Family Dollar 2013 Annual Report Download - page 35

Company deferred a gain of approximately $171.6 million realized on the sale of the stores and will amortize the
gain over the initial lease term.
Concurrent with these sales, we entered into agreements to lease the properties back from the purchasers
over an initial lease term of 15 years upon completion of construction. The master leases for each transaction
include 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 classifies these leases as operating leases, actively uses the leased properties and considers the leases
as normal leasebacks under ASC 840.
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.
As of August 31, 2013, the Company had no outstanding borrowings under the credit facilities. As of
August 25, 2012, the Company had $15.0 million in outstanding borrowings under the credit facilities. During
fiscal 2013, the Company had an average daily outstanding balance of $141.5 million at an annualized weighted-
average interest rate of 1.5% under its unsecured revolving credit facilities. 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 31, 2013, the Company
was in compliance with all such covenants.
Long-Term Debt
On January 28, 2011, the Company issued $300 million of 5.00% unsecured senior notes due February 1,
2021 (the “2021 Notes”), through a public offering. The Company’s proceeds were approximately
$298.5 million, net of an issuance discount of $1.5 million. In addition, the Company incurred issuance costs of
approximately $3.3 million. Both the discount and issuance costs are being amortized to interest expense over the
term of the 2021 Notes. Interest on the 2021 Notes is payable semiannually in arrears on the 1st day of February
and August of each year, commencing on August 1, 2011. The 2021 Notes rank pari passu in right of payment
with the Company’s other unsecured senior indebtedness and will be senior in right of payment to any
subordinated 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,
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