Advance Auto Parts 2003 Annual Report Download - page 39

The Company completed the redemption of its outstanding
senior subordinated notes and senior discount debentures on
April 15, 2003. Incremental facilities were added to fund
the redemption in the form of a tranche A-1 term loan facility
of $75,000 and tranche C-1 term loan facility of $275,000.
In conjunction with this redemption and overall partial
repayment of $54,433, the Company wrote off deferred
financing costs in accordance with EITF Issue No. 96-19,
“Debtor’s Accounting for a Modification or Exchange of
Debt Instruments.” The write-off of these costs combined
with the accretion of the discounts and related premiums
paid on the repurchase of the senior subordinated notes and
senior discount debentures resulted in a loss on extinguish-
ment of debt of $46,887 in the accompanying consolidated
statements of operations for the year ended January 3, 2004.
During the remainder of fiscal 2003, the Company repaid
$236,089 of its terms loans under the senior credit facility.
In conjunction with this partial repayment, the Company
wrote off additional deferred financing costs in the amount
of $401, which is classified as a loss on extinguishment of
debt in the accompanying consolidated statements of oper-
ations for the year ended January 3, 2004. Additionally in
December 2003, the Company refinanced the remaining
portion of its tranche A, A-1, C and C-1 term loan facilities
by amending and restating the credit facility to add a new
$100,000 tranche D term loan facility and $340,000 tranche
E term loan facility.
During fiscal 2002, the Company repaid a portion of its
tranche A and tranche B term loan facilities. Subsequently,
it also refinanced the remaining portion of its tranche B
term loan facility by amending and restating the credit facil-
ity to add a new $250,000 tranche C term loan facility. In
conjunction with the extinguishment of this debt, the
Company wrote off deferred financing costs in accordance
with EITF No. 96-19. The write-off of these costs are clas-
sified as a loss on extinguishment of debt of $8,542 in the
accompanying consolidated statement of operations.
During fiscal 2002, the Company also repurchased and
retired a portion of its senior subordinated notes and senior
discount debentures. The premiums paid and the write-off
of the related deferred financing costs are classified as a loss
on extinguishment of debt of $8,280 in the accompanying
statements of operations.
At January 3, 2004, the senior credit facility provided
for (1) $440,000 in term loans (as detailed above) and
(2) $160,000 under a revolving credit facility (which
provides for the issuance of letters of credit with a sub limit
of $70,000). As of January 3, 2004, the Company had
borrowed $5,000 under the revolving credit facility and had
$32,585 in letters of credit outstanding, which reduced
availability under the credit facility to $122,415.
The tranche D term loan facility requires scheduled
repayments of $19,251 on November 30, 2004, $21,636 in
May and November 2005, $21,636 in May 2006 and
$15,839 at maturity on November 30, 2006. Under the
amended credit facility, the tranche E term loan facility
requires scheduled repayments of $2,969 semi-annually
beginning November 30, 2004 through May 31, 2007, and
the Company will be required to pay the remaining balance
at maturity on November 30, 2007.
The interest rates on the tranche D and E term loan facil-
ities are based, at the Company’s option, on either an
adjusted LIBOR rate, plus a margin, or an alternate base
rate, plus a margin. Under the Company’s senior credit
facility as amended in December 2003 and until its delivery
of its financial statements for the fiscal year ending on
January 3, 2004, the initial margins for the tranche D term
loan facilities and the tranche E term loan facilities are
2.00% and 1.00% per annum for the adjusted LIBOR rate and
alternate base rate borrowings, respectively. The margins
subsequent to such date will be determined by a pricing grid
based on the Company’s leverage ratio at that time.
The interest rates on the revolving credit facility are
based, at the Company’s option, on either an adjusted
LIBOR rate, plus a margin, or an alternate base rate, plus a
margin. Under the Company’s senior credit facility as
amended in December 2003 and until its delivery of its
financial statements for the fiscal year ending on January 3,
2004, the initial margins for the revolving credit facility is
2.25% and 1.25% per annum for the adjusted LIBOR rate
and alternate base rate borrowings, respectively. Addi-
tionally, a commitment fee of 0.375% per annum will
be charged on the unused portion of the revolving credit
facility, payable quarterly in arrears.
Borrowings under the senior credit facility are required
to be prepaid, subject to certain exceptions, with (1) 50%
of the Excess Cash Flow (as defined in the senior credit
facility) unless the Company’s Senior Leverage Ratio (as
defined in the senior credit facility) at the end of any fiscal
year is less than or equal to 1.00 to 1.00, in which case
25% of Excess Cash Flow for such fiscal year will be
required to be repaid, (2) 100% of the net cash proceeds of
all asset sales or other dispositions of property by the
Company and its subsidiaries, subject to certain exceptions
(including exceptions for reinvestment of certain asset sale
proceeds within 270 days of such sale and certain sale-
leaseback transactions), and (3) 100% of the net proceeds
of certain issuances of debt or equity by the Company and
its subsidiaries.
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Advance Auto Parts, Inc. and Subsidiaries