Circuit City 2007 Annual Report Download - page 48

3.
RELATED PARTY TRANSACTIONS
The Company leased its headquarters office/warehouse facility from affiliates during 2007, 2006 and 2005 (see Note 10). 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.
4. 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 (at December 31, 2007) plus 0.25% or the bank’
s daily LIBOR rate (at December 31, 2007)
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, 2007. As of December 31, 2007, eligible collateral under the agreement
was $106.9 million and total availability was $97.0 million. There were outstanding letters of credit of $9.7 million and there were no
outstanding advances.
The Company’s Netherlands subsidiary maintains a €5 million ($7.4 million at the December 31, 2007 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, 2007 and, 2006 was €2.6 million and €2.2 million ($3.9 million and $3.0
million) of borrowings outstanding under this line with interest payable at a rate of 7.05%. The facility expires in September 2008.
The weighted average interest rate on short-term borrowings was 7.5%, 7.8%, and 6.4% in 2007, 2006 and 2005.
5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following (in thousands):
6. LONG-TERM DEBT
Long-term debt consists of (in thousands):
The aggregate maturities of long-term debt outstanding at December 31, 2007 are as follows (in thousands):
46
December 31,
2007 2006
Payroll and employee benefits
$
21,850
$
17,151
Income taxes payable
2,297
2,327
Freight
10,908
6,106
Deferred revenue
5,704
2,653
Other
41,811
47,451
$
82,570
$
75,688
December 31,
2007 2006
Capitalized equipment lease obligations
$
703
$
1,031
Less: current portion
449
548
$
254
$
483
2008 2009 2010 2011 2012
Maturities
$
449
$
173
$
71
$
10
$
0