Office Depot 2011 Annual Report Download - page 30

LIQUIDITY AND CAPITAL RESOURCES
Liquidity
During the second quarter of 2011, the company entered into a $1.0 billion amended and restated credit
agreement (the “Amended Credit Agreement”) with a group of lenders, most of whom participated in the
company’s previously existing $1.25 billion credit agreement. The Amended Credit Agreement expires May 25,
2016. The Amended Credit Agreement reduces the applicable borrowing spread, permits the company to redeem,
tender or otherwise repurchase its existing 6.25% Senior Notes, subject to a $600 million minimum liquidity
requirement, and modifies certain covenants. See Note E of the Notes to the Condensed Consolidated Financial
Statements for additional information.
At December 31, 2011, we had approximately $570.7 million in cash and equivalents and another $734.4 million
available under the Amended Credit Agreement based on the December borrowing base certificate, for a total
liquidity of approximately $1.3 billion. We consider our resources adequate to satisfy our cash needs for at least
the next twelve months.
At December 31, 2011, no amounts were drawn under the Amended Credit Agreement. The maximum month
end amount outstanding during 2011 occurred in May at approximately $117.5 million. There were letters of
credit outstanding under the Amended Credit Agreement at the end of the year totaling approximately $111.2
million. An additional $0.2 million of letters of credit were outstanding under separate agreements. Average
borrowings under the Amended Credit Agreement during 2011 were approximately $61.9 million at an average
interest rate of 3.5%. The maximum monthly average borrowings during 2011 occurred in May at approximately
$121.5 million.
We also had short-term borrowings of $15.1 million at December 31, 2011 under various local currency credit
facilities for our international subsidiaries that had an effective interest rate at the end of the year of
approximately 2.2%. The maximum month end amount occurred in May at approximately $17.6 million and the
maximum monthly average amount occurred in June at approximately $17.0 million. The majority of these short-
term borrowings represent outstanding balances on uncommitted lines of credit, which do not contain financial
covenants.
The company was in compliance with all applicable financial covenants at December 31, 2011. On March 30,
2011, the company obtained from the lending institutions participating in the previously-existing credit
agreement a waiver of default following identification of the need to restate the financial statements in our
original Annual Report on Form 10-K filed on February 22, 2011. For additional information see Note A to
Notes to Consolidated Financial Statements.
Dividends on the company’s redeemable preferred stock are payable quarterly, and will be paid in-kind or in
cash, only to the extent that the company has funds legally available for such payment and a cash dividend is
declared by the company’s board of directors. Dividends for the first three quarters of 2011 were paid in cash.
The dividend due on January 1, 2012 was paid-in-kind, totaling approximately $7.7 million, measured at fair
value.
On February 17, 2012, the company announced commencement of a cash tender offer to purchase up to $250.0
million aggregate principal amount of its outstanding 6.25% Senior Notes due 2013. The tender offer is
scheduled to expire at midnight, New York City time, on March 16, 2012, unless extended or earlier terminated.
On February 24, 2012, the company, together with certain of its European subsidiaries, as borrowers and certain
of its domestic subsidiaries as guarantors, entered into an amendment (the “Amendment”) to the Amended Credit
Agreement with the lenders party thereto, JPMorgan Chase Bank, N.A., London Branch, as European
Administrative Agent and European Collateral Agent, JPMorgan Chase Bank, N.A., as Administrative Agent and
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