Pier 1 2010 Annual Report Download - page 57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
The Company anticipates that the remainder of the 6.375% Notes will be repaid on or before February 15,
2011. The 6.375% Notes are included in fiscal 2011 debt maturities in the table below. Debt matures as follows
(in thousands):
Fiscal Year Debt
2011 16,577
2012 -
2013 -
2014 -
Thereafter 19,000
35,577
Debt discount (142)
Total debt $ 35,435
The Company has a secured credit facility which matures in May 2012 and is secured by the Company’s
eligible merchandise inventory and third-party credit card receivables. At the beginning of fiscal 2010, the total
commitment amount was $325,000,000. Effective July 30, 2009, the Company amended its secured credit
facility. The amendment reduced the total commitment amount to $300,000,000, removed real estate from
eligibility for inclusion in the calculation of the borrowing base, increased applicable interest rate spreads and
redefined permitted uses, liens, indebtedness, acquisitions, and restricted payments. In addition, the amendment
updated certain provisions to allow for the refinance or repurchase of the balance of the Company’s 6.375%
Notes, as well as repurchases of the Company’s outstanding common stock. During fiscal 2010 and 2009, the
Company had no cash borrowings under this facility. As of February 27, 2010, the Company’s borrowing base,
as defined by the agreement, was $229,299,000. This borrowing base calculation is subject to advance rates and
commercially reasonable availability reserves. After excluding the required minimum $30,000,000 and the
$85,758,000 in utilized letters of credit and bankers’ acceptances from the borrowing base, $113,541,000
remained available for cash borrowings. The facility bears interest at LIBOR plus 3.25% for cash borrowings.
The Company pays a fee ranging from 3.0% to 3.5% for standby letters of credit depending on the average daily
availability as defined by the agreement, 1.50% to 1.75% for trade letters of credit and a commitment fee of
0.50% for any unused amounts. As of February 27, 2010, the fee for standby letters of credit was 3.25% and
1.63% for trade letters of credit. As of February 27, 2010, the Company utilized approximately $85,758,000 in
letters of credit and bankers’ acceptances against the secured credit facility. Of the outstanding balance,
approximately $11,279,000 related to trade letters of credit and bankers acceptances for merchandise purchases,
$45,950,000 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 related to the Company’s industrial revenue
bonds, and $9,100,000 related to other miscellaneous standby letters of credit. If advances under the facility
result in availability of less than $30,000,000, the Company would be required to comply with a fixed charge
coverage ratio as stated in the agreement. The Company does not anticipate falling below this minimum
availability in the foreseeable future. The Company was in compliance with all required covenants at fiscal 2010
year end. 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 credit facility, the Company will not be restricted from
paying certain dividends unless fundings on the line result in availability over a specified period of time that is
projected to be less than 35% of the lesser of either $300,000,000 or the calculated borrowing base.
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