Advance Auto Parts 2011 Annual Report Download - page 46

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each of the subsidiary guarantors. We will be permitted to release guarantees without the consent of holders of the
Notes under the circumstances described in the Indenture.
The Indenture contains customary provisions for events of default including for (i) failure to pay principal or
interest when due and payable, (ii) failure to comply with covenants or agreements in the Indenture or the Notes and
failure to cure or obtain a waiver of such default upon notice, (iii) a default under any debt for money borrowed by
us or any of our subsidiaries that results in acceleration of the maturity of such debt, or failure to pay any such debt
within any applicable grace period after final stated maturity, in an aggregate amount greater than $25.0 million
without such debt having been discharged or acceleration having been rescinded or annulled within 10 days after
receipt by us of notice of the default by the Trustee or holders of not less than 25% in aggregate principal amount of
the Notes then outstanding, and (iv) events of bankruptcy, insolvency or reorganization affecting us and certain of
our subsidiaries. In the case of an event of default, the principal amount of the Notes plus accrued and unpaid
interest may be accelerated. The Indenture also contains covenants limiting the ability of us and our subsidiaries to
incur debt secured by liens and to enter into sale and lease back transactions.
Bank Debt
We have a $750 million unsecured five-year revolving credit facility with our wholly-owned subsidiary,
Advance Stores Company, Incorporated, or Stores, serving as the borrower. In connection with the offering of the
Notes, we also amended our revolving credit facility to add all of our domestic subsidiaries as guarantors. The
subsidiary guarantees related to our revolving credit facility and Notes are full and unconditional and joint and
several. 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 matures on October 5, 2011.
As of January 1, 2011, we had no amount outstanding under our revolving credit facility. We had letters of
credit outstanding of $92.6 million, which reduced the availability under the revolving credit facility to $657.4
million. (The letters of credit generally have a term of one year or less.) A commitment fee is charged on the unused
portion of the revolving credit facility, payable in arrears. The current commitment fee rate is 0.125% per annum.
Subsequent to January 1, 2011, we borrowed against our revolving credit facility due to the repurchases of our
common stock and seasonality of our business. As of February 26, 2011 we had $145.0 million outstanding under
our revolving credit facility. Our remaining availability under our revolving credit facility was $512.4 million.
Our revolving credit facility contains covenants restricting our ability 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 our business and the business conducted by our subsidiaries and (7) change our status
as a holding company. We are also required to comply with financial covenants with respect to a maximum leverage
ratio and a minimum consolidated coverage ratio. We were in compliance with these covenants at January 1, 2011
and January 2, 2010. Our revolving credit facility also provides for customary events of default, covenant defaults
and cross-defaults to our other material indebtedness.
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 0.625% and 0.0% per annum for
the adjusted LIBOR and alternate base rate borrowings, respectively. Under the terms of the revolving credit facility,
the interest rate and commitment fee are based on our credit rating.
As of January 1, 2011, we had fully repaid all amounts which had been outstanding under our unsecured four-
year term loan with proceeds from the above mentioned Notes offering.