Debt Obligations

6 Months Ended

Jul. 30, 2011

Debt Obligations

Debt Obligations

D. DEBT OBLIGATIONS

Revolving Line of Credit Facility – The Company has a $60.0 million revolving line of credit facility dated February 20, 2009, as amended effective June 1, 2011, with Wells Fargo Bank, N.A. (successor in merger with Wells Fargo Retail Finance, LLC), CIT Bank and PNC Bank ("WF LOC"). The credit facility expires on June 1, 2015. The amendment to the WF LOC amends certain terms of the revolving line of credit facility, including a decrease in maximum available borrowings from $78 million to $60 million, a 2.00% reduction in the interest rate for base rate advances and LIBOR rate advances both during seasonal and non-seasonal periods, and a decrease in the unused line fee from 0.50% to 0.375%. The WF LOC allows the Company to increase the maximum available borrowings under the facility to $80 million. The Company had no borrowings outstanding under the WF LOC as of July 30, 2011 and January 29, 2011 or during the twenty six week period ending July 30, 2011. The Company had $14.9 million of borrowings outstanding under this revolving line of credit facility at July 31, 2010.

Borrowings under this facility bear interest at various rates based on the excess availability and time of year, with two rate options at the discretion of management as follows: (1) For base rate advances, borrowings bear interest at prime rate plus 1.00% during the non-seasonal period and prime rate plus 1.75% during the seasonal period. When excess availability is $25.0 million or greater, borrowings for base rate advances bear interest at prime rate plus 0.75% during the non-seasonal period and prime rate plus 1.50% during the seasonal period. (2) For LIBOR rate advances, borrowings bear interest at LIBOR rate plus 2.00% during the non-seasonal period and LIBOR rate plus 2.75% during the seasonal period. When excess availability is $25.0 million or greater, borrowings for LIBOR advances bear interest at LIBOR rate plus 1.75% during the non-seasonal period and LIBOR rate plus 2.50% during the seasonal period. Borrowings available under the WF LOC may not exceed the borrowing base (consisting of specified percentages of credit card receivables and eligible inventory, less applicable reserves). The Company had $54.3 million and $29.4 million available to borrow at July 30, 2011 and January 29, 2011, respectively. Borrowings under this facility would have borne an interest rate of 4.25% at July 30, 2011 and 6.00% at January 29, 2011. The Company had outstanding letters of credit included in the borrowing base totaling approximately $0.9 million and $0.4 million as of July 30, 2011 and January 29, 2011, respectively.

An unused line fee is payable quarterly in an amount equal to 0.375% of the sum of the average daily unused revolving commitment plus the average daily unused letter of credit commitment. A customary fee is also payable to the administrative agent under the Loan Agreement on an annual basis.

Borrowings are secured by the Company's inventory, accounts receivable and all other personal property, except as specifically excluded in the agreement. Among other provisions, the revolving line of credit facility contains certain financial covenants restricting the amount of capital expenditures and dividends that can be paid without consent from the lenders. As of July 30, 2011, the Company was in compliance with all of its debt covenants.

Long-term Debt – Long-term debt consists of the following:

	July 30, 2011			January 29, 2011
Term notes payable	$	638		$	1,834
Capital lease obligations		844			1,054
Total long-term debt		1,482			2,888
Less current portion of long-term debt		(1,071	)		(1,932	)
Long-term debt, less current portion	$	411		$	956

As of June 1, 2011, the Company had paid off the $2.0 million equipment loan, as the remaining obligation of $0.6 million was fully paid by the Company on May 25, 2011. The amended WF LOC allows the Company to obtain up to a $15.0 million equipment term loan.

During 2010, the Company entered into two financing arrangements to purchase software. Payments of $0.2 million, including fixed interest at 2.6%, are due quarterly through March 2012 and payments of $41 thousand, including fixed interest at 4.9%, are due quarterly through April 2012.

Annual scheduled debt maturities for the term notes payable are $0.4 million and $0.2 million for the remainder of fiscal year 2011 and fiscal year 2012, respectively.

Financial Instruments – Based on the borrowing rates currently available to the Company for debt with similar terms, the fair value of long-term debt at July 30, 2011 and January 29, 2011 approximates its carrying amount of $1.5 million and $2.9 million, respectively. For all other financial instruments including cash, receivables, accounts payable and accrued expenses, the carrying amounts approximate fair value due to the short maturity of those instruments.