Office Depot 2009 Annual Report Download - page 36

of retail stores in North America and expenditures related to our new corporate headquarters facility. In response
to the global economic crisis, we significantly reduced our capital expenditures in 2009. As the economy
improves, we plan to increase capital expenditures accordingly. We currently estimate that total capital
expenditures will be approximately $200 million in 2010 for activities such as new retail stores, investments in
our distribution network and ongoing maintenance across all Divisions.
Proceeds from the disposition of assets in 2009, 2008 and 2007 include proceeds from sale-leaseback
transactions of $116 million, $67 million and $64 million, respectively. In 2009, we also completed the sale of an
asset previously classified as a capital lease, resulting in proceeds of approximately $29 million. Payments to
satisfy the existing capital lease obligation are included in the financing section of our Consolidated Statement of
Cash Flows. The realized gains on the sale-leaseback transactions are being amortized over the lease terms, and
the non-cash losses are reflected as other asset impairments on our Consolidated Statements of Operations.
During 2008, we also purchased certain non-operating assets for approximately $39 million. We sold certain of
these non-operating assets during the year. We placed restricted cash on deposit in the amount of $6 million and
$18 million, respectively, for transactions that were pending at the end of 2008 and 2007.
During 2008, we acquired a majority ownership position in businesses in India and Sweden. The company has
the right to acquire or may be required to purchase some or all of the minority interest shares of these businesses
at various points over the next year. Also during 2008, we acquired under previously existing put options all
remaining minority interest shares of our joint ventures in Israel and China. During 2007, we acquired a Canada-
based office products delivery company. Additionally in both 2008 and 2007, we funded previously accrued
acquisition-related payments for former owners of entities acquired in 2006.
Financing Activities
Net cash provided by financing activities totaled $173 million compared to a use of cash of $186 million in 2008.
The source in 2009 resulted from our issuance of redeemable preferred stock during the second quarter. As
previously discussed, we completed the $350 million issuance of redeemable preferred stock on June 23, 2009.
These proceeds are shown net of fees paid of approximately $25 million on the transaction during the period.
Uses of cash during 2009 period resulted from repayments of borrowings on our asset based credit facility, which
totaled $139 million, and $37 million in capital lease payments. Also, during 2009, we incurred approximately
$19 million in debt as a result of a land sale-leaseback that was treated as a financing transaction as well as
approximately $5 million of other short-term borrowings. Net cash used in financing activities in 2008 primarily
resulted from net repayments of short-term borrowings under our previously existing revolving credit facility. At
the end of 2007, borrowings under that facility totaled approximately $235 million, all of which was repaid
during 2008. This revolving credit facility was replaced with our asset based credit facility during the third
quarter of 2008, which had an outstanding balance of approximately $139 million at the end of 2008. In
conjunction with our asset based credit facility, we incurred debt issuance costs of approximately $41 million in
2008. In addition to repayments on the revolving credit facility, we also repaid certain other borrowings related
to our international subsidiaries and made payments on capital leases. Net cash provided by financing activities
in 2007 resulted from higher levels of short-term borrowings to support our working capital needs.
The board of directors has historically authorized a series of common stock repurchase plans, the latest of which
is a $500 million authorization in 2007. Under a previously approved plan, we purchased 5.7 million shares at a
cost of approximately $200 million in 2007. We did not purchase any shares of our common stock during 2008
or 2009, and as of December 26, 2009 the entire $500 million remained available for additional repurchases
under the most recent board approved plan. However, common stock repurchases are currently prohibited under
our asset based credit facility and, in certain circumstances, require prior approval under our Preferred Stock
agreements. Proceeds from issuance of common stock under our employee related plans totaled $29 million in
2007. Additionally, upon the issuance of certain restricted stock awards, employees surrendered shares to the
company equal to approximately $11 million in 2007 in exchange for our settlement of their taxes due on these
shares.
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