
$
285,410
$
60,952
Accrued expenses and other current liabilities
$
80,945
$
72,352
$
8,593
Current portion of capitalized lease obligations
$
1,029
$
773
$
256
Short term debt
$
14,168
—
$
14,168
Working capital
$
250,082
$
253,092
$
(3,010
)