Advance Auto Parts 2013 Annual Report Download - page 74

ADVANCE AUTO PARTS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
December 28, 2013, December 29, 2012 and December 31, 2011
(in thousands, except per share data)
F-22
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 each of the Indentures for the
Notes), 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: (i) upon
the release of the guarantee of the Company’s other debt that resulted in the affected subsidiary becoming a guarantor of this
debt; (ii) upon the sale or other disposition of all or substantially all of the stock or assets of the subsidiary guarantor; or (iii)
upon the Company’s exercise of its legal or covenant defeasance option.
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acceleration having been rescinded or annulled within 10 days after receipt by the Company of notice of the default by the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.
Debt Guarantees
Certain 100% wholly-owned domestic subsidiaries of Stores, including its Material Subsidiaries (as defined in the 2013
Credit Agreement) serve as guarantors of the Notes and 2013 Credit Agreement with Advance also serving as a guarantor of the
2013 Credit Agreement. The subsidiary guarantees related to the Company’s Notes and 2013 Credit Agreement 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 2013 Credit
Agreement are minor as defined by SEC regulations.
Future Payments
As of December 28, 2013, the aggregate future annual maturities of long-term debt instruments are as follows:
Fiscal
Year Amount
2014 $ 916
2015 1,049
2016 —
2017 —
2018 —
Thereafter 1,051,619
$ 1,053,584
8. 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