Staples 2005 Annual Report Download - page 82

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STAPLES, INC. AND SUBSIDIARIES
Management’s Discussion and Analysis of Financial Condition and
Results of Operations (Continued)
B-8
decreased and deferred income taxes increased, resulting in no aggregate impact on cash flows from operations. The
increase in cash flow from operations in fiscal 2005 is primarily the result of an increase in net income. The increase in
cash flow from operations in fiscal 2004 and fiscal 2003 is primarily due to the increase in net income adjusted for non-
cash charges, combined with our improvements in working capital.
Cash used in investing activities was $634.1 million in fiscal 2005, compared to $14.4 million in fiscal 2004 and
$1.11 billion in fiscal 2003. The change in investing activities each year primarily reflects a shift in our investment
strategy. In 2005, we increased the amount of treasury securities we held and decreased our holdings of cash equivalents,
including commercial paper and money market investments. In 2004, we reduced the amount of market auction rate
preferred stock and debt securities we held and increased our holdings of cash equivalents. In 2003, we increased our
holdings of market auction rate preferred stock and debt securities and decreased our holdings of cash equivalents.
Cash used in financing activities was $620.8 million in fiscal 2005, compared to $639.9 million in fiscal 2004 and cash
provided by operations of $35.3 million in fiscal 2003. We repurchased 30.1 million shares of our common stock for a
total purchase price of $649.6 million under our share repurchase program in 2005 and we repurchased 26.1 million
shares of our common stock for a total purchase price of $502.7 million in 2004. We paid $123.4 million in the aggregate
in 2005 and $99.5 million in the aggregate in 2004 to shareholders in connection with our annual cash dividend on our
common stock. In 2004, we repaid the outstanding principal and interest due on our 5.875% 150 million Euro Notes,
pursuant to the terms of the original debt agreement. In 2003, we repaid our $325 million 364-Day Term Loan
Agreement (see Note E to the Consolidated Financial Statements) and received net proceeds of $253.0 million from our
issuance of 20.7 million shares of common stock in a public offering (see Note J to the Consolidated Financial
Statements).
Sources of Liquidity
We utilize cash generated from operations, short-term investments and our main revolving credit facility to cover
seasonal fluctuations in cash flows and to support our various growth initiatives.
We had $2.38 billion in total cash, short-term investments and funds available through credit agreements at
January 28, 2006, which consisted of $805.9 million of available credit, $977.8 million of cash and cash equivalents and
$593.1 million of short-term investments. During fiscal 2005, we also issued letters of credit in the ordinary course of
business to satisfy certain vendor contracts. At January 28, 2006, we had $68.1 million of open letters of credit, which
reduces the available amounts under our revolving credit facility. We finance the majority of our stores and certain
equipment with operating leases.