Radio Shack 2013 Annual Report Download - page 28

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SOURCES OF LIQUIDITY
As of December 31, 2013, we had $179.8 million in cash and cash equivalents, compared with $535.7 million as of December
31, 2012. The table below lists our credit commitments from various financial institutions at December 31, 2013.
Commitment Expiration per Period
Total Amounts
Less Than Over
(In millions) Committed 1 Year 1-3 Years 3-5 Years 5 Years
Lines of credit
(1)
$ 535.0
$
-- $
--
$
535.0 $
--
Total commercial commitments $ 535.0
$
-- $
--
$
535.0 $
--
(1) At December 31, 2013 our maximum availability for revolving borrowings was $429.5 million. No revolving borrowings have been made under the facility, and
letters of credit totaling $55.0 million had been issued as of December 31, 2013, resulting in $374.5 million of availability for revolving borrowings.
2018 Credit Facility: In December 2013, we entered into a
five-year, $585 million asset-based credit agreement (“2018
Credit Agreement”) with a group of lenders with General
Electric Capital Corporation as administrative and collateral
agent. The 2018 Credit Agreement consists of a $535
million asset-based revolving credit line (“2018 Credit
Facility”) and a $50 million asset-based term loan (“2018
Credit Agreement Term Loan”). The 2018 Credit
Agreement expires in December 2018. The 2018 Credit
Agreement may be used for general corporate purposes
and the issuance of letters of credit.
Obligations under the 2018 Credit Agreement are
guaranteed by all of our wholly-owned domestic
subsidiaries except Tandy Life Insurance Company. The
2018 Credit Agreement is secured by a lien on substantially
all of our assets, including a first priority lien on current
assets, and a second priority lien on fixed assets,
intellectual property, and the equity interests of our direct
and indirect subsidiaries.
Revolving borrowings under the 2018 Credit Facility bear
interest at our choice of a bank’s prime rate plus 1.0% to
1.5% or LIBOR plus 2.0% to 2.5%. The applicable rates in
these ranges are based on the aggregate average unused
availability under the facility. The 2018 Credit Facility also
contains a $150 million sub-limit for the issuance of standby
and commercial letters of credit. The issuance of letters of
credit reduces the amount available under the facility. Letter
of credit fees range from 2.0% to 2.5%. We pay
commitment fees to the lenders at an annual rate of 0.5%
of the unused amount of the facility.
The availability of credit under the 2018 Credit Facility is
limited at any time to the lesser of $535 million and the
amount of the revolving borrowing base at such time, in
each case, less the principal amount of loans and letters of
credit then-outstanding under the 2018 Credit Facility. The
revolving borrowing base is based on percentages of
eligible accounts receivable and eligible inventory and is
subject to certain reserves. In addition, the revolving
borrowing base is reduced by a minimum availability block
equal to approximately 10% of the revolving borrowing
base. The borrowing capacity is reduced by $35 million if
the revolving borrowing base is less than $150 million.
If at any time the outstanding revolving borrowings and
term loans under the 2018 Credit Facility exceed the
revolving borrowing base, we will be required to repay an
amount equal to such excess. If we or any of our
subsidiaries that are guarantors of our obligations under the
2018 Credit Agreement sell assets on which the lenders
under the 2018 Credit Agreement have a first priority lien
(other than sales of inventory in the ordinary course of
business), we must use the net proceeds from the sale to
repay amounts outstanding under the 2018 Credit
Agreement.
As of December 31, 2013, our maximum availability for
revolving borrowings under the 2018 Credit Facility was
$429.5 million. As of December 31, 2013, no revolving
borrowings had been made under the facility, and letters of
credit totaling $55.0 million had been issued, resulting in
$374.5 million of remaining availability for revolving
borrowings under the 2018 Credit Facility.
The 2018 Credit Agreement contains customary events of
default, the occurrence of which could result in the
acceleration of our obligation to repay the outstanding
indebtedness under the agreement.
The 2018 Credit Agreement includes covenants that,
subject to certain exceptions, limit our ability to:
• Incur additional debt, including guarantees;
• Make acquisitions, loans or investments;
• Pay dividends or repurchase our common stock;
• Create liens on our property;
• Change the nature of our business;
• Dispose of assets, including in connection with store
closures;
• Amend or terminate certain material agreements;
• Engage in sale and leaseback transactions; and
• Consolidate or merge with or into other companies
or sell all or substantially all our assets.
At December 31, 2013, we were in compliance with these
covenants.
CASH REQUIREMENTS
Capital Expenditures: The nature of our capital
expenditures is comprised of a base level of investment
required to support our current operations and a
discretionary amount related to our strategic initiatives. Any
remaining amount of capital expenditures relates to
strategic initiatives as reflected in our annual plan. These