Pep Boys 2009 Annual Report Download - page 88

(2) In the first quarter of fiscal 2005, we entered into a commercial commitment to purchase
approximately $4,800 of products over a six-year period. At January 30, 2010, we expect to meet
the cumulative minimum purchase requirements under this contract and to completely satisfy and
terminate this contract during fiscal 2010.
Long-term Debt
7.50% Senior Subordinated Notes, due December 2014
On December 14, 2004, we issued $200,000,000 aggregate principal amount of 7.50% Senior
Subordinated Notes due December 15, 2014. During fiscal 2009 and 2008, the Company repurchased
notes in the principal amount of $16,970,000 and $25,465,000, respectively. On January 30, 2010, the
outstanding balance of these notes was $157,565,000.
Senior Secured Term Loan Facility, due October 2013
On January 27, 2006, we entered into a $200,000,000 Senior Secured Term Loan facility due
January 27, 2011. This facility is secured by a collateral pool consisting of real property and
improvements associated with our stores, which is adjusted periodically based upon real estate values
and borrowing levels. Interest at the rate of London Interbank Offered Rate (LIBOR) plus 3.0% on
this facility was payable starting in February 2006. Proceeds from this facility were used to satisfy and
discharge our then outstanding $43,000,000 6.88% Medium Term Notes due March 6, 2006 and
$100,000,000 6.92% Term Enhanced Remarketable Securities (TERMS) due July 7, 2016 and to reduce
borrowings under our line of credit by approximately $39,000,000.
On October 27, 2006, we amended and restated the Senior Secured Term Loan facility to
(i) increase the size from $200,000,000 to $320,000,000, (ii) extend the maturity from January 27, 2011
to October 27, 2013 and (iii) reduce the interest rate from LIBOR plus 3.00% to LIBOR plus
2.75%.Proceeds were used to satisfy and discharge $119,000,000 in outstanding 4.25% convertible
Senior Notes due June 1, 2007.
On February 15, 2007, we further amended the Senior Secured Term Loan facility to reduce the
interest rate from LIBOR plus 2.75% to LIBOR plus 2.00%.
On November 27, 2007, we sold the land and buildings for 34 owned properties to an independent
third party. We used $162,558,000 of the net proceeds to prepay a portion of the Senior Secured Term
Loan facility. This prepayment reduced the principal amount of the facility to $155,000,000 and reduced
the scheduled quarterly repayments from $800,000 to $391,000. In addition, the prepayment resulted in
the recognition in interest expense of approximately $5,900,000 of deferred financing fees and the
reclassification from other comprehensive loss for the portion of the related interest rate swap that is
no longer designated as a hedge.
As of January 30, 2010, 126 stores collateralized the Senior Secured Term Loan. The outstanding
balance under the Term loan at the end of fiscal 2009 was $149,715,000. The $1,079,000 decline in the
outstanding balance was due to quarterly principal payments.
Revolving Credit Agreement, through January 2014
On January 16, 2009, we entered into a new Revolving Credit Agreement with available
borrowings up to $300,000,000. Our ability to borrow under the Revolving Credit Agreement is based
on a specific borrowing base consisting of inventory and accounts receivable. Total incurred fees of
$6,754,000 were capitalized and are amortized over the 5 year life of the facility. The interest rate on
this credit line is LIBOR or Prime plus 2.75% to 3.25% based upon the then current availability under
the agreement. Fees based on the unused portion of the agreement range from 37.5 to 75.0 basis
points. As of January 30, 2010, there were no outstanding borrowings under the agreement.
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