CompUSA 2013 Annual Report Download - page 35

Financial Condition, Liquidity and Capital Resources
Selected liquidity data (in millions):
Our primary liquidity needs are to support working capital requirements in our business, including working capital for the ramping up of the
European shared service center’
s workforce, reorganizing our European operations, including workforce reduction costs, implementing new
inventory and warehouse functions in Europe, the new distribution and call center for our Industrial Products segment, funding capital
expenditures, continuing investment in upgrading and expanding our technological capabilities and information technology infrastructure,
repaying outstanding debt, and funding special dividends declared by our Board of Directors and funding 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. We believe our current capital structure and cash resources
are adequate for our internal growth initiatives. To the extent our growth initiatives expand, including major acquisitions, we may seek to raise
additional capital. We believe that, if needed, we can access public or private funding alternatives to raise additional capital.
Our working capital decrease in 2013 is primarily the result of decreased inventory balances, prepaid expenses and other current assets,
increased accounts payable, accrued expenses and other current liabilities balances offset by increased cash and accounts receivable balances as
compared to 2012. Accounts receivable days outstanding were at 32.6 in 2013 up from 29.0 in 2012. This reflects a higher proportion of our
sales being in B2B channels, where most customers do business with us on open account, and a lower proportion of our sales being in B2C
channels, where most customers purchase from us using credit cards. Inventory turns were 9.4 in 2013 compared to 9.3 in 2012 and accounts
payable days outstanding were 45.9 in 2013 compared to 43.4 in 2012. We expect that future accounts receivable, inventory and accounts
payable balances will fluctuate with net sales and the mix of our net sales between consumer and business customers.
Net cash provided by continuing operations was $46.8 million, $75.4 million, and $18.4 million during 2013, 2012, and 2011, respectively. The
decrease in cash provided by operating activities in 2013 compared to 2012 resulted from changes in our working capital accounts which
provided $33.9 million in cash compared to $53.2 million in 2012, primarily the result of changes in inventory, accounts payable, accrued
expenses and other current liabilities offset by changes in accounts receivable and income tax receivable (payable) balances. Cash generated
from net income (loss) adjusted by non-
cash items provided $12.9 million compared to $22.2 million in 2012, primarily the result of the
establishment of valuation allowances against deferred tax assets for U.S. entities in 2013 compared to a release of deferred tax assets valuation
allowances related to the Company’
s French subsidiary in 2012, net loss from continuing operations and change in asset impairment charges
compared to 2012. The increase in cash provided by operating activities in 2012 compared to 2011 resulted from changes in our working capital
accounts which provided $53.2 million in cash compared to $51.0 million used in 2011, primarily the result of increased payable balances at
year end and cash generated from net income (loss) adjusted by non
-
cash items of approximately $22.2 million in cash compared to $69.4
million in 2011, primarily the result of the release of deferred tax assets valuation allowances related to the Company’
s French subsidiary and
higher net income in 2011. Net cash used in operating activities from discontinued operations was zero, $0.4 million and $0.2 million for the
years ended December 31, 2013, 2012 and 2011, respectively.
Net cash used in investing activities from continuing operations was $13.4 million for 2013 and were for property. plant and equipment
including
furniture and fixtures, leasehold improvements, and computer equipment expenditures primarily for a new sales and administrative
office in the United Kingdom, expenditures for the European shared services center, expenditures for our inventory and warehousing functions in
Europe, information and communications systems hardware and software, and machinery and equipment used in Industrial Products new
distribution and call center. In 2012,
net cash used in investing activities was $12.0 million and were for warehouse racking systems for the new
distribution center, network upgrades, fabrication equipment, expenditures for a new retail store opening, upgrades and enhancements to our
information and communications systems hardware. In 2011, net cash used in investing activities was $12.3 million, primarily for upgrades and
enhancements to our information and communication systems hardware and software and expenditures in retail stores in North America.
31
Table of Contents
December 31,
2013
2012
$ Change
Cash
$
181.4
$
150.7
$
30.7
Accounts receivable, net
$
333.3
$
304.0
$
29.3
Inventories
$
321.8
$
367.2
$
(45.4
)
Assets available for sale
$
1.1
$
2.3
$
(1.2
)
Prepaid expenses and other current assets
$
16.5
$
14.6
$
1.9
Accounts payable
$
418.9
$
405.3
$
13.6
Accrued expenses and other current liabilities
$
89.2
$
83.5
$
5.7
Current portion of long term debt
$
2.5
$
2.8
$
(0.3
)
Working capital
$
345.8
$
360.8
$
(15.0
)