Advance Auto Parts 2011 Annual Report Download - page 74

ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
January 1, 2011, January 2, 2010 and January 3, 2009
(in thousands, except per share data)
.
F-20
Senior Unsecured Notes
On April 29, 2010, the Company sold $300,000 aggregate principal amount of 5.75% senior unsecured notes
due May 1, 2020, or the Notes, at a public offering price of 99.587% of the principal amount per note. The parent
company, or Advance, served as the issuer of the Notes with each of Advance’s domestic subsidiaries serving as a
subsidiary guarantor. The terms of the Notes are governed by an indenture and supplemental indenture (collectively
the “Indenture”), dated as of April 29, 2010, among the Company, the subsidiary guarantors and Wells Fargo Bank,
National Association, as Trustee.
The net proceeds from the offering of the Notes were $294,189, after deducting underwriting discounts and
commissions and offering expenses of $4,572 (collectively “deferred financing costs”) payable by the Company.
The Company is amortizing the deferred financing costs over the term of the Notes. The Company used the net
proceeds from this offering to repay indebtedness outstanding under its revolving credit facility and term loan.
Amounts repaid under the Company’s revolving credit facility may be reborrowed from time to time for operational
purposes, working capital needs, capital expenditures and other general corporate purposes.
The Notes bear interest at a rate of 5.75% per year payable semi-annually in arrears on May 1 and November 1
of each year, commencing on November 1, 2010. The Company may redeem some or all of the Notes at any time or
from time to time, at the redemption price described in the Indenture. In addition, in the event of a Change of
Control Triggering Event (as defined in the Indenture), the Company will be required to offer to repurchase the
notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the repurchase
date. The Notes are currently fully and unconditionally guaranteed, jointly and severally, on an unsubordinated and
unsecured basis by each of the subsidiary guarantors. The Company 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
the Company or any of its 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 $25,000
without such debt having been discharged or acceleration having been rescinded or annulled within 10 days after
receipt by the Company 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 the
Company and certain of its 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 the
Company and its subsidiaries to incur debt secured by liens and to enter into sale and lease-back transactions.
Bank Debt
The Company has a $750,000 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 $300,000, and
swingline loans in an amount not to exceed $50,000. The Company may request, subject to agreement by one or
more lenders, that the total revolving commitment be increased by an amount not exceeding $250,000 (up to a total
commitment of $1,000,000) 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. The revolving credit facility matures on October 5,
2011.
As of January 1, 2011, the Company had no amount outstanding under its revolving credit facility, and had
letters of credit outstanding of $92,571, which reduced the availability under the revolving credit facility to
$657,429. (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.