Lumber Liquidators 2014 Annual Report Download - page 63

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Lumber Liquidators Holdings, Inc.
Notes to Consolidated Financial Statements
(amounts in thousands, except share data and per share amounts)
Note 2. Property and Equipment
Property and equipment consisted of:
December 31,
2014 2013
Land ............................................ $ 4,937 $ 4,937
Property and Equipment ............................... 51,409 38,401
Computer Software and Hardware ......................... 40,071 38,317
Leasehold Improvements ............................... 30,715 22,230
Assets under Construction .............................. 51,097 8,095
178,229 111,980
Less: Accumulated Depreciation and Amortization .............. 53,362 46,033
Property and Equipment, net ........................... $124,867 $ 65,947
As of December 31, 2014 and 2013, the Company had capitalized $31,230 and $28,391 of computer
software costs, respectively. Amortization expense related to these assets was $3,212, $2,659 and $2,388 for
2014, 2013 and 2012, respectively.
Note 3. Revolving Credit Agreement
A revolving credit agreement (the ‘‘Revolver’’) providing for borrowings up to $50,000 is available to
the Company through expiration on February 21, 2017. The Revolver is primarily available to fund inventory
purchases, including the support of up to $10,000 for letters of credit, and for general operations. During
2014, a total of $53,000 was borrowed against the Revolver, however, there were no outstanding borrowings
against the Revolver at December 31, 2014. As of December 31, 2013 and 2012, there were no outstanding
borrowings against the Revolver. As of December 31, 2014 and 2013, the Revolver supported $2,685 and
$2,289 of letters of credit, respectively. Interest paid was $84 in 2014 and nil in 2013 and 2012. The Revolver
is secured by the Company’s inventory, has no mandated payment provisions and a fee of 0.1% per annum,
subject to adjustment based on certain financial performance criteria, on any unused portion of the Revolver.
Amounts outstanding under the Revolver would be subject to an interest rate of LIBOR plus 1.125%, subject
to adjustment based on certain financial performance criteria. The Revolver has certain defined covenants and
restrictions, including the maintenance of certain defined financial ratios. The Company was in compliance
with these financial covenants at December 31, 2014.
Note 4. Leases
The Company has operating leases for its stores, Corporate Headquarters, Hampton Roads and
West Coast distribution centers, supplemental office facilities and certain equipment. The store location leases
are operating leases and generally have five-year base periods with one or more five-year renewal periods. The
Corporate Headquarters has an operating lease with a base term running through December 31, 2019. The
Hampton Roads distribution centers have operating leases with varied expiration dates ending by March 31,
2015. The West Coast distribution center is an operating lease with a base term running through October 31,
2024.
As of December 31, 2014, 2013 and 2012, the Company leased the Corporate Headquarters, which
includes a store location, and 30, 29 and 27 of its locations, representing 8.8%, 9.4% and 9.7% of the total
number of store leases in operation, respectively, from entities controlled by the Company’s founder and
current chairman of the Board of Directors (‘‘Controlled Companies’’).
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