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Long-Term Debt

12 Months Ended

Sep. 24, 2011

6. Long-Term Debt

Long-term debt and short-term loans are summarized as follows:


	2011			2010
Bonds payable:
Senior notes, interest rate of 8.875%, maturing 2017	$	575,000,000		$	575,000,000
Unamortized original issue discount on senior notes		(13,930,554	)		(16,411,679	)
Recovery Zone Facility Bonds, maturing 2017		99,740,000			—
Notes payable:
Real estate and equipment maturing 2012-2030:
Due to banks, weighted average interest rate of 3.75% for 2011 and 4.63% for 2010		104,882,954			130,448,707
Due to other financial institutions, weighted average interest rate of 5.17% for 2011 and 6.41% for 2010		89,427,336			128,461,975

Total long-term debt		855,119,736			817,499,003
Less current portion		34,375,989			92,184,965

Long-term debt, net of current portion	$	820,743,747		$	725,314,038

In May 2009, the Company issued $575.0 million aggregate principal amount of senior notes due in 2017 (the "Notes") in a private placement. The Notes bear an interest rate of 8.875% per annum and were issued at a discount to yield 9.5% per annum. Note proceeds were used to pay off $349.8 million aggregate principal amount of senior subordinated debt maturing in 2011, pay off $45.3 million of indebtedness outstanding under the Company's committed lines of credit, pay off $77.7 million of secured indebtedness, and pay costs related to the offering of the Notes. Remaining Note proceeds will be used for general corporate purposes, including future capital expenditures. In connection with the issuance of the Notes, the Company paid $6.8 million in debt extinguishment costs and expensed $3.4 million of unamortized loan costs.

The Company may redeem all or a portion of the Notes at any time on or after May 15, 2013 at the following redemption prices (expressed as percentages of the principal amount), if redeemed during the 12-month period beginning May 15 of the years indicated below:


Year
2013	104.438	%
2014	102.219	%
2015 and thereafter	100.000	%

In connection with the offering of the Notes, the Company entered into a new three-year $175.0 million line of credit and terminated three other lines of credit.

The line of credit provides the Company with various interest rate options based on the prime rate, the Federal Funds Rate, or the London Interbank Offering Rate ("LIBOR"), plus a credit spread. The lines allow the Company to issue up to $30.0 million in unused letters of credit, of which $8.8 million of unused letters of credit were issued at September 24, 2011. There were no amounts outstanding on the line of credit at September 24, 2011. The Company is not required to maintain compensating balances in connection with the line of credit.

On December 29, 2010, the Company completed the funding of $99.7 million of Recovery Zone Facility Bonds (the "Bonds") for: (A) acquisition, construction and equipping of an approximately 830,000 square foot new warehouse and distribution center and a new grocery store to be located in Buncombe County, North Carolina (the "Project"), and (B) the payment of certain expenses incurred in connection with the issuance of the Bonds. The final maturity date of the Bonds is January 1, 2036.

Bond proceeds were invested in a trust account with the Bond trustee. The Company receives disbursements from the account as it submits requisitions to the trustee for incurred Project costs. The account with the Bond trustee is listed in the line item "Restricted investments" on the Condensed Consolidated Balance Sheets and consists of money market deposits and United States Treasury securities which mature no later than September 2012. These investments are classified as available-for-sale and are stated at market value.

The Bonds were issued by the Buncombe County Industrial Facilities and Pollution Control Financing Authority and were purchased by certain financial institutions. Under a Continuing Covenant and Collateral Agency Agreement (the "Covenant Agreement") between the financial institutions and the Company, the financial institutions will hold the Bonds until January 1, 2017, subject to certain events. Mandatory redemption of the Bonds by the Company in the annual amount of $4,530,000 begins on January 1, 2014. The Company may redeem the Bonds without penalty or premium at any time prior to January 1, 2017.

Interest earned by bondholders on the Bonds is exempt from Federal and North Carolina income taxation. Initially, the interest rate on the Bonds is equal to one month LIBOR (adjusted monthly) plus a credit spread, adjusted to reflect the income tax exemption.

The Company's obligation to repay the Bonds is collateralized by the Project. Additional collateral may be required in order to meet certain loan to value criteria in the Covenant Agreement. The Covenant Agreement incorporates substantially all financial covenants included in the line of credit.

Also on December 29, 2010, the Company executed an amendment to extend the maturity of the line of credit from May 12, 2012 to December 29, 2015. All other terms of the line of credit remain in place.

The Notes, the Bonds and the line of credit contain provisions that under certain circumstances would permit lending institutions to terminate or withdraw their respective extensions of credit to the Company. Included among the triggering factors permitting the termination or withdrawal of the line of credit to the Company are certain events of default, including both monetary and non-monetary defaults, the initiation of bankruptcy or insolvency proceedings, and the failure of the Company to meet certain financial covenants designated in its respective loan documents. The Company was in compliance with all financial covenants at September 24, 2011.

The Company's long-term debt agreements generally have cross-default provisions which could result in the acceleration of payments due under the Company's line of credit, Bonds, and Notes indenture in the event of default under any one instrument.

At September 24, 2011, property and equipment with an undepreciated cost of approximately $335 million was pledged as collateral for long-term debt. Long-term debt and line of credit agreements contain various restrictive covenants requiring, among other things, minimum levels of net worth and maintenance of certain financial ratios. In addition, certain loan agreements containing provisions outlining minimum tangible net worth requirements restrict the ability of the Company to pay cash dividends in excess of the current annual per share dividends paid on the Company's Class A and Class B Common Stock. Further, the Company is prevented from paying cash dividends at any time that it is in default under the indenture governing the Notes. In addition, the terms of the indenture may restrict the ability of the Company to pay additional cash dividends based on certain financial parameters.

Components of interest costs are as follows:


	2011			2010			2009
Total interest costs	$	63,554,139		$	66,136,749		$	61,643,076
Interest capitalized		(1,588,384	)		(1,283,110	)		(2,583,728	)

Interest expense	$	61,965,755		$	64,853,639		$	59,059,348

Maturities of long-term debt at September 24, 2011 are as follows:


Fiscal Year
2012	$	34,375,989
2013		57,235,323
2014		15,824,748
2015		7,685,256
2016		7,969,459
Thereafter		732,028,961

Total	$	855,119,736