True Value 2007 Annual Report Download - page 41

20 | TRUE VALUE COMPANY
N O T E S T O
CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
3. PROPERTY, PLANT & EQUIPMENT
Property, Plant & Equipment consisted of the following at:
December 29, December 30,
($ in thousands) 2007 2006
Buildings and improvements $ 68,482 $ 65,168
Machinery and warehouse equipment 72,569 70,669
Office and computer equipment,
and software 136,512 125,669
Transportation equipment 19,747 20,429
297,310 281,935
Less: accumulated depreciation (229,337) (219,412)
67,973 62,523
Land 2,340 2,340
$ 70,313 $ 64,863
Depreciation expense for 2007, 2006 and 2005 was $12,993,
$12,669 and $13,181, respectively.
4. DEBT ARRANGEMENTS
Long-term debt consisted of the following at:
December 29, December 30,
($ in thousands) 2007 2006
Bank Facility $ 27,700 $ 46,400
Real estate mortgage 20,504 21,070
Capital lease obligations 6,301 7,448
Total third-party debt 54,505 74,918
Subordinated promissory and subordinated
promissory installment notes 72,935 69,559
127,440 144,477
Less amounts due within one year (28,564) (45,185)
$ 98,876 $ 99,292
The weighted average of stated interest rates on total debt was
6.41% and 6.65% as of December 29, 2007 and December 30,
2006, respectively.
At December 29, 2007, True Value had $27,700 in Bank Facility
borrowings in which the entire amount was included in Long-
term debt including notes and capital lease obligations, less
current maturities. At December 30, 2006, True Value had
$46,400 in Bank Facility borrowings, of which $26,400 was
included in Long-term debt including notes and capital lease
obligations, less current maturities. Based on True Value’s
projection of seasonal working capital needs, the amount of
the Bank Facility classified as long-term debt represents the
expected lowest level of borrowings during the next 12 months
for each year.
Bank Facility
On November 30, 2006, True Value entered into a five-year
$250,000 senior secured revolving credit facility (“Bank Facility”)
maturing in 2011. The Bank Facility contains an “accordion”
provision which gives True Value an option to increase the credit
limit by $100,000 for a total of $350,000. True Value’s availability
as of December 29, 2007 and December 30, 2006 was $210,175
and $187,683, respectively.
The interest rate charged for the Bank Facility borrowings is
variable at either LIBOR or prime at True Value’s option, plus in
either case, an additional amount of interest determined based
on a performance-based pricing grid. As of December 29, 2007
and December 30, 2006 this interest rate was 6.5% and 7.2%,
respectively. The average all-in rate charged for use of the Bank
Facility which includes the unused commitment fee and the letter
of credit fee was 7.0% and 7.9% for 2007 and 2006, respectively.
The Bank Facility imposes certain limitations on and requires
compliance with covenants from True Value that are usual and
customary for similar senior secured revolving credit facilities.
Unless such terms and conditions are waived by a majority of
the lenders, these terms and conditions include, among other
things compliance with quarterly financial covenants, limitations
on additional third-party debt, the granting of certain liens and
guarantees, investments, transactions with related parties and
acquisitions and periodic financial reporting requirements. Sub-
stantially all of True Value’s assets, excluding property, plant &
equipment, are pledged as security for the Bank Facility. Man-
agement believes it is in compliance with these requirements and
is in compliance with all terms and conditions of the Bank Facility.
Fees paid for obtaining the Bank Facility totaled $1,041 and
these fees are being amortized by True Value over the five-year
term of the Bank Facility. Upon entering into the Bank Facility in
fiscal 2006, True Value wrote off the remaining capitalized fees
of $1,346 from the asset-based revolving credit facility (“Prior
Bank Facility”). The Bank Facility refinanced the Prior Bank Facil-
ity of $275,000 with a maturity date of August 2008. The Bank
Facility provides True Value with lower interest rates and admin-
istrative costs, less restrictive terms and conditions, and certainty
to its line of credit.