Circuit City 2011 Annual Report Download - page 47

Included in property, plant and equipment are assets under capital leases, as follows (in thousands):
Depreciation charged to operations for property, plant and equipment including capital leases in 2011, 2010, and 2009 was $15.9 million, $12.9
million and $11.2 million, respectively.
On December 15, 2011, the Company entered into an amendment of its second amended and restated secured revolving credit agreement. The
amendment increased the maximum availability under the United States revolving loan component of the facility by $25 million to a total of
$125.0 million (which may be increased to $200 million, subject to certain conditions), eliminated the Company’s $25 million United Kingdom
revolving loan component of the facility, released the related United Kingdom assets that were pledged to secure this component and removed
the Company’
s United Kingdom subsidiary from the facility. Availability is subject to a borrowing base formula that takes into account eligible
receivables and eligible inventory. Borrowings are secured by substantially all of the Company’s assets, including accounts receivable,
inventory and certain other assets, subject to limited exceptions. The amended and restated credit agreement contains certain operating, financial
and other covenants, including limits on annual levels of capital expenditures, availability tests related to payments of dividends and stock
repurchases and fixed charge coverage tests related to acquisitions. The credit facility has a five year term and expires in October 2015. 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 prime rate (3.25% at
December 31, 2011) or the overnight daily LIBOR rate (0.15% at December 31, 2011) plus 1.00% to 2.50%. 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 expenditure,
acquisitions and payments of dividends. We were in compliance with all of the covenants as of December 31, 2011. As of December 31, 2011,
eligible collateral under the agreement was $119.5 million and total availability was $113.1 million. There were outstanding letters of credit of
$6.4 million and there were no outstanding advances.
The Company’
s Inmac WStore subsidiary maintains a secured revolving credit agreement with a financial institution in France which is secured
by WStore Europe SA accounts receivable balances. Available amounts for borrowing under this facility include all accounts receivable
balances not over 60 days past due reduced by the greater of €4.0 million or 10% of the eligible accounts receivable. As of December 31, 2011
there was availability under this credit facility of approximately €24.1 million ($31.2 million) and there were no outstanding borrowings. The
credit facility duration is indefinite; however either party may cancel the agreement with sixty days notice. Under this agreement the Company
is subject to certain non-financial covenants which it was in compliance with at December 31, 2011.
The weighted average interest rate on short-term borrowings was 4.5%, 3.5%, and 3.3% in 2011, 2010 and 2009, respectively.
Accrued expenses and other current liabilities consist of the following (in thousands):
On September 23, 2010, the Company (through a subsidiary) completed tax exempt Recovery Zone Facility Bond (the “Bonds”) financing for
up to $15 million with the Development Authority of Jefferson, Georgia (the “Authority”).
The Bonds were issued by the Authority and initially
purchased by GE Government Finance Inc., and mature on October 1, 2018. Interest on the Bonds is calculated at the rate of 4.15% per annum
and principal and interest payments are due monthly. The proceeds of the Bonds are used to finance or repay the costs of capital equipment
purchased for the Company’s distribution facility located in Jefferson, Georgia. The purchase and installation of all the equipment for the
facility was completed by December 31, 2011. Pursuant to the transaction, the Company will transfer to the Authority for consideration
consisting of the Bond proceeds ownership of the equipment to be used at the distribution facility and the Authority in turn will lease the
equipment to the Company’s subsidiary pursuant to a capital equipment lease expiring October 1, 2018. Under the capital equipment lease the
Company has the right to acquire ownership of the equipment at any time for a purchase price sufficient to pay off all principal and interest on
the Bonds, plus $1.00. As a result of the capital lease treatment for this transaction, the leased equipment is included in property, plant and
equipment in the Company’s consolidated balance sheet. As of December 31, 2011 the Company had $7.6 million outstanding against this
facility.
Table of Contents
2011
2010
Furniture and fixtures, office, computer and other equipment
$
17,244
$
14,896
Less: Accumulated amortization
7,791
4,994
$
9,453
$
9,902
4.
CREDIT FACILITIES
5.
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
December 31,
2011
2010
Payroll and employee benefits
$
32,471
$
30,166
Freight
3,146
17,142
Advertising
7,594
8,033
Sales and VAT tax payable
5,300
8,613
Other
23,899
20,726
$
72,410
$
84,680
6.
LONG
-
TERM DEBT