Advance Auto Parts 2007 Annual Report Download - page 82

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ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
December 29, 2007, December 30, 2006 and December 31, 2005
(in thousands, except per share data)
The revolving credit facility also provides for the issuance of letters of credit with a sub limit of $300,000 and
swingline loans in an amount not to exceed $50,000. The Company may request that the total revolving commitment
be increased by an amount not exceeding $250,000 during the term of the credit agreement. Voluntary prepayments
and voluntary reductions of the revolving balance are permitted in whole or in part, at the Company’s option, in
minimum principal amounts as specified in the revolving credit facility.
As of December 29, 2007, the Company had borrowed $451,000 under the revolver and had $74,742 in letters
of credit outstanding, which reduced availability under the revolver to $224,258. In addition, the Company had
outstanding $4,672 under an economic development note. The Company also maintains approximately $2,488 in
surety bonds issued by its insurance provider primarily to utility providers and the departments of revenue for
certain states. These letters of credit and surety bonds generally have a term of one year or less.
The interest rate on the term loan will be based, at the Company’s option, on an adjusted LIBOR rate, plus a
margin, or an alternate base rate, plus a margin. The initial margin is 1.00% and 0.0% per annum for the adjusted
LIBOR and alternate base rate borrowings, respectively. The Company has elected to use the 90-day adjusted
LIBOR rate and has the ability and intent to continue to use this rate on its hedged borrowings. A commitment fee
will be charged on the unused portion of the term loan, payable in arrears. The initial commitment fee rate is 0.200%
per annum. Under the terms of the term loan, the interest rate spread and commitment fee will be based on the
Company’s credit rating. The term loan terminates on October 5, 2011.
The interest rates on borrowings under the revolving credit facility will be based, at the Company’s option, on
an adjusted LIBOR rate, plus a margin, or an alternate base rate, plus a margin. The current margin is 0.75% and
0.0% per annum for the adjusted LIBOR and alternate base rate borrowings, respectively. The Company has elected
to use the 90-day adjusted LIBOR rate and has the ability and intent to continue to use this rate on its hedged
borrowings. A commitment fee will be charged on the unused portion of the revolver, payable in arrears. The current
commitment fee rate is 0.150% per annum. Under the terms of the revolving credit facility, the interest rate spread
and commitment fee will be based on the Company’s credit rating. The revolving facility terminates on October 5,
2011.
The term loan and revolving credit facility are fully and unconditionally guaranteed by Advance Auto Parts,
Inc. The Company’s debt agreements collectively contain covenants restricting the ability of the Company and its
subsidiaries to, among other things, (1) create, incur or assume additional debt (including hedging arrangements), (2)
incur liens or engage in sale-leaseback transactions, (3) make loans and investments, (4) guarantee obligations, (5)
engage in certain mergers, acquisitions and asset sales, (6) change the nature of the Company’s business and the
business conducted by its subsidiaries and (7) change the holding company status of the Company. The Company is
required to comply with financial covenants with respect to a maximum leverage ratio and a minimum consolidated
coverage ratio. The revolving credit facility also provides for customary events of default, including non-payment
defaults, covenant defaults and cross-defaults to the Company’s other material indebtedness. The Company was in
compliance with these covenants at December 29, 2007.
At December 29, 2007, the aggregate future annual maturities of long-term debt instruments are as follows:
2008 610$
2009 740
2010 704
2011 501,662
2012 742
Thereafter 1,214
505,672$
F-23