Pier 1 2009 Annual Report Download - page 62

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE 5—LONG-TERM DEBT AND AVAILABLE CREDIT (Continued)
approximately $49,000,000 in connection with this transaction during the first quarter of fiscal 2010. As
a result of the put features of the Notes, the Company anticipates that the remaining $86,059,000 in
Notes will have to be repaid or refinanced on or before February 15, 2011. The Notes are included in
fiscal 2011 long-term debt maturities in the table below at the entire $165,000,000 that was outstanding
at the end of fiscal 2009. Long-term debt matures as follows (in thousands):
Long-term
Fiscal Year Debt
2010 ...................................... —
2011 ...................................... 165,000
2012 ...................................... —
2013 ...................................... —
2014 ...................................... —
Thereafter ................................. 19,000
Total long-term debt ........................ $184,000
The Company has a $325,000,000 secured credit facility which matures in May 2012 and is secured
by the Company’s eligible merchandise inventory and third-party credit card receivables. The Company
sold its corporate headquarters building during fiscal 2009, and as a result, the building was removed
from the assets securing borrowings under the Company’s secured credit facility at that time. During
fiscal 2009 and 2008, the Company had no cash borrowings under this facility. As of February 28, 2009,
the Company’s borrowing base, as defined by the agreement, was $201,669,000. This borrowing base
calculation is subject to advance rates and commercially reasonable availability reserves. After excluding
the required minimum $32,500,000 and the $84,256,000 in utilized letters of credit and bankers’
acceptances from the borrowing base, $84,913,000 remained available for cash borrowings. The facility
bears interest at LIBOR plus 1.0% for cash borrowings. The Company pays a fee ranging from 1.0% to
1.5% for standby letters of credit depending on the average daily availability as defined by the
agreement, 0.5% for trade letters of credit and a commitment fee of 0.25% for any unused amounts.
As of February 28, 2009, the fee for standby letters of credit was 1.0%. As of February 28, 2009, the
Company utilized approximately $84,256,000 in letters of credit and bankers’ acceptances against the
secured credit facility. Of the outstanding balance, approximately $16,228,000 related to trade letters of
credit and bankers acceptances for merchandise purchases, $43,669,000 related to standby letters of
credit for the Company’s workers’ compensation and general liability insurance policies, $19,429,000
related to standby letters of credit related to the Company’s industrial revenue bonds, and $4,930,000
related to other miscellaneous standby letters of credit. Should the availability under the facility be less
than $32,500,000, the Company would be required to comply with a fixed charge coverage ratio as
stated in the agreement. Assuming availability was below that level, the fixed charge coverage ratio
would not have been met during fiscal 2009. The Company does not anticipate falling below this
minimum availability in the foreseeable future. The Company was in compliance with all required debt
covenants at fiscal 2009 year end. This facility may limit certain investments and, in some instances,
limit payment of cash dividends and repurchases of the Company’s common stock. Under this credit
facility, the Company will not be restricted from paying certain dividends unless the availability under
the facility over a specified period of time is projected to be less than $97,500,000.
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