Napa Auto Parts 2009 Annual Report Download - page 20

Table of Contents
Net Cash Used in Investing Activities:
Net cash flow used in investing activities was $264 million in 2009 compared to $214 million in 2008, an increase of 23%.
Primarily, the increase in investing activities was due to the $73 million used in 2009 for the purchase of properties under a construction
and lease agreement, net of the $36 million decrease in capital expenditures in 2009 from 2008. Cash used for acquisitions of businesses
in 2009 was relatively consistent with 2008. In 2008, the change in investing activities was primarily due to the $89 million increase in
cash used for the acquisition of businesses in 2008 and the $56 million decrease in cash proceeds from the sale of assets during the year,
relative to 2007.
Net Cash Used in Financing Activities:
The Company used $330 million of cash in financing activities in 2009, a 30% decrease from the $473 million used in financing
activities in 2008. Cash used in financing activities in 2008 was relatively consistent with 2007. For the three years presented, net cash
used in financing activities was primarily for dividends paid to shareholders and the repurchase of the Company’s common stock. The
Company paid dividends to shareholders of $254 million, $252 million and $243 million during 2009, 2008 and 2007, respectively.
The Company expects this trend of increasing dividends to continue in the foreseeable future. During 2009, 2008 and 2007, the Company
repurchased $26 million, $273 million and $241 million, respectively, of the Company’s common stock. We expect to remain active in
our share repurchase program, but the amount and value of shares repurchased will vary annually.
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The Company maintains a $350 million unsecured revolving line of credit with a consortium of financial institutions, which
matures in December 2012 and bears interest at LIBOR plus .30%. (0.53% at December 31, 2009). At December 31, 2009 and 2008, no
amounts were outstanding under the line of credit. Due to the workers compensation and insurance reserve requirements in certain states,
the Company also had unused letters of credit of approximately $50 million and $51 million outstanding at December 31, 2009 and
2008, respectively.
At December 31, 2009, the Company had unsecured Senior Notes outstanding under a $500 million financing arrangement as
follows: $250 million, Series B, 6.23% fixed, due 2011; and $250 million senior unsecured note, 4.67% fixed, due 2013. Certain
borrowings contain covenants related to a maximum debt-to-capitalization ratio and certain limitations on additional borrowings. At
December 31, 2009, the Company was in compliance with all such covenants. The weighted average interest rate on the Company’s
outstanding borrowings was approximately 5.45% at December 31, 2009 and 2008. Total interest expense, net of interest income, for all
borrowings was $27.1 million, $29.8 million and $21.1 million in 2009, 2008 and 2007, respectively.
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The Company had an $85 million construction and lease agreement with an unaffiliated third party which expired in 2009. Under
the agreement, the third party constructed facilities and leased them to the Company. Upon expiration of the agreement, the Company
purchased the properties from the lessor for $73 million, including closing costs, which was paid in July 2009. These properties have
been included in property, plant and equipment in the consolidated balance sheet. Refer to Note 4 of the Consolidated Financial Statements
for further information regarding this arrangement.
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In October 2007, the Company entered into a sale-leaseback transaction with a financial institution. In connection with the
transaction, the Company sold certain automotive retail store properties and immediately leased the properties back over a lease term of
twenty years. The lease was classified as an operating lease. Net proceeds from the transaction amounted to approximately $56 million.
The Company realized a net gain of approximately $20 million, which was deferred and is being amortized over the lease term.
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