Advance Auto Parts 2009 Annual Report Download - page 50

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37
New Accounting Pronouncements
For a description of recently announced accounting standards, including the expected dates of adoption and
estimated effects, if any, on our consolidated financial statements, see New Accounting Pronouncements in Note 2 to
the Consolidated Financial Statements in this Report on Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures about Market Risks.
We are exposed to cash flow risk due to changes in interest rates with respect to our long-term bank debt as a
result of the movements in LIBOR. Our long-term bank debt consists of borrowings under a revolving credit facility
and a term loan. While we cannot predict the impact interest rate movements will have on our bank debt, exposure
to rate changes is managed through the use of hedging activities.
Our future exposure to interest rate risk is mitigated by utilizing interest rate swaps. At January 2, 2010, our
outstanding swaps fixed our LIBOR on an aggregate of $275 million of hedged debt at interest rates ranging from
4.01% to 4.98%. All of the swaps expire in October 2011.
The table below presents principal cash flows and related weighted average interest rates on our long-term bank
debt outstanding at January 2, 2010, by expected maturity dates. Additionally, the table includes (i) the notional
amounts of our hedged debt, and (ii) the impact of the anticipated average pay and receive rates of our interest rate
swaps through their maturity dates. Expected maturity dates approximate contract terms. Weighted average variable
rates are based on implied forward rates in the yield curve at January 2, 2010. Implied forward rates should not be
considered a predictor of actual future interest rates.
Fair
Fiscal Fiscal Fiscal Fiscal Fiscal Market
2010 2011 2012 2013 2014 Thereafter Total Liability
Long-term bank debt: (dollars in thousands)
Variable rate -$ 200,000$ -$ -$ -$ -$ 200,000$ 195,000$
(1)
Weighted average
interest rate 1.7% 3.0% - - - - 2.1% -
Interest rate swap:
Variable to fixed
(2)
275,000$ 275,000$ -$ -$ - - 275,000 17,344$
Weighted average pay rate 4.1% 2.8% - - - - 3.5% -
Weighted average receive rate - - - - - - - -
(1) The fair value of our bank debt is approximated based on similar issues available to us as of January 2, 2010.
(2) Amounts presented may not be outstanding for the entire year.
Item 8. Financial Statements and Supplementary Data.
See financial statements included in Item 15 “Exhibits, Financial Statement Schedules” of this annual report.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.