Pep Boys 2012 Annual Report Download - page 69

$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. 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. As of February 2, 2013, we had no borrowings outstanding under the Agreement and
$37.4 million of availability was utilized to support outstanding letters of credit. Taking this into
account, the borrowings under the vendor financing program, and the borrowing base requirements, as
of February 2, 2013, there was $141.2 million of availability remaining under the Agreement.
Other Matters
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 availability under our Revolving Credit Agreement plus unrestricted cash drops below
$50.0 million. As of February 2, 2013, we were in compliance with all financial covenants contained in
its debt agreements.
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 $175.0 million as of February 2, 2013. There was an
outstanding balance of $149.7 million and $85.2 million under this program as of February 2, 2013 and
January 28, 2012, respectively.
We have letter of credit arrangements in connection with our risk management, import
merchandising and vendor financing programs. We had $5.2 million of outstanding commercial letters
of credit as of February 2, 2013. As of January 28, 2012, there were no outstanding commercial letters
of credit. We were contingently liable for $32.2 million and $31.7 million in outstanding standby letters
of credit as of February 2, 2013 and January 28, 2012, respectively.
We are also contingently liable for surety bonds in the amount of approximately $11.5 million and
$8.3 million as of February 2, 2013 and January 28, 2012, respectively. The surety bonds guarantee
certain of our payments (for example utilities, easement repairs, licensing requirements and customs
fees).
Off-balance Sheet Arrangements
We lease certain property and equipment under operating leases and lease financings which
contain renewal and escalation clauses, step rent provisions, capital improvements funding and other
lease concessions. These provisions are considered in the calculation of our minimum lease payments
which are recognized as expense on a straight-line basis over the applicable lease term. Any lease
payments that are based upon an existing index or rate are included in our minimum lease payment
calculations. Total operating lease commitments as of February 2, 2013 were $791.7 million.
Pension and Retirement Plans
On December 31, 2008, we paid $14.4 million to terminate the defined benefit portion of our
Supplemental Executive Retirement Plan (SERP) and recorded a $6.0 million settlement charge. We
continue to maintain the non-qualified defined contribution portion of the SERP plan (the ‘‘Account
Plan’’) for key employees designated by the Board of Directors. Our contribution expense for the
Account Plan was $0.1 million, $0.3 million and $1.2 million for fiscal 2012, 2011 and 2010, respectively.
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