Pier 1 2007 Annual Report Download - page 56

As a result of the offsetting call and put features of the Notes in five years, the Company anticipates the
entire $165,000,000 in Notes will be repaid or refinanced on February 15, 2011. Therefore, the Notes are
included in fiscal 2011 long-term debt maturities in the table below. Long-term debt matures as follows (in
thousands):
Fiscal Year
Long-Term
Debt
2008 ............................................................... $ —
2009 ............................................................... —
2010 ............................................................... —
2011 ............................................................... 165,000
2012 ............................................................... —
Thereafter ........................................................... 19,000
Total long-term debt .................................................. $184,000
At the beginning of fiscal 2006, the Company had a three-year $125,000,000 revolving credit facility with
a maturity date of August 2006. Proceeds of borrowings under the credit facility were available for working
capital of the Company and for general corporate purposes. The agreement had certain restrictive covenants
that required, among other things, the maintenance of certain financial ratios including debt to net cash flow,
fixed charge coverage and minimum tangible net worth. At the time this credit facility was repaid in
November 2005, it bore a floating interest rate (LIBOR plus 1.25%) based on the Company’s corporate debt
rating and required a commitment fee of 0.25% on unused amounts.
During fiscal 2006, the Company entered into a new $325,000,000 secured credit facility, which matures
in November 2010. This facility is secured by the Company’s eligible merchandise inventory and third party
credit card receivables. It replaced the Company’s previous unsecured bank facilities, including the three-year
$125,000,000 revolving credit facility discussed above, the $120,000,000 uncommitted letter of credit facility,
and other credit lines used for special-purpose letters of credit. The new facility bears interest at LIBOR plus
1.0% for cash borrowings. The Company will not be required to comply with restrictive covenants under the
new facility unless the facility has less than $32,500,000 available under the borrowing base as defined in the
agreement. As of March 3, 2007, the Company’s borrowing base was $239,696,000, of which $83,167,000
was available for cash borrowings excluding the $32,500,000 discussed above. The Company pays a fee of
1.25% for standby letters of credit, 0.5% for trade letters of credit and a commitment fee of 0.25% for any
unused amounts. As of March 3, 2007, the Company had no outstanding cash borrowings and approximately
$124,029,000 in letters of credit utilized against the new secured credit facility. Of the outstanding balance,
approximately $52,400,000 related to trade letters of credit for merchandise purchases, $48,800,000 related to
standby letters of credit for the Company’s workers’ compensation and general liability insurance policies,
$19,429,000 related to standby letters of credit on the Company’s industrial revenue bonds, and $3,400,000
related to other miscellaneous standby letters of credit. This facility may limit certain investments and, in
some instances, limit payment of cash dividends and repurchases of the Company’s common stock. Under this
new credit facility, the Company will not be restricted from paying cash dividends unless the availability under
the facility is less than 30% of the Company’s borrowing base calculation. The Company was in compliance
with all required debt covenants at fiscal 2007 year end.
54
Pier 1 Imports, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)