LIQUIDITY AND CAPITAL RESOURCES
As of July 29, 2018, we held $174,580,000 in cash and cash equivalents, the majority of which was held in interest bearing demand deposit accounts and
money market funds, and of which $92,403,000 was held by our foreign subsidiaries. As is consistent within our industry, our cash balances are seasonal in nature, with the fourth quarter historically representing a significantly higher level of cash
than other periods.
In fiscal 2018, we plan to use our cash resources to fund our inventory and inventory related purchases, advertising and marketing
initiatives, property and equipment purchases, stock repurchases and dividend payments. In addition to our cash balances on hand, we have a $500,000,000 unsecured revolving line of credit (revolver) under our credit facility. The
revolver may be used to borrow revolving loans or request the issuance of letters of credit. We may, upon notice to the administrative agent, request existing or new lenders to increase the revolver by up to $250,000,000, at such lenders
option, to provide for a total of $750,000,000 of unsecured revolving credit. For year-to-date fiscal 2018, we had no borrowings under the revolver. For year-to-date fiscal 2017, we borrowed $115,000,000 under the revolver, all of which was outstanding as of July 30, 2017. As of July 29, 2018, we had $300,000,000
outstanding under our term loan. The term loan matures on January 8, 2021, at which point all outstanding principal and any accrued interest must be repaid. Additionally, as of July 29, 2018, a total of $13,574,000 in issued but undrawn
standby letters of credit was outstanding under the credit facility. The standby letters of credit were issued to secure the liabilities associated with workers compensation and other insurance programs.
As of July 29, 2018, we had three unsecured letter of credit reimbursement facilities for a total of $70,000,000, of which $6,049,000 was outstanding.
These letter of credit facilities represent only a future commitment to fund inventory purchases to which we had not taken legal title.
We are currently
in compliance with all of our financial covenants under the credit facility and, based on our current projections, we expect to remain in compliance throughout the next 12 months. We believe our cash on hand, in addition to our available credit
facilities, will provide adequate liquidity for our business operations over the next 12 months.
Cash Flows from Operating Activities
For year-to-date fiscal 2018, net cash provided by operating activities was
$120,123,000 compared to $35,135,000 for year-to-date fiscal 2017. For year-to-date
fiscal 2018, net cash provided by operating activities was primarily attributable to net earnings adjusted for non-cash items, partially offset by an increase in merchandise inventories, prepaid expenses and
other assets, and a decrease in income taxes payable. Net cash provided by operating activities increased compared to year-to-date fiscal 2017, primarily due to lower
merchandise inventory purchases and an increase in accounts payable.
Cash Flows from Investing Activities
For year-to-date fiscal 2018, net cash used in investing activities was
$79,508,000 compared to $82,683,000 for year-to-date fiscal 2017, and was primarily attributable to purchases of property and equipment. Net cash used in investing
activities decreased compared to year-to-date fiscal 2017, primarily due to a decrease in purchases of property and equipment.
Cash Flows from Financing Activities
For year-to-date fiscal 2018, net cash used in financing activities was $257,484,000 compared to $60,675,000 for
year-to-date fiscal 2017. For year-to-date fiscal 2018, net cash used in financing
activities was primarily attributable to repurchases of common stock and the payment of dividends. Net cash used in financing activities increased compared to
year-to-date fiscal 2017, primarily due to borrowings under our revolver during
year-to-date 2017 which did not recur in year-to-date 2018, as well as an increase in
repurchases of common stock.
Stock Repurchase Program and Dividends
See Note G to our Condensed Consolidated Financial Statements, Stock Repurchase Program and Dividends, within Item 1 of this Quarterly Report on
Form 10-Q for further information.
Critical Accounting Policies
Managements Discussion and Analysis of Financial Condition and Results of Operations is based on our Condensed Consolidated Financial Statements, which
have been prepared in accordance with U.S. GAAP. The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and