Circuit City 2011 Annual Report Download - page 28

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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, 2009 (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, capital
expenditures, payment of interest on outstanding debt, special dividends declared by our Board of Directors and 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 increase in 2011 is primarily the result of lower accounts payable, accrued expenses and other current liabilities balances in
addition to increased cash and inventory balances compared to 2010. Accounts receivable days outstanding were at 27 in 2011 up from 25 in 2010.
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 $18.2 million, $64.9 million, and $4.8 million during 2011, 2010, and 2009. The decrease in cash
provided by operating activities in 2011 compared to 2010 resulted from a $3.6 million increase in net income adjusted by other non-cash items, such
as depreciation expense, and a decrease of $50.3 million in cash used in our working capital accounts. 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.
Net cash used in investing activities was $12.3 million and were for upgrades and enhancements to our information and communications systems
hardware and software and expenditures in retail stores in North America. In 2010, net cash used in investing activities was $24.7 million, primarily
for capital expenditures including expenditures for the second North American distribution center for the Technology Products segment. Cash flows
used in investing activities during 2009 totaled $32.3 million primarily for the CircuitCity.com acquisition and for capital expenditures. Capital
expenditures in 2010 and 2009 also included upgrades and enhancements to our information and communications systems hardware and software and
expenditures in retail stores in North America.
Table of Contents
Quarter Ended
March 31
June 30
September 30
December 31
2011
Net sales
$
930
$
872
$
901
$
979
Percentage of year
’
s net sales
25.3
%
23.7
%
24.5
%
26.5
%
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
%
December 31,
2011
2010
$ Change
Cash
$
97,254
$
92,077
$
5,177
Accounts receivable, net
$
268,980
$
276,344
$
(7,364
)
Inventories
$
372,244
$
370,375
$
1,869
Prepaid expenses and other current assets
$
18,198
$
19,308
$
(1,110
)
Accounts payable
$
336,550
$
377,030
$
(40,480
)
Accrued expenses and other current liabilities
$
72,410
$
84,680
$
(12,270
)
Current portion of long term debt
$
2,552
$
2,655
$
(103
)
Working capital
$
354,704
$
300,872
$
53,832
26