LONG-TERM DEBT

12 Months Ended

Jan. 31, 2021

Debt Disclosure [Abstract]

Long-term Debt [Text Block]

NOTE 12 – LONG-TERM DEBT

We paid off the term loans which were related to the Home Meridian acquisition in fiscal 2021 and currently have a $35 million revolving credit facility. The credit facility was provided for in the amended and restated loan agreement (the “Original Loan Agreement”), which we entered into on February 1, 2016 with Bank of America, N. A. (“BofA”) in connection with the Home Meridian Acquisition. We entered a Second Amended and Restated Loan Agreement dated as of September 29, 2017 (the “Second Amended and Restated Loan Agreement”), a First Amendment to Second Amended and Restated Loan Agreement dated as of January 31, 2019, a Second Amendment to Second Amended and Restated Loan Agreement dated as of November 4, 2020, and a Third Amendment to the Second Amended and Restated Loan Agreement dated as of January 27, 2021. Details of our revolving credit facility are outlined below:

■ The facility is available between January 27, 2021 and February 1, 2026 or such earlier date as the availability may terminate or such later date as BofA may from time to time in its sole discretion designate in any extension notice;

■ During the availability period, BofA will provide a line of credit to the maximum amount of the Existing Revolver;

■ The sublimit of the facility available for the issuance of letters of credit was increased to $10 million;

■ The actual daily amount of undrawn letters of credit is subject to a quarterly fee equal to a per annum rate of 1%;

■ We may, on a one-time basis, request an increase in the Existing Revolver by an amount not to exceed $30 million at BofA’s discretion; and

■ Any amounts outstanding under the Existing Revolver bear interest at a rate, equal to the then current LIBOR monthly rate (adjusted periodically) plus 1.00%. We must also pay a quarterly unused commitment fee at a rate of 0.15% determined by the actual daily amount of credit outstanding during the applicable quarter.

The loan covenants agreed to under the Second Amended and Restated Loan Agreement continue to apply to us. They include customary representations and warranties and requires us to comply with customary covenants, including, among other things, the following financial covenants:

● Maintain a ratio of funded debt to EBITDA not exceeding 2.00:1.00.

● A basic fixed charge coverage ratio of at least 1.25:1.00; and

● Limit capital expenditures to no more than $15.0 million during any fiscal year.

The Second Amended and Restated Loan Agreement also limits our right to incur other indebtedness, make certain investments and create liens upon our assets, subject to certain exceptions, among other restrictions. They do not restrict our ability to pay cash dividends on, or repurchase shares of our common stock, subject to our compliance with the financial covenants discussed above, if we are not otherwise in default under the agreements.

We were in compliance with each of these financial covenants at January 31, 2021.

As of January 31, 2021, we had an aggregate $28.7 million available under the Existing Revolver to fund working capital needs. Standby letters of credit in the aggregate amount of $6.3 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the revolving credit facility as of January 31, 2021. There were no additional borrowings outstanding under the Existing Revolver as of January 31, 2021.