Pep Boys 2013 Annual Report Download - page 102

Revolving Credit Agreement, Through July 2016
On January 16, 2009 we entered into the Revolving Credit Agreement among the Company, Bank
of America, N.A., as Administrative Agent, and the other parties thereto providing for borrowings of
up to $300.0 million and having 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 Revolving Credit Agreement to reduce its interest rate by 75 basis points
and to extend its maturity to July 2016. Our ability to borrow under the Revolving Credit Agreement is
based on a specific borrowing base consisting of inventory and accounts receivable. The interest rate on
this facility is LIBOR plus a margin of 2.00% to 2.50% for LIBOR rate borrowings or Prime
plus 1.00% to 1.50% for Prime rate borrowings. The margin is based upon the then current availability
under the facility. As of February 1, 2014, we had $3.5 million in borrowings outstanding under the
facility and $44.8 million of availability was utilized to support outstanding letters of credit. Taking this
into account and the borrowing base requirements (including reduction for amount outstanding under
the supplier financing program), as of February 1, 2014 there was $161.4 million of availability
remaining under the facility.
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 1, 2014, we were in compliance with all financial covenants contained in
our debt agreements.
The weighted average interest rate on all debt borrowings during fiscal 2013 and 2012 was 4.9%
and 5.1%, respectively.
Other Contractual Obligations
We have a supplier 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 suppliers.
In fiscal 2013, we increased the total availability under the program from $175.0 million to
$200.0 million. There was an outstanding balance of $129.8 million and $149.7 million under this
program as of February 1, 2014 and February 2, 2013, respectively.
We have letter of credit arrangements in connection with our risk management and import
merchandising programs. We had $13.9 million and $5.2 million of outstanding commercial letters of
credit as of February 1, 2014 and February 2, 2013, respectively. We were contingently liable for
$30.9 million and $32.2 million in outstanding standby letters of credit as of February 1, 2014 and
February 2, 2013, respectively.
We are also contingently liable for surety bonds in the amount of approximately $10.6 million and
$11.5 million as of February 1, 2014 and February 2, 2013, 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
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