Pep Boys 2009 Annual Report Download - page 89

The weighted average interest rate on all debt borrowings during fiscal 2009 and 2008 were 4.2%
and 5.8%, respectively.
Other Matters
Several of our debt agreements require compliance with covenants. The most restrictive of these
requirements is contained in our Revolving Credit Agreement. During any period when the availability
under the Revolving Credit Agreement drops below the greater of $50,000,000 or 17.5% of the
borrowing base, we are required to maintain a consolidated fixed charge coverage ratio of at least
1.1:1.0, calculated as the ratio of (a) EBITDA (net income plus interest charges, provision for taxes,
depreciation and amortization expense, non-cash stock compensation expenses and other non-recurring,
non-cash items) minus capital expenditures and income taxes paid to (b) the sum of debt service
charges and restricted payments made. The failure to satisfy this covenant would constitute an event of
default under the Revolving Credit Agreement, which would result in a cross-default under our 7.50%
Senior Subordinated Notes and Senior Secured Term Loan.
As of January 30, 2010, the Company had no borrowings outstanding under the Revolving Credit
Agreement, additional availability of approximately $137,848,000 and was in compliance with its
financial covenants.
Other Contractual Obligations
On June 29, 2007, we entered into a vendor financing program with availability up to $65,000,000.
Under this program, our factor made accelerated and discounted payment to our vendors and we in
turn, made our regularly-scheduled full vendor payments to the factor. The availability was
subsequently reduced to $40,000,000. On April 6, 2009, we replaced this program with a new program
which is funded by various bank participants who have the ability, but not the obligation, to purchase
account receivables owed by us directly from our vendors. There was an outstanding balance of
$34,099,000 and $31,930,000 under these programs as of January 30, 2010 and January 31, 2009,
respectively.
We have letter of credit arrangements in connection with our risk management, import
merchandising and vendor financing programs. We were contingently liable for $5,000 and $354,000 in
outstanding import letters of credit and $103,289,000 and $86,502,000 in outstanding standby letters of
credit as of January 30, 2010 and January 31, 2009, respectively.
We are also contingently liable for surety bonds in the amount of approximately $10,169,000 and
$9,235,000 as of January 30, 2010 and January 31, 2009, respectively. The surety bonds guarantee
certain of our payments (for example utilities, easement repairs, licensing requirements and customs
fees).
Off-balance Sheet Arrangements
We lease certain property and equipment under operating leases and lease financings which
contain renewal and escalation clauses, step rent provisions, capital improvements funding and other
lease concessions. These provisions are considered in the calculation of our minimum lease payments
which are recognized as expense on a straight-line basis over the applicable lease term. Any lease
payments that are based upon an existing index or rate are included in our minimum lease payment
calculations. Total operating lease commitments as of January 30, 2010 were $776,285,000.
Pension and Retirement Plans
The Company has a Supplemental Executive Retirement Plan (SERP). This unfunded plan had a
defined benefit component that provided key employees designated by the Board of Directors with
31