Credit Arrangements, Notes Payable and Long-term Debt

12 Months Ended

Feb. 03, 2013

Credit Arrangements, Notes Payable and Long-term Debt [Abstract]

Credit Arrangements, Notes Payable and Long-term Debt

3.             Credit Arrangements, Notes Payable and Long-term Debt 

On July 21, 2011, the Company entered into a five-year revolving Credit Agreement (the "Facility") with Wells Fargo Bank, National Association and Wells Capital Finance, LLC (collectively "Wells Fargo").  The $120.0 million Facility replaced the Company's previous $120.0 million credit facility with Bank of America, N.A. and Wells Fargo Retail Finance, LLC, and expires July 20, 2016.  Additional costs paid to Wells Fargo in connection with the new facility were $0.5 million.  Those fees have been deferred and will be amortized over the term of the new facility.  Loan advances are secured by a security interest in the Company's inventory and credit card receivables. 

Based on the Company's average excess availability, the amount advanced to the Company on any Base Rate Loan (as such term is defined in the Facility) bears interest at the highest of (a) the rate of interest in effect for such day as publicly announced from time to time by Wells Fargo as its "prime rate"; (b) the Federal Funds Rate for such day, plus 1.0%; and (c) the LIBO Rate for a 30 day interest period as determined on such day, plus 2.0%.  Amounts advanced with respect to any LIBO Borrowing for any Interest Period (as those terms are defined in the Facility) shall bear interest at an interest rate per annum (rounded upwards, if necessary, to the next 1/16 of one percent) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate (as defined in the Facility).  The Facility contains various restrictions that are applicable when outstanding borrowings reach certain thresholds, including limitations on additional indebtedness, prepayments, acquisition of assets, granting of liens, certain investments and payment of dividends.

On October 12, 2012, subsequent to a trade confirmation executed October 10, 2012 whereby the Company repurchased shares of its common stock, the Company notified Wells Fargo that immediately after giving effect to the share repurchase, the Consolidated Fixed Charge Coverage Ratio would not be greater than the required ratio per Section 7.06(c) of the Facility.  On October 12, 2012, Wells Fargo issued its consent of the repurchase; provided that their consent automatically terminated in the event the repurchase was not consummated within 90 days of the date of consent.

On February 6, 2013, the Board of Directors of the Company unanimously approved a First Amendment (the "Amendment") to its Credit Agreement with Wells Fargo National Association, amending Section 7.06(c) of the Credit Agreement to permit the Company, subject to certain conditions set forth in the Amendment, to repurchase, redeem or otherwise acquire Equity Interests issued by the Company not to exceed $1,000,000 in the aggregate in each Fiscal Year.  Under the Credit Agreement, "Equity Interests" is defined as all of the shares of the capital stock of a person and all of the other warrants, options or other rights of a person to purchase capital stock of such person.  Such amendment was announced on Form 8-K filed by the Company with the Securities and Exchange Commission on February 12, 2013 and a copy of the Amendment is attached to such 8-K..  Except to the extent specifically set forth in Wells Fargo's Consent, no other consent, waiver of, or change in any of the terms, provisions or conditions of the Credit Agreement is intended or implied.

Notes payable outstanding at February 3, 2013 and January 29, 2012 under the revolving loan credit facility aggregated $63.4 million and $52.1 million, respectively.  The lender had also issued letters of credit aggregating $8.6 million and $7.6 million, respectively, at such dates on behalf of the Company.  The interest rates on the outstanding borrowings at February 3, 2013 were 2.25% on $60.0 million of the outstanding balance and 4.25% on the remaining $3.4 million.  The Company had additional borrowings available at February 3, 2013 under the revolving loan credit facility amounting to approximately $45.3 million. 

As of January 30, 2011, the Company had a term loan which was incurred to fund new store fixtures and equipment and was secured by such fixtures and equipment.  The term loan expired and the remaining balance was paid during fiscal year 2012.

Interest expense on notes payable and long-term debt, excluding capital lease obligations, aggregated $2.2 million and $3.2 million during fiscal years 2013 and fiscal 2012, respectively.