Circuit City 2006 Annual Report Download - page 39

2006 2005
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Payroll and employee benefits $17,151 $13,262
Income taxes payable 2,327 6,819
Other 56,210 42,807
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$75,688 $62,888
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2006 2005
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Mortgage note payable (a) -- $ 7,803
Term loan payable -- --
Capitalized equipment lease obligations 1,031 799
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1,031 8,602
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 (at December 31, 2006) plus 0.25% or the bank’s daily
LIBOR rate (at December 31, 2006) 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. We were in compliance with all of the covenants as of December 31, 2006, except for the required timely
submission of certain financial statements, for which we have obtained a waiver. The Company was not in compliance
with the financial reporting requirement regarding timely submission of the Company’s forecasted financial statements
under the agreement for periods subsequent to December 31, 2006 for which the lenders have approved a waiver. As of
December 31, 2006, eligible collateral under the agreement was $104.1 million and total availability was $83.8 million.
There were outstanding advances of $9.3 million (all in the United Kingdom) and outstanding letters of credit of $11
million.
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 ($6.6 million at the December 31, 2006 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, 2006 there
were €2.2 million ($3.0 million) of borrowings outstanding under the line with interest payable at a rate of 5%. 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
August 2007.
The weighted average interest rate on short
-
term borrowings was 7.8% in 2006, 6.4% in 2005, and 6.0% in 2004.
6.
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following (in thousands):
7.
LONG
-
TERM DEBT
Long
-
term debt consists of (in thousands):