CompUSA 2014 Annual Report Download - page 38

Our primary liquidity needs are to support working capital requirements in our business, including working capital for the closing of the
previously announced purchase of the Plant Equipment Group in January 2015, integrating Plant Equipment Group with our business, exiting of
the consumer and retail business and related workforce reductions in 2015, integrating SCC Services with our business (see Note 2 to the
Consolidated Financial Statements), reorganizing our European operations including funding cash requirements of certain European businesses,
European workforce reduction costs and transition costs, implementing new inventory and warehouse functions in Europe, funding capital
expenditures, continuing investment in upgrading and expanding our technological capabilities and information technology infrastructure
(including upgrading and transitioning of SCC Services and Plant Equipment Group’
s technology infrastructure), repaying outstanding debt, and
funding acquisitions. We rely principally upon operating cash flows to meet these needs. We believe that cash flow available from these sources
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 would 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 decreased due to cash used for the SCC Services acquisition and the net loss incurred in 2014. Accounts receivable days
outstanding were at 37.5 in 2014 up from 32.6 in 2013. This trend reflects slower receivables collection in the Europe as we transition
collections to the Hungarian shared services center and a higher proportion of our sales coming from B2B channels, where most customers do
business with us on open credit account, and a lower proportion of our sales being B2C channels, where most customers purchase from us using
credit cards. Inventory turns were 9.5 in 2014 compared to 9.4 in 2013 and accounts payable days outstanding were 51.2 in 2014 compared to
45.9 in 2013. 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 used in 2014 from continuing operations was $0.
1
million resulting from changes in our working capital accounts, which used $0.1
million in cash compared to $33.9 million provided in 2013, primarily the result of fluctuation in our accounts receivable, inventory, and income
tax payable (receivable) balances. Cash generated from net (loss) adjusted by other non-cash items used $0.0
million compared to $12.9
million provided in 2013, primarily the result of establishment of valuation allowances against deferred tax assets for U.S. entities in 2013,
change in asset impairment charges, depreciation and amortization offset by improvement of net loss from operations and fluctuation in our
provision adjustments for returns and doubtful accounts in 2014 compared to 2013. Net cash provided by continuing operations was $46.8
million and $75.4 million during 2013 and 2012, 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 2013, 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 (loss) adjusted by non-
cash items provided $12.9 million compared to $22.2
million in 2013, 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. Net cash used in operating activities from discontinued operations was zero for the
years ended December 31, 2014 and 2013 and $0.4 million for the year ended December 31, 2012.
Net cash used in investing activities totaled $12.5 million for 2014, of which $6.4 million was used for SCC Services acquisition, net of cash
acquired of $0.9 million (see Note 2 ) and $0.9 million of proceeds from the sale of our former PC manufacturing facility.
Other investing
activities include office expansions related to our Industrial Products segment, expenditures for the European shared services center, computer
and office equipment expenditures for the sales and administrative offices in the United Kingdom, expenditures for our inventory and
warehousing functions in Europe, and information and communications systems hardware and software. In 2013,
net cash used in investing
activities was $13.4 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 2012, net
cash used in investing activities was $12.0 million, primarily for upgrades and enhancements to our information and communication systems
hardware and software and expenditures in retail stores in North America.
Net cash used in financing activities was $2.3 million in 2014, $2.6 million in 2013 and $11.1 million in 2012. In 2014, we repaid
approximately $2.6 million of capital lease obligations and net proceeds and excess tax benefit from stock option exercises provided $0.3
million. In 2013, we repaid approximately $2.8 million of capital lease obligations. Net proceeds and excess tax benefits from stock option
exercises provided $0.2 million. In 2012, we paid a special dividend of $9.1 million and repaid approximately $2.8 million in capital lease
obligations. Net proceeds and excess tax benefits from stock option exercises provided $0.8 million.
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