Advance Auto Parts 2008 Annual Report Download - page 48

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legally binding and that specify all material 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 the amount of
diesel fuel required to be purchased by us under certain fixed price fuel supply agreements. All of these
agreements expire in 2009.
(4) Primarily includes employee benefits accruals, restructuring and closed store liabilities and deferred income
taxes for which no contractual payment schedule exists and we expect the payments to occur beyond 12
months from January 3, 2009. Additionally, Other long-term liabilities include $20.6 million of
unrecognized income tax benefits. During the next 12 months, it is possible that we could conclude on
approximately $2 to $3 million of the contingencies associated with these tax uncertainties, a portion of
which may be settled in cash. We do not anticipate any significant impact on our liquidity and capital
resources due to the conclusion of these tax matters.
Long Term Debt
Term Loan
We entered into a $200 million unsecured four-year term loan on December 4, 2007, with our wholly-owned
subsidiary, Advance Stores Company, Incorporated, or Stores, serving as borrower. As of January 3, 2009, we had
borrowed $200 million under this term loan, as compared to borrowings of $50 million as of December 29, 2007.
The entire $200 million of proceeds from this term loan were used to repurchase shares of our common stock under
our stock repurchase program. The term loan terminates on October 5, 2011. Voluntary prepayments and voluntary
reductions of the term loan balance are permitted in whole or in part, at our option, in minimum principal amounts
as specified in the term loan.
The interest rate on the term loan is based, at our option, on an adjusted LIBOR rate, plus a margin, or an
alternate base rate, plus a margin. The current margin is 1.00% and 0.0% per annum for the adjusted LIBOR and
alternate base rate borrowings, respectively. We have elected to use the 90-day adjusted LIBOR rate and have the
ability and intent to continue to use this rate on our hedged borrowings. Under the terms of the term loan, the interest
rate is based on our credit rating.
Revolving Credit Facility
In addition to the term loan, we have a $750 million unsecured five-year revolving credit facility with Stores
serving as the borrower. The revolving credit facility also 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, subject to
agreement by one or more lenders, that the total revolving commitment be increased by an amount not exceeding
$250 million (up to a total commitment of $1 billion) 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 revolving credit facility. The revolving credit facility terminates on
October 5, 2011.
As of January 3, 2009, we had $251.5 million outstanding under our revolving credit facility, and letters of
credit outstanding of $101.3 million, which reduced the availability under the revolving credit facility to $397.2
million. The letters of credit serve as collateral for our self-insurance policies and routine purchase of imported
merchandise. A commitment fee is charged on the unused portion of the revolver, payable in arrears. The current
commitment fee rate is 0.150% per annum.
The interest rate on borrowings under the revolving credit facility is based, at our 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. We have elected to use the 90-day adjusted LIBOR
rate and have the ability and intent to continue to use this rate on our hedged borrowings. Under the terms of the
revolving credit facility, the interest rate (and commitment fee) is based on our credit rating.