CompUSA 2008 Annual Report Download - page 63

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Financial Condition, Liquidity and Capital Resources
Selected liquidity data (in thousands):
December 31,
2008 2007 $ Change
Cash and cash equivalents $115,967 $128,021 ($12,054)
Accounts receivable, net $190,909 $207,460 ($16,551)
Inventories $282,217 $250,222 $31,995
Prepaid expenses and other current $12,667 $13,902 ($1,235)
Accounts payable $284,378 $248,673 $35,705
Accrued expenses $75,603 $81,637 ($6,034)
Short term debt $773 $4,302 ($3,529)
Working capital $250,564 $274,353 ($23,789)
Our primary liquidity needs are to support working capital requirements in our business, to fund capital
expenditures, to fund the payment of interest on outstanding debt and to effect small acquisitions. We rely
principally upon operating cash flow to meet these needs. In addition we have available a credit facility
of approximately $120 million We believe that cash flow available from these sources will be sufficient
to meet our working capital requirements, projected capital expenditures and interest and debt repayments
in the foreseeable future.
Our working capital decreased in 2008 as the result of use of approximately $30.6 million cash for the
purchase of certain CompUSA assets, payment of $37.1 million for a special dividend, stock repurchases
of $5.8 million and an increase in inventory, primarily related to purchasing inventory for the 16
CompUSA retail stores. Accounts payable balances increased by approximately $35.7 million offset by a
decrease of approximately $6.0 million in accrued expenses and a reduction in short term debt in Europe.
Inventory turnover was at 9 times during 2008 and 10 times at 2007. Our accounts receivable days
outstanding was at 21 in 2008 down from 24 in 2007. 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.
We maintain our cash and cash equivalents primarily in money market funds or their equivalent. As of
December 31, 2008, all of our investments mature in less than three months. Accordingly, we do not
believe that our investments have significant exposure to interest rate risk.
Net cash provided by operating activities was $82.4 million, $93.1 million and $34.3 million during 2008,
2007 and 2006. The decrease in cash provided by operating activities in 2008 over 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 our working capital accounts. The increase in cash
provided by operating activities in 2007 over 2006 resulted from a $27.0 million increase in net income
adjusted by other non-cash items, such as depreciation expense, and an increase of $31.7 million in cash
used for changes in our working capital accounts.
Net cash used in investing activities was $47.7 million during 2008, primarily for the CompUSA
acquisition and for capital expenditures. Net cash used in investing activities was $8.0 million during
2007, primarily for capital expenditures. Net cash provided by investing activities during 2006 consisting
of proceeds from disposals of property and equipment of $18.9 million from the sale of our distribution
facility in Suwanee, Georgia offset by cash used for capital expenditures of $6.7 million. Capital
expenditures in 2008, 2007 and 2006 included upgrades and enhancements to our information and
communications systems hardware and facilities costs for the opening of additional retail outlets stores in
North America.
Net cash used in financing activities was $42.8 million during 2008. We repaid approximately $3.9
million in short-term debt, paid a special dividend of $37.1 million, and repurchased Company stock of
approximately $5.8 million. Proceeds and excess tax benefits from stock option exercises and proceeds