Circuit City 2001 Annual Report Download - page 27

purchase price over the estimated fair values of net assets acquired in the amount of $17.0 million has been recorded as goodwill and is being
amortized over the estimated useful lives.
The pro forma results for 2001, 2000 and 1999, assuming these acquisitions had been made at the beginning of the period, would not have been
materially different from the reported results.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net consists of the following (in thousands):
The Company leases two warehouse and office facilities from affiliates (see Note 8). Rent expense under those leases aggregated
approximately $1,224,000, $1,314,000 and $1,584,000 for the years ended December 31, 2001, 2000 and 1999, respectively.
5. DEBT
The Company has a $70,000,000 revolving credit agreement with a group of financial institutions which provides for borrowings in the United
States. The borrowings are secured by all of the domestic accounts receivable and inventories of the Company and the Company's shares of
stock in its domestic subsidiaries. The credit facility expires and outstanding borrowings thereunder are due on June 15, 2004. The borrowings
under the agreement are subject to borrowing base limitations of up to 75% of eligible accounts receivable and up to 25% of qualified
inventories. The interest on outstanding advances is payable monthly, at the Company's option, at the agent bank's base rate (4.75% at
December 31, 2001) plus 0.25% to 0.75% or the bank's daily LIBOR rate (3.62% at December 31, 2001) plus 2.25% to 3%. The facility also
calls for a commitment fee payable quarterly in arrears of 0.5% of the average daily unused portion of the facility. The undrawn availability
may not be less than $20 million prior to June 30, 2002. As of December 31, 2001 availability under the agreement was $45,291,000, against
which there were no outstanding advances and outstanding letters of credit of $4,000,000. The revolving credit agreement contains certain
financial and other covenants, including restrictions on capital expenditures and payments of dividends.
The Company has a (pound)15,000,000 ($21,828,000 at the December 31, 2001 exchange rate) multi-currency credit facility with Barclays
Bank in the United Kingdom, which is available to its United Kingdom subsidiaries. Drawings under the facility may be made by overdraft,
trade acceptance or loan. The facility is secured by assets of certain of the Company's United Kingdom subsidiaries and a guaranty from the
Company. At December 31, 2001 there were (pound)1,944,000 ($2,829,000) of borrowings outstanding under this line.
The weighted average interest rate on short-term borrowings was 6.6% in 2001, 7.9% in 2000 and 8.2% in 1999.
The Company has accepted a proposal from a financial institution and signed a commitment letter for an $8.4 million, ten-year mortgage on its
Suwanee, GA distribution facility. The loan will bear interest at 7.04%. Closing is subject to due diligence and negotiation of a definitive
agreement.
6. SHAREHOLDERS' EQUITY
In May 1998 the Board of Directors authorized a share repurchase program to acquire up to 1,350,000 (subsequently increased to 4,350,000)
common shares on the open market. The Company purchased an aggregate of 1,133,500 shares during 2000 at an aggregate cost of $9.8
million and 890,300 shares during 1999 at an aggregate cost of $10.1 million.
As required by law, certain foreign subsidiaries must retain a percentage of shareholders' capital in the respective company. Accordingly, a
portion of retained earnings is restricted and not available for distribution to shareholders. Such amount at December 31, 2001 was not
material.
STOCK OPTION PLANS - The Company has three fixed option plans which reserve shares of common stock for issuance to key employees,
directors, consultants and advisors to the Company. The following is a description of these plans:
THE 1995 LONG
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TERM STOCK INCENTIVE PLAN
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This plan allows the Company to issue qualified, non
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qualified and deferred
2001 2000
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Land and buildings.............................. $ 31,357 $ 25,518
Furniture and fixtures, office, computer
and other equipment........................... 90,056 77,205
Leasehold improvements ......................... 13,993 12,505
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135,406 115,228
Less accumulated depreciation and amortization.. 52,783 40,479
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Property, plant and equipment, net.............. $ 82,623 $ 74,749
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4. RELATED PARTY TRANSACTIONS