Advance Auto Parts 2005 Annual Report Download - page 33

Advance Auto Parts I Annual Report 2005 I 31
under our vendor supply agreements nor are our open pur-
chase orders for goods and services binding agreements.
Accordingly, we have excluded open purchase orders from
this table. The purchase obligations consist of the amount of
fuel required to be purchased by us under our fixed price fuel
supply agreement and certain commitments for training and
development. These agreements expire in May 2006 and
March 2008, respectively.
(2) Primarily includes employee benefits accruals, restructuring
and closed store liabilities and deferred income taxes for
which no contractual payment schedule exists.
(3) Represents contingent portion of AI purchase price payable
no later than April 1, 2006 based upon AI satisfying certain
earnings before interest, taxes, depreciation and amortization
targets met through December 31, 2005.
LONG-TERM DEBT
Senior Credit Facility. Our senior credit facility
provides for a tranche A term loan and a tranche B
term loan. During fiscal 2004, we used proceeds
from these term loans to refinance our tranche D and
E term loans and revolver under our previous facility.
Additionally, this new senior credit facility provides
for a $100 million delayed draw term loan, which was
available exclusively for stock buybacks under our
stock repurchase program, and a $200.0 million
revolving facility, or the revolver (which provides for
the issuance of letters of credit with a sub limit of
$70.0 million). In conjunction with the fiscal 2004
refinancing, we wrote-off deferred financing costs
related to the previous term loans 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 additional
costs required to establish the new facility resulted in
a loss on extinguishment of debt of $2.8 million
in the accompanying consolidated statements of
operations for the year ended January 1, 2005. Earlier
during fiscal 2004, we made $105.0 million of repay-
ments on our previous senior credit facility prior to
their scheduled maturity. In conjunction with these
partial repayments, we wrote-off $0.4 million, which
is also classified as a loss on extinguishment of debt
in the accompanying consolidated statement of
operations for the year ended January 1, 2005.
At December 31, 2005, our senior credit facility
consisted of (1) a tranche A term loan facility with a
balance of $170.0 million, a tranche B term loan
facility with a balance of $168.3 million, a delayed
draw term loan with a balance of $100.0 million and
(2) a $200.0 million revolving credit facility (includ-
ing a letter of credit sub facility) (of which $145.4
million was available as a result of $54.6 million in
letters of credit outstanding). The senior credit
facility is jointly and severally guaranteed by all of
our domestic subsidiaries and is secured by all of our
assets and the assets of our existing and future
domestic subsidiaries.
The tranche A term loan currently requires sched-
uled repayments of $7.5 million on March 31, 2006
and quarterly thereafter through December 31, 2006,
$10.0 million on March 31, 2007 and quarterly
thereafter through December 31, 2007, $12.5 million
on March 31, 2008 and quarterly thereafter through
June 30, 2009 and $25.0 million due at maturity on
September 30, 2009. The tranche B term loan cur-
rently requires scheduled repayments of $0.4 million
on March 31, 2006 and quarterly thereafter, with a
final payment of $160.7 million due at maturity on
September 30, 2010. The delayed draw term loan
currently requires scheduled repayments of 0.25% of
the aggregate principal amount outstanding on
March 31, 2006 and quarterly thereafter, with a final
payment due at maturity on September 30, 2010. The
revolver expires on September 30, 2009.
The interest rates on the tranche A and B term
loans, the delayed draw term loan and the revolver are
based, at our option, on an adjusted LIBOR rate, plus
a margin, or an alternate base rate, plus a margin. The
current margin for the tranche A term loan and
revolver is 1.25% and 0.25% per annum for the
adjusted LIBOR and alternate base rate borrowings,
respectively. The current margin for the tranche B
term loan and the delayed draw term loan is 1.50%
and 0.50% per annum for the adjusted LIBOR and
alternate base rate borrowings, respectively.
Additionally, a commitment fee of 0.25% per annum
is charged on the unused portion of the revolver,
payable in arrears.
In March 2005 we entered into three interest rate
swap agreements on an aggregate of $175 million of
debt under our senior credit facility. Through the
first swap we fixed our LIBOR rate at 4.153% on
$50 million of debt for a term of 48 months, expir-
ing March 2009. Through the second swap we fixed
our LIBOR rate at 4.255% on $75 million of debt for
a term of 60 months, expiring February 2010. In
March 2006, the third swap will fix our LIBOR rate
at 4.6125% on $50 million of debt for a term of 54
months, expiring in September 2010.
Additionally, we had entered into two additional
interest rate swap agreements in March 2003 to limit
our cash flow risk on variable rate debt. The first
swap allows the Company to fix its LIBOR rate at
2.269% on $75 million of debt for a term of 36
months, expiring in March 2006. The second swap,
which fixed our LIBOR rate at 1.79% on $50 million
of debt, expired in March 2005.