NOTE 5 - DEBT

A summary of long-term debt and capital lease obligations is as follows:


	April 30, 2011				January 29, 2011				May 1, 2010
	Carrying		Fair		Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value		Amount		Value

Notes 7.50%, matured fiscal year 2010	$	-	$	-	$	-	$	-	$	22,859	$	23,442
Notes 9.875%, maturing fiscal year 2011		141,557		146,186		141,557		147,573		141,557		149,343
Notes 7.00%, maturing fiscal year 2013		2,125		2,268		2,125		2,168		2,922		2,852
Notes 7.375%, maturing fiscal year 2019		-		-		1,911		1,835		1,911		1,659
Convertible notes 7.50%, maturing fiscal year 2013, net (1)		105,908		278,022		104,777		265,906		101,567		237,416
Convertible notes 2.00%, maturing fiscal year 2024, net (2)		204,649		248,402		202,648		244,720		196,827		238,050
Capital lease obligations (3)		56,942		n/a		53,730		n/a		57,989		n/a

Total debt		511,181		674,878		506,748		662,202		525,632		652,762

Less current portion:
Notes 7.50%, matured fiscal year 2010		-		-		-		-		(22,859)		(23,442)
Notes 9.875%, maturing fiscal year 2011		(141,557)		(146,186)		(141,557)		(147,573)		-		-
Capital lease obligations (3)		(6,624)		n/a		(5,941)		n/a		(5,780)		n/a

Current portion of long-term debt		(148,181)		(146,186)		(147,498)		(147,573)		(28,639)		(23,442)
Long-term debt	$	363,000	$	528,692	$	359,250	$	514,629	$	496,993	$	629,320

(1)	Amount represents the $120,000 convertible notes, net of the unamortized discount of $14,092, $15,223, and $18,433 as of April 30, 2011, January 29, 2011, and May 1, 2010, respectively.

(2)	Amount represents the $230,000 convertible notes, net of the unamortized discount of $25,351, $27,352, and $33,173 as of April 30, 2011, January 29, 2011, and May 1, 2010, respectively.

(3)	Disclosure regarding fair value of capital leases is not required.

The fair values of the long-term debt were estimated based on quotes obtained from financial institutions for those or similar instruments or on the basis of quoted market prices.

REVOLVING CREDIT AGREEMENT

The Company has a $500,000 revolving credit facility, subject to a borrowing base equal to a specified percentage of eligible inventory and certain credit card receivables.

In March 2011, the Company entered into an amendment to its existing revolving credit agreement. The amendment extended the maturity date of this facility from November 23, 2013 to March 29, 2016 and revised certain terms of the existing revolving credit facility. The maximum committed borrowing capacity of the amended facility remains at $500 million. Fees incurred associated with the amendment to the revolving credit agreement were $2,961. As of April 30, 2011, the Company had no direct outstanding borrowings under the facility and had letters of credit outstanding of $17,733.

The obligations under the facility are guaranteed by certain of the Company's existing and future domestic subsidiaries, and the obligations are secured by the Company's and the guarantors' merchandise inventories and certain third party accounts receivable. Borrowings under the facility bear interest at a per annum rate of either LIBOR plus a percentage ranging from 2.00% to 2.50%, or at the higher of the prime rate and federal funds rate plus a percentage ranging from 1.00% to 1.50%. Letters of credit are charged a per annum fee equal to the then applicable LIBOR borrowing spread (for standby letters of credit) or the applicable LIBOR spread minus 0.5% (for documentary or commercial letters of credit). The Company also pays an unused line fee ranging from 0.38% to 0.50% per annum on the average daily unused revolver.

During periods in which availability under the agreement is $62,500 or more, the Company is not subject to financial covenants. If and when availability under the agreement decreases to less than $62,500, the Company will be subject to a minimum fixed charge coverage ratio of 1.0 to 1.0. There is no debt rating trigger. As of April 30, 2011, the Company was not subject to the minimum fixed charge coverage ratio.

The revolving credit agreement permits additional debt in specific categories including the following (each category being subject to limitations as described in the revolving credit agreement): debt arising from permitted sale/leaseback transactions; debt to finance purchases of machinery, equipment, real estate and other fixed assets; debt in connection with permitted acquisitions; and unsecured debt. The revolving credit agreement also permits other debt (including permitted sale/leaseback transactions) in an aggregate amount not to exceed $500,000 at any time, including secured debt, so long as it is a permitted lien as defined by the revolving credit agreement. The revolving credit agreement also places certain restrictions on, among other things, asset sales, the ability to make acquisitions and investments, and to pay dividends.

SENIOR NOTES

As of April 30, 2011, the Company had $143,682 of unsecured senior notes outstanding, excluding the convertible notes, comprising two separate series having maturities ranging from 2011 to 2013 and interest rates ranging from 7.000% to 9.875%. The senior notes are guaranteed by all of the subsidiaries that guarantee the Company's credit facility and have substantially identical terms except for the maturity dates and interest rates payable to investors. The notes permit certain sale/leaseback transactions but place certain restrictions around the use of proceeds generated from a sale/leaseback transaction. The terms of each senior note require all principal to be repaid at maturity. There are no financial covenants associated with these notes, and there are no debt-rating triggers.

During April 2011, the Company completed the redemption of its 7.375% senior notes that mature in 2019. The redemption of these notes resulted in a loss on extinguishment of debt of approximately $539.

CONVERTIBLE NOTES

7.5% Convertible Notes

The Company issued $120,000 of 7.5% convertible notes in May 2009 (the "7.5% Convertible Notes"). The 7.5% Convertible Notes mature in December 2013 and are convertible, at the option of the holders at any time, into shares of the Company's common stock at a conversion rate of $5.54 per share of common stock (21,670 shares of common stock to be issued upon conversion). The Company can settle a conversion of the notes with shares, cash, or a combination thereof at its discretion. Authoritative accounting literature requires the allocation of convertible debt proceeds between the liability component and the embedded conversion option (i.e., the equity component). The liability component of the debt instrument is accreted to par value using the effective interest method over the remaining life of the debt. This amortization is reported as a component of interest expense. The equity component is not subsequently revalued as long as it continues to qualify for equity treatment.

Upon issuance, the Company estimated the fair value of the liability component of the 7.5% Convertible Notes, assuming a 13% non-convertible borrowing rate, to be $97,994. The difference between the fair value and the principal amount of the 7.5% Convertible Notes was $22,006. This amount was recorded as a debt discount and as an increase to additional paid-in capital as of the issuance date. The discount is being amortized to interest expense over the 4.5 year period to the maturity date of the notes in December 2013 resulting in an increase in non-cash interest expense in future periods.

2.0% Convertible Senior Notes

The Company issued $230,000 of 2.0% convertible senior notes in March 2004 (the "2.0% Convertible Notes"). The 2.0% Convertible Notes mature in 2024 and, in certain circumstances, allow the holders to convert the notes to shares of the Company's common stock at a conversion rate of $11.97 per share of common stock (19,219 shares of common stock to be issued upon conversion) subject to an anti-dilution adjustment. The holders may put the debt back to the Company in 2014 or 2019 and the Company can call the debt on or after March 21, 2011. The Company can settle a conversion of the notes with shares, cash or a combination thereof at its discretion. The holders may convert the notes at the following times, among others: if the Company's share price is greater than 120% of the applicable conversion price for a certain trading period; if the credit ratings of the notes are below a certain threshold; or upon the occurrence of certain consolidations, mergers or share exchange transactions involving the Company. As of April 30, 2011, none of the conversion criteria were met.

In connection with the issuance of the 2.0% Convertible Notes, the Company entered into a convertible note hedge and written call options on its common stock to reduce the Company's exposure to dilution from the conversion of the 2.0% Convertible Notes. The convertible note hedge expired on April 20, 2011. The written call options have a strike price of $13.81 and the contract is indexed to 19,219 shares of the Company's common stock. The written call option options have maturity dates ranging from June 21, 2011 through August 2, 2011. These transactions were accounted for as a net reduction of stockholders' equity of approximately $25,000 in 2004. The estimated fair value of the written call option was $3,594 as of April 30, 2011. The estimated net fair value of the convertible note hedge and written call option was $4,901 and $2,723 as of January 29, 2011 and May 1, 2010, respectively.

The Company estimated the fair value of the liability component of the 2.0% Convertible Notes at the date of issuance, assuming a 6.25% non-convertible borrowing rate, to be $158,148. The difference between the fair value and the principal amount of the 2.0% Convertible Notes was $71,852. This amount was recorded as a debt discount and as an increase to additional paid-in capital as of the issuance date. In accordance with the authoritative accounting guidance, the debt discount should be amortized over the expected life of a similar liability that does not have an associated equity component (considering the effects of embedded features other than the conversion option). Since the holders of the notes have put options in 2014 and 2019, the debt instrument is accreted to par value using the effective interest method from the date of issuance until the first put date in 2014 resulting in an increase in non-cash interest expense.