CompUSA 2009 Annual Report Download - page 83

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23
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 was $45.0 million during 2008. We repaid approximately $3.9 million in short-term debt, repaid approximately
$0.7 million in capital lease obligations, 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 provided approximately $2.5 million of cash. Net cash used
in financing activities was $42.7 million during 2007, attributable to dividends paid of $36.6 million, repayment of short term debt of
$8.7 million, repayment of $0.6 million in capital lease obligations, repurchase of common stock of approximately $1.8 million, offset
by proceeds of stock option exercises and related excess tax benefits of $5.0 million.
We have a $120.0 million secured revolving credit agreement (which may be increased by up to an additional $30.0 million, subject to
certain conditions). The facility expires in October 2010 and the Company expects to renew the facility on or before that date.
Borrowings under the agreement are subject to borrowing base limitations of up to 85% of eligible accounts receivable and 40% of
qualified inventories and are secured by accounts receivable, inventories and certain other assets. The undrawn availability under the
facility may not be less than $15.0 million until the last day of any month in which the availability net of outstanding borrowings is at
least $70.0 million. The revolving credit agreement requires that we maintain a minimum level of availability. If such availability is
not maintained, we will then be required to maintain a fixed charge coverage ratio (as defined). The agreement contains certain other
covenants, including restrictions on capital expenditures and payments of dividends. As of December 31, 2009, the Company was in
compliance with all of the covenants under the credit facility. Eligible collateral under the facility was $110.8 million, total availability
was $98.7 million, outstanding letters of credit of were $12.1 million and there were no outstanding advances.
The Company’ s Inmac WStore subsidiary maintains a secured revolving credit agreement with a financial institution in France which
is secured by WStore Europe SA accounts receivable balances. Available amounts for borrowing under this facility includes all
accounts receivable balances not over 60 days past due reduced by the greater of €4.0 million or 10% of the eligible accounts
receivable. As of December 31, 2009, there was availability under this credit facility of approximately €6.0 million ($8.6 million) and
there was €9.9 million ($14.2 million) of outstanding borrowings. Outstanding balances under this agreement carry interest at 1.5% as
of December 31, 2009. The credit facility duration is indefinite; however either party may cancel the agreement with ninety days
notice. Under this agreement the Company is subject to certain non-financial covenants which it was in compliance with at December
31, 2009.
The Company’ s WStore UK subsidiary maintains a £2 million secured resolving credit agreement with a financial institution in the
United Kingdom which is secured by WStore UK’ s accounts receivable balances. Available amounts for borrowing under this facility
includes accounts receivable balances less 30% retention. As of December 31, 2009, there was availability under this credit facility of
approximately £.5 million ($.8 million). Outstanding balances under this agreement carry interest at 2.5% above the overnight daily
LIBOR rate (0.5% at December 31, 2009). The credit facility duration is indefinite; however either party may cancel the agreement
with ninety days notice. Under this agreement the Company is subject to certain non-financial covenants which it was in compliance