Pep Boys 2007 Annual Report Download - page 67

reclassification from other comprehensive loss for the portion of the related interest rate swap that is
no longer designated as a hedge. The number of stores in the collateral pool, which secures the facility,
was simultaneously reduced by 136 stores (bringing the total remaining collateral to 105 stores with an
estimated fair market value of approximately $310,000,000).
Senior Subordinated Notes due December, 2014
On December 14, 2004, we issued $200,000,000 aggregate principal amount of 7.5% Senior
Subordinated Notes due December 15, 2014.
Line of Credit Agreement due December, 2009
On December 2, 2004, we further amended our 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 $73,924,000 on February 2, 2008.
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 7.51% and 7.67% at
February 2, 2008 and February 3, 2007, respectively.
Other Notes
We also have other notes payable with aggregate principal balances of $248,000 and $268,000 and
a weighted average interest rates of 8.0% and 8.0% at February 2, 2008 and February 3, 2007,
respectively. These notes mature at various times through August 2016. Certain of these notes are
collateralized by land and buildings with an aggregate carrying value of approximately $1,773,000 and
$1,774,000 at February 2, 2008 and February 3, 2007, respectively.
Other Matters
Several of the Company’s debt agreements require the maintenance of certain financial ratios and
compliance with covenants. The most restrictive of these covenants, an EBITDA requirement, is
triggered if the Company’s availability under its line of credit agreement drops below $50,000,000. As
of February 2, 2008 the Company had an additional availability of approximately $131,000,000 under its
line of credit, and was in compliance with all covenants contained in its debt agreements.
Other Contractual Obligations
In the third quarter of fiscal 2004, we entered into a vendor financing program with an availability
of $20,000,000. Under this program, our factor made accelerated and discounted payments to our
vendors and we, in turn, made our regularly-scheduled full vendor payments to the factor. This
program was terminated effective December, 2007. As of February 2, 2008 and February 3, 2007, there
was an outstanding balance of $0 and $13,990,000, respectively, under this program, classified as trade
payable program liability in the consolidated balance sheet.
On June 29, 2007, we entered into a new vendor financing program with an availability up to
$65,000,000. There was an outstanding balance of $14,254,000 under this program as of February 2,
2008.
We have letter of credit arrangements in connection with our risk management, import
merchandising and vendor financing programs. We were contingently liable for $691,000 and $487,000
in outstanding import letters of credit and $63,477,000 and $55,708,000 in outstanding standby letters of
credit as of February 2, 2008 and February 3, 2007, respectively.
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10-K