Dick's Sporting Goods 2009 Annual Report Download - page 76

Concurrently with the sale of the Notes, the Company purchased a bond hedge designed to mitigate the potential dilution to
stockholders from the conversion of the Notes and sold a warrant exercisable for shares of the Company’s common stock to the
counterparty with whom the Company entered into the bond hedge. As described above, the Company repaid substantially all of
the Notes on February 18, 2009, and repurchased the remaining Notes in March 2009. By their terms, the warrant and bond
hedge concurrently expired and no longer had the ability to be exercised.
Revolving Credit Agreement — On July 27, 2007, the Company entered into a Fourth Amendment to its Second Amended and
Restated Credit Agreement (the “Credit Agreement”) that, among other things, extended the maturity of the Credit Agreement
from July 2008 to July 2012, increased the potential Aggregate Revolving Credit Commitment, as defined in the Credit Agreement,
from $350 million to a potential commitment of $450 million and reduced certain applicable interest rates and fees charged under
the Credit Agreement, including up to $75 million in the form of letters of credit. The Credit Agreement’s term was extended to
July 27, 2012.
On November 19, 2008, the Company entered into an Eighth Amendment to its Credit Agreement, the effect of which was to
increase the aggregate revolving loan commitment by $90 million to a total of $440 million.
As of January 30, 2010 and January 31, 2009, the Company’s total remaining borrowing capacity, after subtracting letters of credit,
under the Credit Agreement was $424.4 million and $417.5 million, respectively. Borrowing availability under the Company’s
Credit Agreement is generally limited to the lesser of 70% of the Company’s eligible inventory or 85% of the Company’s
inventory’s liquidation value, in each case net of specified reserves and less any letters of credit outstanding. Interest on
outstanding indebtedness under the Credit Agreement is based upon a formula at either (a) the prime corporate lending rate
minus the applicable margin of 0.25% or (b) the London Interbank Offering Rate (“LIBOR”), plus the applicable margin of 0.75% to
1.50%. The applicable margins are based on the level of total borrowings during the prior three months. Borrowings are
collateralized by the assets of the Company, excluding store and distribution center equipment and fixtures that have a net
carrying value of $120.4 million as of January 30, 2010.
At January 30, 2010 and January 31, 2009, the prime rate was 3.25%, and LIBOR was 0.23% and 0.42%, respectively. There were
no outstanding borrowings under the Credit Agreement at January 30, 2010 and January 31, 2009.
The Credit Agreement contains restrictive covenants including the maintenance of a certain fixed charge coverage ratio of not less
than 1.0 to 1.0 in certain circumstances and prohibits payment of any cash dividends. As of January 30, 2010, the Company was in
compliance with the terms of the Credit Agreement.
The Credit Agreement provides for letters of credit not to exceed the lesser of (a) $75 million, (b) $440 million less the
outstanding loan balance and (c) the borrowing base minus the outstanding loan balance. As of January 30, 2010 and January 31,
2009, the Company had outstanding letters of credit totaling $15.6 million and $22.5 million, respectively.
The following table provides information about the Credit Agreement borrowings as of and for the periods (dollars in thousands):
2009 2008
Balance, fiscal period end. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ — $ —
Average interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.36% 3.51%
Maximum outstanding during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $186,467 $244,598
Average outstanding during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63,734 $ 74,845
Other Debt — Other debt, exclusive of capital lease and financing lease obligations, consists of the following as of the end of the
fiscal periods (dollars in thousands):
2009 2008
Note payable, due in monthly installments of approximately $6, including interest at 4%, through 2019 . . . . . . . . . . $565 $614
Note payable, due in monthly installments of approximately $5, including interest at 11%, through 2018 . . . . . . . . . 334 358
Total other debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 899 972
Less current portion: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (77) (72)
Total Other Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $822 $900
74 Dick’s Sporting Goods, Inc. ¬2009 Annual Report
DICK’S SPORTING GOODS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)