Pep Boys 2011 Annual Report Download - page 75

fiscal 2011. During fiscal 2010 the Company repurchased Notes in the principal amount of
$10.0 million. On January 28, 2012, the outstanding balance of these Notes was $147.6 million.
Senior Secured Term Loan Facility, due October 2013
Our Senior Secured Term Loan (the ‘‘Term Loan’’) is due October, 2013. 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 accrues at the three
month London Interbank Offered Rate (LIBOR) plus 2.0% on this facility.
As of January 28, 2012, 126 stores collateralized the Senior Secured Term Loan. The outstanding
balance under the Term Loan at the end of fiscal 2011 was $147.6 million. The $1.0 million decline in
the outstanding balance was due to quarterly principal payments of $0.3 million.
Revolving Credit Agreement, through July 2016
On January 16, 2009, we entered into a Revolving Credit Agreement (the ‘‘Agreement’’) with
available borrowings up to $300.0 million and a maturity of January 2014. Total incurred fees of
$6.8 million were capitalized and are being amortized over the original five year life of the facility. On
July 26, 2011, we amended and restated the Agreement to reduce its interest rate by 75 basis points
and to extend its maturity to July 2016. The related refinancing fees of $2.4 million are being amortized
over the new five year life. Our ability to borrow under the Agreement is based on a specific borrowing
base consisting of inventory and accounts receivable. The interest rate on this credit line is daily
LIBOR plus 2.00% to 2.50% based upon the then current availability under the Agreement. Fees based
on the unused portion of the Agreement range from 37.5 to 75.0 basis points. As of January 28, 2012,
there were no outstanding borrowings under the Agreement.
The weighted average interest rate on all debt borrowings during fiscal 2011 and 2010 was 6.3%.
Other Matters
Several of our debt agreements require compliance with covenants. The most restrictive of these
covenants, an earnings before interest, taxes, depreciation and amortization (‘‘EBITDA’’) requirement,
is triggered if the Company’s availability under its credit agreement drops below $50.0 million. As of
January 28, 2012, the Company had no borrowings outstanding under the Revolving Credit Agreement,
additional availability of approximately $194.9 million and was in compliance with all financial
covenants contained in its debt agreements.
The failure to satisfy this covenant would constitute an event of default under the Revolving Credit
Agreement, which would result in a cross-default under our 7.50% Senior Subordinated Notes and
Senior Secured Term Loan.
Other Contractual Obligations
We have a vendor financing program which is funded by various bank participants who have the
ability, but not the obligation, to purchase account receivables owed by us directly from our vendors.
The total availability under the program was $125.0 million as of January 29, 2011. There was an
outstanding balance of $85.2 million and $56.3 million under this program as of January 28, 2012 and
January 29, 2011, respectively.
We have letter of credit arrangements in connection with our risk management, import
merchandising and vendor financing programs. We had no outstanding commercial letters of credit as
of January 28, 2012 and were contingently liable for $0.3 million in outstanding commercial letters of
credit as of January 29, 2011. We were contingently liable for $31.7 million and $107.6 million in
outstanding standby letters of credit as of January 28, 2012 and January 29, 2011, respectively. The
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