American Eagle Outfitters 2013 Annual Report Download - page 26

Table of Contents
The following sets forth certain measures of our liquidity:
The $46.2 million decrease in working capital compared to February 1, 2014 and the $223.1 million decrease compared to last year is primarily
related to use of cash for financing and investing activities including capital expenditures and the distribution of cash to shareholders through the
payment of dividends and share repurchases.
Cash Flows from Operating Activities
Net cash used for operating activities totaled $4.3 million and $38.7 million for the 13 weeks ended May 3, 2014 and May 4, 2013, respectively.
For both periods, our major source of cash from operations was merchandise sales and our primary outflow of cash for operations was for the
payment of operational costs. The year-over-year decrease in cash flows from operations this year was primarily driven by the decrease in net
income net of non-cash adjustments, as a result of the 5% decrease in sales and decline in margin resulting from increased promotional activity.
Cash Flows from Investing Activities
Investing activities for the 13 weeks ended May 3, 2014 primarily consisted of $72.0 million of capital expenditures for property and equipment
partially offset by $10.0 million of proceeds from the sale of investments classified as available-for-sale. Investing activities for the 13 weeks
ended May 4, 2013 primarily included $45.7 million of capital expenditures for property and equipment and $15.2 million of investment security
purchases partially offset by $23.8 million of proceeds from the sale of investments classified as available-for-sale.
Cash Flows from Financing Activities
Cash used for financing activities for the 13 weeks ended May 3, 2014 consisted primarily of $24.3 million for cash dividends paid at a rate of
$0.125 per share, $7.4 million for the repurchase of common stock from employees for the payment of taxes in connection with the vesting of
share-based payment and $1.4 million for the payments on capital leases. There were no purchases of common stock from publically announced
programs this year. This is partially offset by $6.8 million of net proceeds from stock options exercised.
Cash used for financing activities for the 13 weeks ended May 4, 2013 consisted primarily of $33.1 million for the repurchase of common stock
as part of publicly announced programs and $23.3 million for the repurchase of common stock from employees for the payment of taxes in
connection with the vesting of share-based payment, partially offset by $8.1 million related to excess tax benefit from share-based payments.
Credit Facilities
On March 2, 2012, we entered into a five-year, $150.0 million syndicated, unsecured, revolving credit agreement (the “Credit Agreement”). The
primary purpose of the Credit Agreement is to provide additional access to capital for general corporate purposes, growth initiatives and the
issuance of letters of credit.
The Credit Agreement contains financial covenants that require us to maintain certain coverage and leverage ratios, and various customary
affirmative and negative covenants such as the ability to incur additional debt not otherwise permitted under the Credit Agreement.
The Credit Agreement has various borrowing options, including rates of interest that are based on (i) an Adjusted London Interbank Offered
Rate (“LIBOR” as defined in the Credit Agreement) plus a margin ranging from 1.00% to 1.75% based on a defined leverage ratio, payable at
the end of the applicable interest period; and (ii) a Base Rate (as defined in the Credit Agreement), plus a margin ranging from 0.00% to 0.75%
based on a defined leverage ratio, payable quarterly.
Under the Credit Agreement, we are also required to pay a commitment fee ranging from 0.175% to 0.30%, based on the defined leverage ratio,
on the unused portion of the total lender commitments.
As of May 3, 2014, we are in compliance with the terms of the Credit Agreement and had $8.2 million outstanding in letters of credit and no
borrowings.
The Credit Agreement replaced uncommitted demand lines in the aggregate amount of $110.0 million USD and $25.0 million CAD.
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May 3,
2014
February 1,
2014
May 4,
2013
Working Capital (in thousands)
$
461,844
$
508,082
$
684,943
Current Ratio
2.17
2.22
2.97