CompUSA 2015 Annual Report Download - page 36

Table of Contents
Ourprimaryliquidityneedsaretosupportworkingcapitalrequirementsinourbusiness,includingworkingcapitalforintegratingP.E.G.andMiscoSolutionswith
ourbusiness,exitfromandwindingdownofourNATGoperations,fundingcashrequirementsofcertainEuropeanbusinessesforpreviouslyaccruedworkforce
reductioncostsandtransitioncosts,implementingnewinventoryandwarehousefunctionsinNorthAmerica,fundingcapitalexpenditures,continuinginvestment
inupgradingandexpandingourtechnologicalcapabilitiesandinformationtechnologyinfrastructure(includingupgradingandtransitioningofP.E.G.andMisco
Solutions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P.E.G.acquisitionandthenetlossincurredin2015.Accountsreceivabledaysoutstandingwereat38.1in
2015upfrom37.5in2014.ThistrendreflectsslowerreceivablescollectioninEuropeaswetransitioned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11.3in2015comparedto9.5in2014andaccountspayable
daysoutstandingwere53.4in2015comparedto51.2in2014.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operatingactivitiesfromcontinuingoperationswas$135.6millionresultingfromchangesinourworkingcapitalaccounts,whichprovided
$158.7millionincashcomparedto$0.3millionusedin2014,primarilytheresultoftheliquidationofinventoriesatourretailstores,fluctuationinouraccounts
receivableandaccountspayablebalances.Cashgeneratedfromnetincome(loss)adjustedbyothernon-cashitemsused$23.1millioncomparedto$0.9million
providedbytheseitemsin2014,primarilyrelatedtotheincreasednetlossfromoperations,fluctuationsindepreciationandamortizationcharges,changeinasset
impairmentchargesandtheutilizationofnetoperatinglosscarryforwardsfromourFranceoperations.Netcashprovidedbyoperatingactivitiesfromcontinuing
operations was $0.8 million and $42.1 million during 2014 compared to2013, primarily resulting from changes in 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income(loss)adjustedbyothernon-cashitemsprovided$0.9millioncomparedto$8.2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usedinoperatingactivitiesfromdiscontinuedoperationswas$49.1millionand$0.9millionfor2015and2014,respectivelyand
cashprovidedbyoperatingactivitiesfromdiscontinuedoperationswas$4.7millionfor2013.
Netcashusedininvestingactivitiestotaled$34.7million,$12.5millionand$13.4millionfor2015,2014and2013,respectively.AcquisitionofP.E.G.in2015
used$24.8million,netofcash acquired of $1.1 million and in 2014, $6.4million was used for theMisco Solutions acquisition, net ofcash acquired of$0.9
million(seeNote3)alongwith$0.9millionofproceedsfromthesaleofourformerPCmanufacturingfacility.In2015otherinvestingactivitiesincludeleasehold
improvementsforracking,equipmentandbuildoutofouradditionalwarehousespaceforIPGsegment,newofficespaceforourFranceoperations,expenditures
forourinventoryandwarehousingfunctionsinEMEAandIPGandinformationandcommunicationssystemshardwareandsoftware,aggregating$11.3million.
In 2014, 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,totalingapproximately$7.1millionin2014.In2013,netcashusedin
investingactivitieswas$13.4millionforwarehouserackingsystemsforthenewdistributioncenter,networkupgrades,fabricationequipment,expendituresfora
newretailstoreopeningandupgradesandenhancementstoourinformationandcommunicationssystemshardware.
Net cash used in financing activities was $3.0 million, $2.3 million in 2014 and $2.6 million for 2015, 2014 and 2013, respectively. In 2015, we repaid
approximately $2.8 million of capital lease obligations andrepurchased approximately $0.2 million of treasury stock.  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.
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