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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended February 2, 2013, January 28, 2012 and January 29, 2011
NOTE 5—DEBT AND FINANCING ARRANGEMENTS
The following are the components of debt and financing arrangements:
February 2, January 28,
(dollar amounts in thousands) 2013 2012
7.50% Senior Subordinated Notes, due December 2014 ..... $ — $147,565
Senior Secured Term Loan, due October 2013 ........... — 147,557
Senior Secured Term Loan, due October 2018 ........... 200,000 —
Revolving Credit Agreement, through July 2016 .......... — —
Long-term debt ................................ 200,000 295,122
Current maturities ............................... (2,000) (1,079)
Long-term debt less current maturities ............... $198,000 $294,043
Senior Secured Term Loan Facility due October 2018
On October 11, 2012, the Company entered into the Second Amended and Restated Credit
Agreement that (i) increased the size of the Company’s Senior Secured Term Loan (the ‘‘Term Loan’’)
to $200.0 million, (ii) extended the maturity of the Term Loan from October 27, 2013 to October 11,
2018, (iii) reset the interest rate under the Term Loan to the London Interbank Offered Rate
(LIBOR), subject to a floor of 1.25%, plus 3.75% and (iv) added an additional 16 of the Company’s
owned locations to the collateral pool securing the Term Loan. The amended and restated Term Loan
was deemed to be substantially different than the prior Term Loan, and therefore the modification of
the debt was treated as a debt extinguishment. As of February 2, 2013, 142 stores collateralized the
Term Loan. The Company recorded $6.5 million of deferred financing costs related to the Second
Amended and Restated Credit Agreement. The amount outstanding under the Term Loan as of
February 2, 2013 was $200.0 million.
Net proceeds from the amended and restated Term Loan together with cash on hand were used to
settle the Company’s outstanding interest rate swap on the Term Loan as structured prior to its
amendment and restatement and to satisfy and discharge all of the Company’s outstanding 7.5% Senior
Subordinated Notes (‘‘Notes’’) due 2014. The settlement of the interest rate swap resulted in the
reclassification of $7.5 million of accumulated other comprehensive loss to interest expense. The
Company recognized, in interest expense, $1.9 million of deferred financing costs related to the Notes
and the Term Loan as structured prior to its amendment and restatement. The interest payment and
the swap settlement payment are presented within cash flows from operations on the consolidated
statement of cash flows.
On October 11, 2012, the Company entered into two new interest rate swaps for a notional
amount of $50.0 million each that together were designated as a cash flow hedge on the first
$100.0 million of the Term Loan. The interest rate swaps convert the variable LIBOR portion of the
interest payments due on the first $100.0 million of the Term Loan to a fixed rate of 1.855%.
Revolving Credit Agreement, Through July 2016
On January 16, 2009 the Company 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
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