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Long-Term Debt | 12 Months Ended
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Sep. 29, 2012
Long-Term Debt [Abstract] |
Long-Term Debt | 7. Long-Term Debt Long-term debt and short-term loans are summarized as follows:
|  | 2012 |  |  | 2011 |
Bonds payable: |  |  |  |  |  |  |  |
Senior notes, interest rate of 8.875%, maturing 2017 |  | $ | 575,000,000 |  |  | $ | 575,000,000 |
Unamortized original issue discount on senior notes |  |  | (11,449,429 | ) |  |  | (13,930,554 | )
Recovery Zone Facility Bonds, maturing 2036 |  |  | 99,740,000 |  |  |  | 99,740,000 |
Outstanding line of credit, weighted average interest rate of 3.99% |  |  | 40,120,642 |  |  |  | — |
Notes payable: |  |  |  |  |  |  |  |
Real estate and equipment maturing 2013-2031: |  |  |  |  |  |  |  |
Due to banks, weighted average interest rate of 3.21% for 2012 and 3.75% for 2011 |  |  | 82,356,556 |  |  |  | 104,882,954 |
Due to other financial institutions, weighted average interest rate of 3.82% for 2012 and 5.17% for 2011 |  |  | 49,400,744 |  |  |  | 89,427,336 |
Total long-term debt |  |  | 835,168,513 |  |  |  | 855,119,736 |
Less current portion |  |  | 49,928,264 |  |  |  | 34,375,989 |
Long-term debt, net of current portion |  | $ | 785,240,249 |  |  | $ | 820,743,747 |
In May 2009, the Company issued $575.0 million aggregate principal amount of senior notes due in 2017 (the “Notes”) in a private placement. Subsequent to the private placement, the Company filed a registration statement with the Securities and Exchange Commission to exchange private placement notes with registered notes. The Notes bear an interest rate of 8.875% per annum and were issued at a discount to yield 9.5% per annum. 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. At September 29, 2012 the Company had $40.1 million of borrowing outstanding under the line 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 line allows the Company to issue up to $30.0 million in unused letters of credit, of which $8.2 million of unused letters of credit were issued at September 29, 2012. 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 received disbursements from the account as it submitted requisitions to the trustee for incurred Project costs. The account with the Bond trustee was listed in the line item “Restricted investments” on the Condensed Consolidated Balance Sheets and consisted of money market deposits and United States Treasury securities. All funds had disbursed from the trust account as of September 29, 2012. Prior to that time, these investments were classified as available-for-sale and were 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 2, 2018, 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 2, 2018. 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 was provided 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 29, 2012. 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 29, 2012, property and equipment with an undepreciated cost of approximately $310 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:
|  | 2012 |  |  | 2011 |  |  | 2010 |
Total interest costs |  | $ | 61,764,642 |  |  | $ | 63,554,139 |  |  | $ | 66,136,749 |
Interest capitalized |  |  | (1,738,078 | ) |  |  | (1,588,384 | ) |  |  | (1,283,110 | )
Interest expense |  | $ | 60,026,564 |  |  | $ | 61,965,755 |  |  | $ | 64,853,639 |
Maturities of long-term debt at September 29, 2012 are as follows:
Fiscal Year |
2013 |  | $ | 52,409,389 |
2014 |  |  | 9,848,985 |
2015 |  |  | 9,710,606 |
2016 |  |  | 50,009,031 |
2017 |  |  | 583,333,380 |
Thereafter |  |  | 141,306,550 |
Total |  | $ | 846,617,941 |

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 + Details
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