Lumber Liquidators 2007 Annual Report Download - page 63

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On November 15, 2007 the Company paid $6,601 to retire the principal balance of Consolidated Term Note,
which included monthly interest accrued to that date. The Consolidated Term Note had required 60 equal
monthly principal payments through scheduled expiration in March 2011, and bore interest payable monthly in
arrears, at the 30-Day London Interbank Offer Rate (“LIBOR”) + 0.90%.
The Company entered into a new revolving credit agreement (or “2007 Revolver”) to replace the existing
revolving line of credit (the “2006 Revolver”), which provided for borrowings up to $10,000 and was set to
expire on May 31, 2008. The 2007 Revolver provides for borrowings up to $25,000 and expires on August 10,
2012. The 2007 Revolver is primarily used to fund inventory purchases, including the support of up to $5,000 for
letters of credit, and for general operations. The 2007 Revolver is secured by the Company’s inventory, has no
mandated payment provisions and the Company pays a fee of 0.125% per annum, which may be increased in the
future based on financial performance criteria, on any unused portion of the 2007 Revolver. Amounts outstanding
under the 2007 Revolver would be subject to an interest rate of LIBOR (reset on the 10th of the month) + 0.50%,
which may increase based on financial performance criteria. The 2006 Revolver bore interest at the 30-Day
LIBOR + 0.90%, and the Company paid a fee of 0.25% on any unused portion. The Company had outstanding
commitments under letters of credit of $262 at December 31, 2007 and $24,738 was available to borrow. The
Revolver has certain defined covenants and restrictions, including the maintenance of certain defined financial
ratios. The Company is in compliance with these financial covenants at December 31, 2007.
Interest payments totaled $679, $672 and $574 in 2007, 2006 and 2005, respectively.
NOTE 5. LEASES
The Company leases all store locations, the Corporate Headquarters and certain transportation equipment.
The store location leases are operating leases and generally have five-year base periods with multiple five-year
renewal periods.
The Founder is also the sole owner of ANO LLC, DORA Real Estate Company, LLC and Wood on Wood
Road, Inc., and he has a 50% membership interest in BMT Holdings, LLC (collectively, “ANO and Related
Companies”). As of December 31, 2007 and 2006, the Company leased 26 of its locations from ANO and
Related Companies representing 22.4% and 28.6% of the total number of store leases in operation, respectively.
As of December 31, 2005 the Company leased 23 of its locations from ANO and Related Companies,
representing 30.3% of the total number of store leases in operation. In addition, the Company leases the
Corporate Headquarters from ANO LLC under an operating lease with a base period through December 31,
2019.
Rental expense for 2007, 2006 and 2005 was $6,853, $5,213 and $4,425, respectively, with rental expense
attributable to ANO and Related Companies of $2,529, $2,261 and $2,110, respectively.
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