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Line of Credit
12 Months Ended
Feb. 03, 2018
Debt Disclosure [Abstract]  
Line of Credit
Line of Credit
Our amended and restated credit agreement with Wells Fargo Bank, N.A. ("Bank") provides for a $25.0 million revolving line of credit with a maturity date of January 26, 2020. The interest rate charged on borrowings is selected at our discretion at the time of draw between the London Interbank Offered Rate, plus 0.75%, or at the Bank’s prime rate. The agreement allows for the declaration and payment of dividends or distributions to stockholders. On February 20, 2018 and February 24, 2017, we paid a special dividend of $1.00 per share and $0.70 per share, respectively. Refer to "Note 18: Shareholders' Equity", for further information. The line of credit is secured by substantially all of our assets. As a sub-feature under the revolving line of credit, the Bank may also issue stand-by and/or commercial letters of credit up to $15.0 million.
We are required to maintain certain financial and non-financial covenants in accordance with the line of credit. The financial covenants require certain levels of leverage and profitability, such as (i) income before income taxes not to be less than $1 million (measured at the end of each fiscal quarter), (ii) a maximum ratio of 4.00 to 1.00 as of each quarter end for “Funded Debt to EBITDAR”, defined as the sum of total debt, capital leases and annual rent expense multiplied by 6 divided by the sum of net income, interest expense, taxes, depreciation, amortization and annual rent expense, and (iii) requires minimum eligible inventory of $50 million as of the end of each quarter. In addition, maximum investment in fixed assets in any fiscal year of $50 million.
In September 2016, we established a $750,000 standby letter of credit as security against insurance claims as required by our workers compensation insurance policy.  As of February 3, 2018, there has been no activity under this letter of credit since its inception.
As of February 3, 2018, we were in compliance with all of our covenants and had no outstanding borrowings under the revolving credit facility.