Circuit City 2005 Annual Report Download - page 55

as follows (in thousands):
2005
2004
Furniture and fixtures, office, computer and other equipment
$
1,582
$
1,680
Less: Accumulated amortization
754
503
$
828
$
1,177
4.
RELATED PARTY TRANSACTIONS
The Company leased its headquarters office/warehouse facility from affiliates during the years ended December
31, 2005, December 31, 2004 and December 31, 2003 (see Note 11). Rent expense under the lease aggregated
$612,000 in each of those years. The Company believes that these payments were no higher than would be paid
to an unrelated lessor for comparable space.
5.
CREDIT FACILITIES
In October 2005 the Company amended and restated its $70,000,000 revolving credit agreement with a group of
financial institutions to increase the amount available to $120,000,000 (which may be increased by up to $30
million, subject to certain conditions) and to provide for borrowings by the Company’s United States and United
Kingdom subsidiaries. The borrowings are secured by all of the domestic and United Kingdom accounts
receivable, the domestic inventories of the Company, the Company’s United Kingdom headquarters building and
the Company’s shares of stock in its domestic and United Kingdom subsidiaries. The credit facility expires and
outstanding borrowings thereunder are due on October 26, 2010. The borrowings under the agreement are subject
to borrowing base limitations of up to 85% of eligible accounts receivable and up to 40% of qualified inventories.
The interest on outstanding advances is payable monthly, at the Company’s option, at the agent bank’s base rate
(7.25% at December 31, 2005) plus 0.25% or the bank’s daily LIBOR rate (4.9% at December 31, 2005) plus
1.25% to 2.25%. The undrawn availability under the facility may not be less than $15 million until the last day of
any month in which the availability net of outstanding borrowings is at least $70 million. The facility also calls
for a commitment fee payable quarterly in arrears of 0.375% of the average daily unused portions of the facility.
The revolving credit agreement requires that a minimum level of availability be maintained. If such availability is
not maintained, the Company will be required to maintain a fixed charge coverage ratio (as defined). The
agreement contains certain other covenants, including restrictions on capital expenditures and payments of
dividends. The Company was in compliance with all of the covenants as of December 31, 2005. The Company
was not in compliance with the financial reporting requirements regarding timely filing of the Company’s
financial statements under the agreement for periods subsequent to December 31, 2005 for which the lenders
have approved a waiver. As of December 31, 2005, availability under the agreement was $97.6 million and there
were outstanding advances of $21.8 million (all in the United Kingdom) and outstanding letters of credit of $14.6
million. Under the previous facility, as of December 31, 2004 availability under the agreement was $54.6 million
and there were outstanding letters of credit of $9.1 million. There were no outstanding advances as of December
31, 2004.
In connection with the amendment to its revolving credit agreement, the Company terminated its £15,000,000
multi-currency credit facility with a United Kingdom financial institution in October 2005. The facility was
available to the Company’s United Kingdom subsidiaries and at December 31, 2004 there were £5.3 million
($10.0 million at the December 31, 2004 exchange rate) of borrowings outstanding under this line with interest
payable at a rate of 5.87%.
The Company’s Netherlands subsidiary maintains a €5 million ($5.9 million at the December 31, 2005 exchange
rate) credit facility with a local financial institution. 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%. At December 31, 2004 there were €3.5 million ($4.8 million at the December 31, 2004 exchange
rate) of borrowings outstanding under this line with interest payable at a rate of 5.0%. The facility expires in
November 2006.