Advance Auto Parts 2012 Annual Report Download - page 66

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F-21
Debt Guarantees
Certain 100% wholly-owned domestic subsidiaries of Stores, including its Material Subsidiaries (as defined in the Facility)
serve as guarantors of the Notes and Facility with Advance also serving as a guarantor of the Facility. The subsidiary
guarantees related to the Company’s Notes and Facility are full and unconditional and joint and several, and there are no
restrictions on the ability of Advance to obtain funds from its subsidiaries. Also, Advance has no independent assets or
operations, and the subsidiaries not guaranteeing the Notes and Facility are minor as defined by SEC regulations.
Future Payments
At December 29, 2012, the aggregate future annual maturities of long-term debt instruments are as follows:
Fiscal
Year Amount
2013 $ 627
2014 524
2015 5,000
2016 —
2017 —
Thereafter 598,937
$ 605,088
7. Derivative Instruments and Hedging Activities:
From September 2011 through January 2012, the Company executed a series of forward treasury rate locks in anticipation
of the issuance of the 2022 Notes. The treasury rate locks, which were derivative instruments, were designated as cash flow
hedges to offset the Company's exposure to increases in the underlying U.S. Treasury benchmark rate. This rate was used to
establish the fixed interest rate for 2022 Notes which was comprised of the underlying U.S. Treasury benchmark rate, plus a
credit spread premium. Upon issuance of the 2022 Notes, the cumulative change in fair market value of the treasury rate locks
was not significant due to the narrow margin between the lock rate and the underlying treasury rate.
The Company's previously outstanding interest rate swaps matured on October 5, 2011. The Company had entered into
these interest rate swaps as a hedge to the variable rate interest payments on its bank debt. Effective April 24, 2010, the
Company’s outstanding interest rate swaps no longer qualified for hedge accounting as a result of the Company’s intent to pay
off its bank debt with the proceeds from the offering of the 2020 Notes. Accordingly, the Company recorded all subsequent
changes in the fair value of the interest rate swaps through earnings and amortized to interest expense the remaining balance of
previously recorded unrecognized loss in accumulated other comprehensive income over the remaining life of the swaps.
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on
the condensed consolidated balance sheet as of December 29, 2012 and December 31, 2011:
Balance Sheet
Location
Fair Value as of
December 29, 2012
Fair Value as of
December 31, 2011
Derivatives designated as hedging
instruments:
Treasury rate locks Accrued expenses $ — $ 4,986
ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 29, 2012, December 31, 2011 and January 1, 2011
(in thousands, except per share data)