CompUSA 2007 Annual Report Download - page 70

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exercises provided approximately $2.6 million of cash. Net cash of $4.7 million was provided by
financing activities in 2005, primarily as a result of an increase in our short-term borrowings in Europe.
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):
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
Our purchase and other obligations consist primarily of certain employment agreements and service
agreements.