True Value 2009 Annual Report Download - page 34

Notes To Consolidated Financial Statements
($ in thousands)
2009 Financial Report 19
2. INVENTORIES
Inventories consisted of the following at:
January 2, January 3,
($ in thousands) 2010 2009
Manufacturing inventories:
Raw materials $ 1,784 $ 2,210
Work-in-process and finished goods 15,057 17,696
Manufacturing inventory reserves (2,354) (2,753)
14,487 17,153
Merchandise inventories:
Warehouse inventory 272,659 301,548
Merchandise inventory reserves (15,686) (14,899)
256,973 286,649
$ 271,460 $ 303,802
The amount of warehouse, general and administrative costs
included in ending inventory was $19,198 and $19,575 at January 2,
2010 and January 3, 2009, respectively. Warehouse, general and
administrative costs incurred for 2009 and 2008, were $90,743
and $92,349, respectively.
3. PROPERTY, PLANT & EQUIPMENT
Property, Plant & Equipment consisted of the following at:
January 2, January 3,
($ in thousands) 2010 2009
Buildings and improvements $ 72,879 $ 70,604
Machinery and warehouse equipment 74,876 73,180
Office and computer equipment,
and software 134,139 134,639
Transportation equipment 19,257 19,365
301,151 297,788
Less: accumulated depreciation (240,101) (231,126)
61,050 66,662
Land 2,340 2,340
$ 63,390 $ 69,002
Depreciation expense, which includes amortization of capi-
tal leases, for 2009, 2008 and 2007, was $13,010, $12,717 and
$12,993, respectively.
4. DEBT ARRANGEMENTS
Long-term debt consisted of the following at:
January 2, January 3,
($ in thousands) 2010 2009
Bank Facility $ – $ 34,300
Real estate mortgage 19,250 19,898
Capital lease obligations 4,776 5,026
Total third-party debt 24,026 59,224
Subordinated promissory and subordinated
promissory installment notes 97,459 81,987
121,485 141,211
Less amounts due within one year (30,421) (29,327)
$ 91,064 $ 111,884
The weighted average of stated interest rates on total debt
was 5.65% and 5.3% as of January 2, 2010 and January 3, 2009,
respectively.
At January 2, 2010, True Value had no outstanding Bank Facility
borrowings. At January 3, 2009, True Value had $34,300 in Bank
Facility borrowings, of which $25,000 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. True Value’s availability as of January 2, 2010
and January 3, 2009 was $240,889 and $204,461, respectively,
after taking into account outstanding letters of credit.
The interest rate charged for the Bank Facility borrowings is vari-
able 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. At January 2, 2010, True Value
had no outstanding Bank Facility borrowings and therefore, had
no corresponding interest rate. At January 3, 2009 this interest
rate was 2.9%. 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 2.4% and 4.5% for 2009 and 2008, 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