Lumber Liquidators 2007 Annual Report Download - page 48

Senior Secured Loan Agreement
In March 2006, we entered into an amended and restated senior secured loan agreement with Bank of
America, N.A., and we amended it in July 2006. The agreement included a term loan with an original principal
amount of $9.9 million. On November 15, 2007, we used $6.6 million of the net IPO proceeds to retire the
principal balance of the term loan and interest accrued to date. The term loan had required principal payments in
60 equal monthly installments through scheduled expiration in March 2011, and bore interest, payable monthly
in arrears, at the 30-Day LIBOR plus 0.90%. This senior secured loan agreement also included a revolving credit
facility that initially permitted borrowings of up to $5.0 million, amended in July 2006 to increase the maximum
borrowings to $10.0 million. That facility was replaced by a new revolving credit agreement in August 2007.
Conversion of Preferred Stock
In connection with our IPO, funds managed by TA Associates converted 7,952,018 shares of series A
convertible preferred stock, par value $0.01, to shares of common stock, par value $0.001, on a one-to-one basis
on November 8, 2007. These shares had been purchased in December 2004 for $35.0 million.
Related Party Transactions
See the discussion of related party transactions in Note 5 and Note 10 to the financial statements included in
Item 8 of this report and within Related Party Transactions and Lease Arrangements in Item 13 of this report.
Contractual Commitments and Contingencies
Our significant contractual obligations and commitments as of December 31, 2007 are summarized in the
following table:
Payments Due by Period
Total
Less Than
1 Year
1to3
Years
3to5
Years 5+ Years
(in thousands)
Contractual obligations
Operating lease obligations(1) ........................ $46,537 $7,980 $13,644 $8,893 $16,020
Other notes payable ................................. 62 62 — — —
Capital lease obligations, including interest .............. 61 61 — — —
Supplier purchase commitments(2) .................... — — — — —
Total contractual obligations .......................... $46,660 $8,103 $13,644 $8,893 $16,020
(1) Included in this table is the base period or current renewal period for our operating leases. The operating
leases generally contain varying renewal provisions.
(2) We have one long-term purchase agreement with a merchant vendor that we entered into in July 2006 that
requires us to purchase approximately 27 million square feet of the vendor’s assorted products over a four-
year period, with the unit prices set at the time a purchase order is created/accepted. Issues have arisen with
regard to the quality of the products provided by the vendor, the vendor’s requests for changes in prices for
the products and the vendor’s failure to honor purchase orders that it had accepted. We are not currently
receiving product under the agreement, and we intend to seek payment for our cover costs relating to
purchase orders that were not delivered. The products ordered from the vendor that are not being delivered
have been purchased from other suppliers and we expect the cover costs to be immaterial.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements or other financing activities with special-purpose
entities.
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