Circuit City 2010 Annual Report Download - page 26

Seasonality
As the Company’s consumer channel sales have grown significantly in the past few years, the fourth quarter has represented a greater portion of
annual sales than historically. Net sales have historically been modestly weaker during the second and third quarters as a result of lower
business activity during those months. The following table sets forth the net sales seasonality for each of the quarters since January 1, 2008
(amounts in millions) .
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, including the second North American distribution center for the Technology Products segment, 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 flows to meet these needs. We believe that cash flows 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 increased in 2010 as the result of increased cash, accounts receivable and inventory balances as a result of growth in the
business offset partially by an increase in accounts payable, accrued expenses and the current portion of long term debt. The increase in
inventory is the result of increased retail store inventory in 2010 and the opening of a new distribution facility for Technology Products in the
third quarter of 2010. Accounts receivable balances increased as the result of growth in open account business to business customers, 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. Accounts receivable days outstanding were at 25 in 2010 up from 23 in 2009. 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 $64.9 million, $4.8 million, and $82.4 million during 2010, 2009, and 2008. The increase in cash
provided by operating activities in 2010 over 2009 resulted from a $5.0 million decrease in net income adjusted by other non-cash items, such as
depreciation expense, and an increase of $65.1 million in cash used for changes in our working capital accounts. The decrease in cash provided
by operating activities in 2009 compared to 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 working capital accounts.
Quarter Ended
March 31
June 30
September 30
December 31
2010
Net sales
$
915
$
806
$
863
$
1,006
Percentage of year
’
s net sales
25.5
%
22.5
%
24.0
%
28.0
%
2009
Net sales
$
752
$
722
$
754
$
938
Percentage of year
’
s net sales
23.8
%
22.8
%
23.8
%
29.6
%
2008
Net sales
$
725
$
756
$
739
$
813
Percentage of year
’
s net sales
23.9
%
24.9
%
24.4
%
26.8
%
December 31,
2010
2009
$ Change
Cash
$
92,077
$
58,309
$
33,768
Accounts receivable, net
$
276,344
$
241,860
$
34,484
Inventories
$
370,375
$
365,725
$
4,650
Prepaid expenses and other current assets
$
19,308
$
20,066
$
(758
)
Accounts payable
$
377,030
$
348,029
$
29,001
Accrued expenses and other current liabilities
$
84,680
$
78,841
$
5,839
Current portion of long term debt
$
2,655
$
1,029
$
1,626
Short term debt
$
-
14,168
$
(14,168
)
Long term debt
$
7,386
$
1,194
$
6,192
Working capital
$
300,872
$
250,519
$
50,353
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