Debt

6 Months Ended

Aug. 03, 2019

Debt Disclosure [Abstract]

DEBT

Bank Credit Facility

On August 31, 2018, we entered into a $700 million five-year unsecured credit facility (“2018 Credit Agreement”) that replaced our prior credit facility entered into in July 2011 and most recently amended in May 2015 (“2011 Credit Agreement”). The 2018 Credit Agreement expires on August 31, 2023. In connection with our entry into the 2018 Credit Agreement, we paid bank fees and other expenses in the aggregate amount of $1.5 million, which are being amortized over the term of the 2018 Credit Agreement.

Borrowings under the 2018 Credit Agreement are available for general corporate purposes, working capital, and to repay certain indebtedness.  The 2018 Credit Agreement includes a $30 million swing loan sublimit, a $75 million letter of credit sublimit, a $75 million sublimit for loans to foreign borrowers, and a $200 million optional currency sublimit.  The interest rates, pricing and fees under the 2018 Credit Agreement fluctuate based on our debt rating.  The 2018 Credit Agreement allows us to select our interest rate for each borrowing from multiple interest rate options.  The interest rate options are generally derived from the prime rate or LIBOR.  We may prepay revolving loans made under the 2018 Credit Agreement.  The 2018 Credit Agreement contains financial and other covenants, including, but not limited to, limitations on indebtedness, liens and investments, as well as the maintenance of two financial ratios – a leverage ratio and a fixed charge coverage ratio. Additionally, we are subject to cross-default provisions associated with the synthetic lease for our new distribution center in California. A violation of any of the covenants could result in a default under the 2018 Credit Agreement that would permit the lenders to restrict our ability to further access the 2018 Credit Agreement for loans and letters of credit and require the immediate repayment of any outstanding loans under the 2018 Credit Agreement.  At August 3, 2019, we had $467.8 million of borrowings outstanding under the 2018 Credit Agreement, while $16.1 million was committed to outstanding letters of credit, leaving $216.1 million available under the 2018 Credit Agreement.

Subsequent Event - Secured Equipment Term Note

On August 7, 2019, we entered into a $70 million term note agreement, which is secured by the equipment at our new California distribution center. The initial term of this note will expire on May 7, 2024. We are required to make monthly payments on this amortizing note over its term and are permitted to prepay the note at any time. The interest rate on the note is 3.3%. We used the funds from the secured note to pay down outstanding borrowings under the 2018 Credit Agreement that we previously used to fund the purchase and assembly of the equipment at our new California distribution center.