Pep Boys 2008 Annual Report Download - page 117

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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)
that the Company’s availability under its revolving credit agreement drops below $52,500 the Company
is required to maintain a consolidated fixed charge coverage ratio, of at least 1.1:1.0, calculated as the
ratio of (a) EBITDA (net income plus interest charges, provision for taxes, depreciation and
amortization expense, non-cash stock compensation expenses and other non-recurring, non-cash items)
minus capital expenditures and income taxes paid to (b) the sum of debt service charges and restricted
payments made. The failure to satisfy this covenant would constitute an event of default under the
Company’s revolving credit agreement, which would result in a cross-default under the Company’s 7.5%
Senior Subordinated Notes and Senior Secured Term Loan.
As of January 31, 2009, the Company had additional availability under the revolving credit
agreement of approximately $182,115 and was in compliance with its financial covenants.
Other Contractual Obligations
In the third quarter of fiscal 2004, the Company entered into a vendor financing program with an
availability of $20,000. Under this program, the Company’s factor made accelerated and discounted
payments to its vendors and the Company, in turn, made regularly-scheduled full vendor payments to
the factor. This program was terminated effective December, 2007.
On June 29, 2007, we entered into a new vendor financing program with availability up to $65,000.
The availability was subsequently reduced and as of January 31, 2009 the availability was $40,000.
There was an outstanding balance of $31,930 and $14,254 under this program as of January 31, 2009
and February 2, 2008, respectively.
The Company has letter of credit arrangements in connection with its risk management, import
merchandising and vendor financing programs. The Company was contingently liable for $354 and $691
in outstanding import letters of credit and $86,502 and $63,477 in outstanding standby letters of credit
as of January 31, 2009 and February 2, 2008, respectively.
The Company is also contingently liable for surety bonds in the amount of $9,235 and $6,598 as of
January 31, 2009 and February 2, 2008, respectively. The surety bonds guarantee certain of our
payments (for example utilities, easement repairs, licensing requirements and customs fees).
The annual maturities of all long-term debt and capital lease commitments for the next five fiscal
years are:
Long-Term Capital Lease Financing
Year Debt Leases Obligation Total
2009 ............................... $ 1,078 $129 $ 247 $ 1,454
2010 ............................... 1,078 — 258 1,336
2011 ............................... 1,078 — 269 1,347
2012 ............................... 1,078 — 281 1,359
2013 ............................... 146,482 — 294 146,776
Thereafter ........................... 198,397 — 3,166 201,563
Total ............................... $349,191 $129 $4,515 $353,835
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