Pep Boys 2009 Annual Report Download - page 110

THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended January 30, 2010, January 31, 2009 and February 2, 2008
(dollar amounts in thousands, except share and per share data)
NOTE 5—DEBT AND FINANCING ARRANGEMENTS (Continued)
7.50% Senior Subordinated Notes, due December 2014
On December 14, 2004, we issued $200,000 aggregate principal amount of 7.50% Senior
Subordinated Notes due December 15, 2014. During fiscal 2009 and 2008, the Company repurchased
notes in the principal amount of $16,970 and $25,465, respectively.
Senior Secured Term Loan Facility, due October 2013
On January 27, 2006, we 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 our 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 our 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, we 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, we 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, we sold the land and buildings for 34 owned properties to an independent
third party. We 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 was
no longer designated as a hedge.
As of January 30, 2010, 126 stores collateralized the Senior Secured Term Loan.
Revolving Credit Agreement, through January 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 with an ability,
upon satisfaction of certain conditions, to increase such amount to $400,000. 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). The amendment also provided the flexibility, upon satisfaction of certain conditions, to
release up to $99,000 of reserves required as of December 2, 2004 under the line of credit agreement
to support certain operating leases. Finally, the amendment extended the term of the agreement
through December 2009. The weighted average interest rate on borrowings under the line of credit
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