Circuit City 2007 Annual Report Download - page 29

We have a $120 million secured revolving credit agreement (which may be increased by up to an additional $30 million, subject to certain
conditions). The facility expires in October 2010. Borrowings under the agreement are subject to borrowing base limitations of up to 85% of
eligible accounts receivable and 40% of qualified inventories and are secured by accounts receivable, inventories and certain other assets. 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 revolving credit agreement requires that we maintain a minimum level of availability. If such
availability is not maintained, we will then 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. As of December 31, 2007, the Company was in
compliance with all of the covenants under the credit facility. Eligible collateral under the facility was $106.9 million, total availability was
$97.0 million, outstanding letters of credit of were $9.7 million and there were no outstanding advances.
The Company’s Netherlands subsidiary maintains a €5 million ($7.4 million as of December 2007 exchange rate) credit facility with a local
financial institution. At December 2007 there was approximately €2.6 million ($3.9 million) outstanding under this line. The facility carries
interest at a rate of 7.05%. 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. This facility expires in September 2008.
In April 2002, we entered into a ten year, $8.4 million mortgage loan on our Suwanee, Georgia distribution facility. 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 nearby 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 one of our New York facilities 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 will total $860,000 for 2008 and the lease
expires in 2017. We have sublease agreements for unused space we lease Wellingborough, England. In the event the sublessee is unable to fulfill
its obligations, we would be responsible for rent due under the lease. However, we expect the sublessee 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 as of December 2007 (in thousands):
27
2008 2009 2010 2011 2012 After 2012
Contractual Obligations:
Capital lease obligations
$
471
$
186
$
73
$
10
Non
-
cancelable operating leases, net of subleases
13,280
12,895
10,390
9,342
8,549
54,737
Purchase and other obligations
6,945
3,437
3,523
3,368
3,471
3,632
Short term loans
3,853
Tax contingencies
1,547
Total contractual obligations
$
26,096
$
16,518
$
13,986
$
12,720
$
12,020
$
58,369