Pep Boys 2006 Annual Report Download - page 57

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Long-term Debt
On January 27, 2006 the Company entered into a $200,000,000 Senior Secured Term Loan facility due
January 27, 2011. This facility is secured by the real property and improvements associated with 154 of the
Company’s stores. Interest at the rate of London Interbank Offered Rate (LIBOR) plus 3.0% on this
facility was payable by the Company starting in February 2006. Proceeds from this facility were used to
satisfy and discharge the Company’s then outstanding $43,000,000 6.88% Medium Term Notes due
March 6, 2006 and $100,000,000 6.92% Term Enhanced Remarketable Securities (TERMS) due July 7,
2016 and to reduce borrowings under the Company’s line of credit by approximately $39,000,000.
On October 30, 2006, the Company amended and restated the Senior Secured Term Loan facility to
(i) increase the size from $200,000,000 to $320,000,000, (ii) extend the maturity from January 27, 2011 to
October 27, 2013, (iii) reduce the interest rate from LIBOR plus 3.00% to LIBOR plus 2.75%. An
additional 87 stores (bringing the total to 241 stores) were added to the collateral pool securing the facility.
Proceeds were used to satisfy and discharge $119,000,000 in outstanding 4.25% convertible Senior Notes
due June 1, 2007.
On February 15, 2007, the Company further amended the Senior Secured Term Loan facility to
reduce the interest rate from LIBOR plus 2.75% to LIBOR plus 2.00%.
Upon maturity on June 1, 2005, the Company retired the remaining $40,444,000 aggregate principal
amount of its 7.0% Senior Notes with cash from operations and its existing line of credit.
On December 14, 2004, the Company issued $200,000,000 aggregate principal amount of 7.5% Senior
Subordinated Notes due December 15, 2014.
On December 2, 2004, the Company further amended its amended and restated line of credit
agreement. The amendment increased the amount available for borrowings to $357,500,000, with an
ability, upon satisfaction of certain conditions, to increase such amount to $400,000,000. The amendment
also reduced the interest rate under the agreement to LIBOR plus 1.75% (after June 1, 2005, the rate
decreased to LIBOR plus 1.50%, subject to 0.25% incremental increases as excess availability falls below
$50,000,000). The amendment also provided the flexibility, upon satisfaction of certain conditions, to
release up to $99,000,000 of reserves required as of December 2, 2004 under the line of credit agreement
to support certain operating leases. This reserve was $73,912,000 on February 3, 2007. Finally, the
amendment extended the term of the agreement through December 2009. The weighted average interest
rate on borrowings under the line of credit agreement was 7.67 % and 6.2% at February 3, 2007 and
January 28, 2006, respectively.
The other notes payable have a principal balance of $268,000 and $1,315,000 and a weighted average
interest rate of 8.0% and 5.1% at February 3, 2007 and January 28, 2006, respectively, and mature at
various times through August 2016. Certain of these notes are collateralized by land and buildings with an
aggregate carrying value of approximately $1,774,000 and $6,744,000 at February 3, 2007 and January 28,
2006, respectively.
Other Contractual Obligations
In the third quarter of fiscal 2004, the Company entered into a vendor financing program with an
availability of $20,000,000. Under this program, the Company’s factor makes accelerated and discounted
payments to its vendors and the Company, in turn, makes its regularly-scheduled full vendor payments to
the factor. As of February 3, 2007 and January 28, 2006, there was an outstanding balance of $13,990,000
and $11,156,000, respectively, under this program, classified as trade payable program liability in the
consolidated balance sheet.