Saks Fifth Avenue 2008 Annual Report Download - page 76

SAKS INCORPORATED & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(In thousands, except per share amounts)
NOTE 6 — DEBT
A summary of long-term debt and capital lease obligations is as follows:
January 31,
2009
February 2,
2008
Notes 8.25%, maturing fiscal year 2008 ....................................... $ — $ 84,132
Notes 7.50%, maturing fiscal year 2010 ....................................... 45,872 45,872
Notes 9.875%, maturing fiscal year 2011 ...................................... 141,557 141,557
Notes 7.00%, maturing fiscal year 2013 ....................................... 2,922 2,922
Notes 7.375%, maturing fiscal year 2019 ...................................... 1,911 1,911
Convertible Notes 2.00%, maturing fiscal year 2024 ............................. 230,000 230,000
Revolving credit facility ................................................... 156,675 —
Terminated interest rate swap agreements, net .................................. 53 —
Capital lease obligations ................................................... 61,083 66,194
640,073 572,588
Current portion .......................................................... (4,673) (319,242)
$635,400 $ 253,346
REVOLVING CREDIT AGREEMENT
The Company has a $500,000 revolving credit facility, subject to a borrowing base equal to a specified
percentage of eligible inventory and certain credit card receivables. The facility matures in September 2011. The
obligations under the facility are guaranteed by certain of Company’s existing and future domestic subsidiaries,
and the obligations are secured by the Company’s and the guarantors’ merchandise inventories and certain third
party accounts receivable. Borrowings under the facility bear interest at a per annum rate of either LIBOR plus a
percentage ranging from 1.00% to 1.50% or at the higher of the prime rate and federal funds rate. Letters of
credit are charged a per annum fee equal to the then applicable LIBOR borrowing spread (for standby letters of
credit) or fifty percent of the LIBOR borrowing spread (for documentary or commercial letters of credit). The
Company also pays an unused line fee of 0.25% per annum on the average daily unused revolver.
During periods in which availability under the agreement is $60,000 or more, the Company is not subject to
financial covenants. If and when availability under the agreement decreases to less than $60,000, the Company
will be subject to a minimum fixed charge coverage ratio of 1 to 1. There is no debt rating trigger.
The revolving credit agreement restricts additional debt to specific categories including the following (each
category being subject to limitations as described in the revolving credit agreement): debt arising from permitted
sale and leaseback transactions; debt to finance purchases of machinery, equipment, real estate and other fixed
assets; debt in connection with permitted acquisitions; and unsecured debt. The revolving credit agreement also
places certain restrictions on, among other things, asset sales, the ability to make acquisitions and investments,
and to pay dividends.
The Company routinely issues stand-by and documentary letters of credit principally related to the funding
of insurance reserves. Outstanding letters of credit reduce availability under the revolving line of credit. During
2008, weighted average letters of credit issued under the credit agreement were $28,594. The highest amount of
F-22