Advance Auto Parts 2014 Annual Report Download - page 38

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in property and equipment as a result of less spending on existing stores, new store development, information technology, and
investments in supply chain.
Financing Activities
For 2014, net cash provided by financing activities increased by $244.7 million to $575.9 million. This increase was
primarily a result of net borrowings associated with the acquisition of GPI, partially offset by the issuance of unsecured notes in
the prior year, and a decrease in repurchases of common stock in 2014.
For 2013, net cash provided by financing activities increased by $203.3 million to $331.2 million. This increase was
primarily a result of a net change in borrowings under our senior unsecured notes and credit facilities, partially offset by a
$53.7 million increase in the repurchase of common stock under our stock repurchase program.
Long-Term Debt
Bank Debt
On December 5, 2013, we entered into a new credit agreement (the "2013 Credit Agreement") which provides a $700.0
million unsecured term loan and a $1.0 billion unsecured revolving credit facility with Advance Stores Company, Inc.
("Advance Stores"), as Borrower, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent. This
revolving credit facility replaced the revolver under our former Credit Agreement dated as of May 27, 2011 with Advance
Stores, as Borrower, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (the “2011 Credit
Agreement”). Upon execution of the 2013 Credit Agreement, the lenders’ commitments under the 2011 Credit Agreement were
terminated and the liabilities of us and our subsidiaries with respect to obligations under the 2011 Credit Agreement were
discharged. The new revolving credit facility also provides for the issuance of letters of credit with a sub-limit of $300.0
million and swingline loans in an amount not to exceed $50.0 million. We may request, subject to agreement by one or more
lenders, that the total revolving commitment be increased by an amount not to exceed $250.0 million by those respective
lenders (up to a total commitment of $1.25 billion) during the term of the 2013 Credit Agreement. Voluntary prepayments and
voluntary reductions of the revolving balance are permitted in whole or in part, at our option, in minimum principal amounts as
specified in the 2013 Credit Agreement. Under the terms of the 2013 Credit Agreement, the revolving credit facility terminates
in December 2018 and the term loan matures in January 2019.
As of January 3, 2015, under the 2013 Credit Agreement, we had outstanding borrowings of $93.4 million under the
revolver and $490.0 million under the term loan. As of January 3, 2015, we also had letters of credit outstanding of $124.3
million, which reduced the availability under the revolver to $782.3 million. The letters of credit generally have a term of one
year or less and primarily serve as collateral for our self-insurance policies.
The interest rate on borrowings under the revolving credit facility is based, at our option, on adjusted LIBOR, plus a
margin, or an alternate base rate, plus a margin. The current margin is 1.30% and 0.30% per annum for the adjusted LIBOR and
alternate base rate borrowings, respectively. A facility fee is charged on the total amount of the revolving credit facility, payable
in arrears. The current facility fee rate is 0.20% per annum. Under the terms of the 2013 Credit Agreement, the interest rate and
facility fee are subject to change based on our credit rating.
The interest rate on the term loan is based, at our option, on adjusted LIBOR, plus a margin, or an alternate base rate, plus
a margin. The current margin is 1.50% and 0.50% per annum for the adjusted LIBOR and alternate base rate borrowings,
respectively. Under the terms of the term loan, the interest rate is subject to change based on our credit rating.
The 2013 Credit Agreement contains customary covenants restricting the ability of: (a) subsidiaries of Advance Stores to,
among other things, create, incur or assume additional debt; (b) Advance Stores and its subsidiaries to, among other things, (i)
incur liens, (ii) make loans and investments, (iii) guarantee obligations, and (iv) change the nature of its business conducted by
itself and its subsidiaries; (c) Advance, Advance Stores and their subsidiaries to, among other things (i) engage in certain
mergers, acquisitions, asset sales and liquidations, (ii) enter into certain hedging arrangements, (iii) enter into restrictive
agreements limiting its ability to incur liens on any of its property or assets, pay distributions, repay loans, or guarantee
indebtedness of its subsidiaries, and (iv) engage in sale-leaseback transactions; and (d) Advance to, among other things, change
its holding company status. Advance and Advance Stores are required to comply with financial covenants with respect to a
maximum leverage ratio and a minimum consolidated coverage ratio. The 2013 Credit Agreement also provides for customary
events of default, including non-payment defaults, covenant defaults and cross-defaults to Advance Stores’ other material
indebtedness. We were in compliance with our covenants with respect to the 2013 Credit Agreement at January 3, 2015.