Advance Auto Parts 2006 Annual Report Download - page 57

Contractual Obligations
Our future contractual obligations related to long-term debt, operating leases and other contractual obligations
at December 30, 2006 were as follows:
Fiscal Fiscal Fiscal Fiscal Fiscal
Contractual Obligations Total 2007 2008 2009 2010 2011 Thereafter
(in thousands)
Long-term debt 477,240$ 67$ 75$ 71$ 73$ 476,869$ 85$
Interest payments 122,530$ 27,536$ 27,052$ 27,010$ 27,281$ 13,651$ -$
Letters of credit 66,768$ 61,768$ 5,000$ -$ -$ -$ -$
Operating leases
(1)
2,018,132$ 249,905$ 222,693$ 205,128$ 185,473$ 162,829$ 992,104$
Purchase obligations
(2)
625$ 500$ 125$ -$ -$ -$ -$
Other long-term liabilities
(3)
61,234$ -$ -$ -$ -$ -$ -$
(1)
(2)
(3)
We lease certain store locations, distribution centers, office space, equipment and vehicles. Our property
leases generally contain renewal and escalation clauses and other leases concessions. These provisions are
considered in our calculation of our minimum lease payments which are recognized as expense on a
straight-line basis over the applicable lease term. In accordance with SFAS No. 13, “Accounting for
Leases,” as amended by SFAS No. 29, “Determining Contingent Rental,” any lease payments that are
based upon an existing index or rate, are included in our minimum lease payment calculations.
For the purposes of this table, purchase obligations are defined as agreements that are enforceable and
legally binding, a term of greater than one year and that specify all significant terms, including: fixed or
minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate
timing of the transaction. Our open purchase orders are based on current inventory or operational needs and
are fulfilled by our vendors within short periods of time. We currently do not have minimum purchase
commitments under our vendor supply agreements nor are our open purchase orders for goods and services
binding agreements. Accordingly, we have excluded open purchase orders from this table. The purchase
obligations consist of certain commitments for training and development. This agreement expires in March
2008.
Primarily includes employee benefits accruals and deferred income taxes for which no contractual payment
schedule exists.
Long Term Debt
On October 5, 2006, we entered into a new $750.0 million unsecured five-year revolving credit facility with our
subsidiary, Advance Stores Company, Incorporated, serving as the borrower. This new facility replaced the term
loans and revolver under our previous credit facility. Proceeds from this revolving loan were used to repay $433.8
million of principal outstanding on the term loans and revolver under our previous credit facility. In conjunction
with this refinancing, we wrote-off existing deferred financing costs related to our previous term loans and revolver.
The $1.9 million write-off of these costs was combined with a related gain on settlement of interest rate swaps of
$2.9 million for a net gain on extinguishment of debt of $1.0 million.
Additionally, the new facility provides for the issuance of letters of credit with a sub-limit of $300 million and
swingline loans in an amount not to exceed $50 million. We may request that the total revolving commitment be
increased by an amount not exceeding $250 million during the term of the 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 new revolving credit facility.
As of December 30, 2006, we had borrowed $476.8 million under the revolver and had $66.8 million in letters
of credit outstanding, which reduced availability under the revolver to $206.4 million. At December 30, 2006, we
also have interest rate swaps in place that effectively fix our interest rate exposure on approximately 50% of our
debt. These interest rate swaps are further discussed in our market risk analysis.
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