Family Dollar 2012 Annual Report Download - page 58

indebtedness. The Company may redeem the 2021 Notes in whole at any time or in part from time to time, at the
option of the Company, subject to a make-whole premium. In addition, upon the occurrence of certain change of
control triggering events, the Company may be required to repurchase the 2021 Notes, at a price equal to 101%
of their principal amount, plus accrued and unpaid interest to the date of repurchase.
On September 27, 2005, the Company obtained $250 million through a private placement of unsecured senior
notes due September 27, 2015 (the “2015 Notes”), to a group of institutional accredited investors. The 2015
Notes were issued in two tranches at par and rank pari passu in right of payment with the Company’s other
unsecured senior indebtedness. The first tranche has an aggregate principal amount of $169 million, is payable in
a single installment on September 27, 2015, and bears interest at a rate of 5.41% per annum from the date of
issuance. The second tranche has an aggregate principal amount of $81 million, matures on September 27, 2015,
with amortization commencing on September 27, 2011, and bears interest at a rate of 5.24% per annum from the
date of issuance. The second tranche has a required principal payment of $16.2 million on September 27, 2011,
and on each September 27 thereafter to and including September 27, 2015. Interest on the 2015 Notes is payable
semi-annually in arrears on the 27th day of March and September of each year. The 2015 Notes contain certain
restrictive financial covenants, which include a consolidated debt to consolidated total capitalization ratio, a fixed
charge coverage ratio, and a priority debt to consolidated net worth ratio. As of August 25, 2012, the Company
was in compliance with all such covenants.
On November 17, 2010, the Company amended the 2015 Notes to remove the subsidiary co-borrower and all
subsidiary guarantors.
Credit Facilities
On November 17, 2010, the Company entered into a new four-year unsecured revolving credit facility with a
syndicate of lenders for borrowings of up to $400 million. The credit facility matures on November 17, 2014, and
provides for two, one-year extensions that require lender consent. Any borrowings under the credit facility accrue
interest at a variable rate based on short-term market interest rates. The credit facility replaced the previous
364-day $250 million unsecured revolving credit facility.
On August 17, 2011, the Company entered into a new five-year unsecured revolving credit facility with a
syndicate of lenders for borrowings of up to $300 million. The credit facility matures on August 17, 2016, and
provides for two, one-year extensions that require lender consent. Any borrowings under the credit facility accrue
interest at a variable rate based on short-term market interest rates. The credit facility replaced the Company’s
previous five-year $200 million unsecured credit facility.
During fiscal 2012, the Company borrowed $362.3 million under the credit facilities at a weighted-average
interest rate of 1.6%. As of August 25, 2012, the Company had $15.0 million in outstanding borrowings under
the credit facilities. There were no outstanding borrowings under the credit facilities as of August 27, 2011. The
credit facilities contain certain restrictive financial covenants, which include a consolidated debt to consolidated
total capitalization ratio, a fixed charge coverage ratio, and a priority debt to consolidated net worth ratio. As of
August 25, 2012, the Company was in compliance with all such covenants.
6. Sale-Leaseback Transactions
During fiscal 2012, the Company completed two sale-leaseback transactions under which it sold a total of 276
stores to unrelated third parties. Net proceeds from these sales were $359.7 million. Concurrent with these sales,
the Company entered into agreements to lease the properties back from the purchasers over an initial lease terms
of 15 years. The master leases for the 276 stores includes an initial term of 15 years and four, five-year renewal
options and provides for the Company to evaluate each store individually upon certain events during the life of
the lease, including individual renewal options. The Company classified these leases as operating leases, actively
uses the leased properties and considers the leases as normal leasebacks for accounting purposes. The Company
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