Circuit City 2005 Annual Report Download - page 26

In connection with the amendment to our revolving credit agreement in October 2005, we terminated our £15
million multi-currency credit facility with a financial institution in the United Kingdom, which was available to our
United Kingdom subsidiaries. We also paid off the remaining £4.6 million balance on our United Kingdom term loan,
which we had entered into in 2002 to finance the construction of our United Kingdom headquarters.
Our Netherlands subsidiary has a €5 million ($5.9 million at the December 31, 2005 exchange rate, which
exchange rate applies to all other Euro denominated amounts below) credit facility. Borrowings under the facility are
secured by the subsidiary’s accounts receivable and are subject to a borrowing base limitation of 85% of the eligible
accounts. At December 31, 2005 there were €3.8 million ($4.4 million) of borrowings outstanding under this line with
interest payable at a rate of 5.0%. The facility expires in November 2006.
In April 2002 we entered into a ten year, $8.4 million mortgage loan on our Suwanee, Georgia distribution
facility. The mortgage had monthly principal and interest payments of $62,000 through May 2012, with a final
additional principal payment of $6.4 million at maturity in May 2012. The mortgage loan bore interest at 7.04% and
was collateralized by the underlying land and building. During the first quarter of fiscal 2006, we sold this facility and
repaid the remaining balance on the loan. The facility was replaced by a larger, leased distribution center in a near-by
area.
We are obligated under non-cancelable operating leases for the rental of most of our facilities and certain of our
equipment which expire at various dates through 2026. We currently lease our New York facility from an entity owned
by Richard Leeds, Robert Leeds and Bruce Leeds, the Company’s three principal shareholders and senior executive
officers. The annual rental totals $612,000 and the lease expires in 2007. We have sublease agreements for unused
space we lease in Compton, California and Wellingborough, England. In the event a sublessee is unable to fulfill its
obligations, we would be responsible for rent due under the lease. However, we expect the sublessees will fulfill their
obligations under the leases.
Following is a summary of our contractual obligations for future principal payments on our debt, minimum rental
payments on our non-cancelable operating leases and minimum payments on our other purchase obligations at
December 31, 2005 (in thousands):
Our purchase and other obligations include $0.6 million of inventory purchases under outstanding letters of
credit from overseas vendors which expire during 2006. The balance consists primarily of certain employment
agreements and service agreements.
In addition to the contractual obligations noted above, we had $14.0 million of standby letters of credit
outstanding as of December 31, 2005.
Our operating results have generated cash flow which, together with borrowings under our debt agreements, has
provided sufficient capital resources to finance working capital and cash operating requirements, fund capital
2006
2007
2008
2009
2010
After
2010
Contractual Obligations:
Payments on debt obligations
(including interest)
$26,937
$ 738
$ 739
$ 738
$ 738
$ 7,322
Payments on capital lease
obligations
387
299
126
Payments on non
-
cancelable
operating leases, net of
subleases
7,597
9,200
8,819
8,443
6,348
55,160
Purchase and other obligations
4,074
2,869
1,733
1,191
1,169
2,836
Total contractual obligations
$38,995
$13,106
$11,417
$10,372
$8,255
$65,318