Pep Boys 2008 Annual Report Download - page 115

THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended January 31, 2009, February 2, 2008 and February 3, 2007
(dollar amounts in thousands, except share data)
NOTE 2—DEBT AND FINANCING ARRANGEMENTS
LONG-TERM DEBT
January 31, February 2,
2009 2008
7.50% Senior Subordinated Notes, due December 2014 .................. $174,535 $200,000
Senior Secured Term Loan, due October 2013 ......................... 150,794 154,652
Other notes payable, 8.0% ....................................... — 248
Lease financing obligations, payable through October 2022 ............... 4,515 4,786
Capital lease obligations payable through October 2009 .................. 129 399
Line of credit agreement, through December 2009 ...................... — 42,045
Line of credit agreement, through January 2014 ....................... 23,862 —
353,835 402,130
Less current maturities ......................................... 1,453 2,114
Total Long-Term Debt .......................................... $352,382 $400,016
Senior Secured Term Loan Facility due October, 2013
On January 27, 2006 the Company entered into a $200,000 Senior Secured Term Loan facility due
January 27, 2011. This facility is secured by a collateral pool consisting of real property and
improvements associated with Company stores, which is adjusted periodically based upon real estate
values and borrowing levels. Interest at the rate of London Interbank Offered Rate (LIBOR) plus
3.0% on this facility was payable starting in February 2006. Proceeds from this facility were used to
satisfy and discharge the Company’s then outstanding $43,000 6.88% Medium Term Notes due
March 6, 2006 and $100,000 6.92% Term Enhanced Remarketable Securities (TERMS) due July 7,
2016 and to reduce borrowings under our line of credit by approximately $39,000.
On October 27, 2006, the Company amended and restated the Senior Secured Term Loan facility
to (i) increase the size from $200,000 to $320,000, (ii) extend the maturity from January 27, 2011 to
October 27, 2013 and (iii) reduce the interest rate from LIBOR plus 3.00% to LIBOR plus 2.75%.
Proceeds were used to satisfy and discharge $119,000 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%.
On November 27, 2007, the Company sold the land and buildings for 34 owned properties to an
independent third party. The Company used $162,558 of the net proceeds to prepay a portion of the
Senior Secured Term Loan facility. This prepayment reduced the principal amount of the facility to
$155,000 and reduced the scheduled quarterly repayments from $800 to $391. In addition the
prepayment resulted in the recognition in interest expense of approximately $5,900 of deferred
financing fees and the reclassification from other comprehensive loss for the portion of the related
interest rate swap that is no longer designated as a hedge.
As of January 31, 2009, the number of stores which collateralize the Senior Secured Term Loan
was reduced to 101 properties. The outstanding balance under the Term loan at the end of fiscal year
2008 was $150,794. The $3,858 decline in the outstanding balance was due to quarterly principal
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