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Debt Financing Arrangements | 9 Months Ended
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Nov. 02, 2024
Debt Disclosure [Abstract] |
Debt Financing Arrangements | Debt Financing Arrangements Our debt financing arrangements consist of the following (in thousands):
| November 2, 2024 |  | February 3, 2024
ABL Facility, as amended | $ | — |  |  | $ | 7,270 |
Term loan |  |  |
Amended Term Loan Credit Agreement | 297,500 |  |  | 310,625 |
Less: current portion of unamortized original issue discount and debt financing costs | (1,356) |  |  | (1,356) |
Less: noncurrent portion of unamortized original issue discount and debt financing costs | (3,555) |  |  | (4,572) |
Total term loan outstanding, net of unamortized original issue discount and debt financing costs | 292,589 |  |  | 304,697 |
Less: current portion of term loan, net of unamortized original issue discount and debt financing costs | (16,144) |  |  | (16,144) |
Total term loan, net of current portion and unamortized original issue discount and debt financing costs | $ | 276,445 |  |  | $ | 288,553 |
Fixed mandatory principal repayments due on the outstanding term loan are as follows as of the end of the third quarter of fiscal year 2024 (in thousands):
2024 | 4,375 |
2025 | 17,500 |
2026 | 17,500 |
2027 | 17,500 |
2028 | 240,625 |
| $ | 297,500 |
Term Loan Credit Agreement On June 14, 2021, we entered into a term loan credit agreement (the “Term Loan Credit Agreement”) among Bank of America, N.A., as agent, and the lenders party thereto. On May 24, 2023, we entered into an amendment to the Term Loan Credit Agreement (the “Amended Term Loan Credit Agreement”). The Amended Term Loan Credit Agreement replaced the London Interbank Offered Rate (“LIBOR”) interest rate benchmark with the Secured Overnight Financing Rate (“SOFR”) benchmark. All other material terms of the Term Loan Credit Agreement remained substantially the same after giving effect to the Amended Term Loan Credit Agreement. In March 2020 and January 2021, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848)—Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) and 2021-01, Reference Rate Reform (Topic 848): Scope (“ASU 2021-01”), respectively. ASU 2020-04 and ASU 2021-01 include practical expedients which provide entities the option to account for qualifying amendments as if the modification was not substantial in accordance with Accounting Standards Codification (“ASC”) 470, Debt. We elected this option, accordingly, the Amended Term Loan Credit Agreement did not have a material impact on our condensed consolidated financial statements. The Term Loan Credit Agreement provides for term loans in an initial aggregate amount of $350.0 million, which is recorded net of an original issue discount (“OID”) of $3.5 million and has a maturity date of June 14, 2028. In connection with the Term Loan Credit Agreement, we paid financing costs of approximately $6.0 million. The elected interest rate on November 2, 2024 was approximately 10%. As of the end of the third quarter of fiscal year 2024, we were compliant with our debt covenants under the Amended Term Loan Credit Agreement. As of November 2, 2024, the fair value of the Amended Term Loan Credit Agreement was approximately $276.7 million. As of the end of fiscal year 2023, the fair value of the Amended Term Loan Credit Agreement was approximately $259.4 million. The fair value of the Amended Term Loan Credit Agreement is determined using current applicable rates for similar instruments as of the balance sheet date, a Level 2 measurement (as defined in “Note 18—Fair Value Measurements”). As of the end of the third quarter of fiscal year 2024, total borrowings, net of OID and financing costs, of $292.6 million remain outstanding under the Amended Term Loan Credit Agreement. During the three- and nine-month periods ended November 2, 2024, we recognized $8.2 million and $25.5 million, respectively, of interest expense related to the Amended Term Loan Credit Agreement. During the three- and nine-month periods ended October 28, 2023, we recognized $9.1 million and $26.5 million, respectively, of interest expense related to the Amended Term Loan Credit Agreement. During the three- and nine-month periods ended November 2, 2024, we recognized $0.4 million and $1.0 million, respectively, of OID and financing costs related to the Amended Term Loan Credit Agreement. During the three- and nine-month periods ended October 28, 2023, we recognized $0.3 million and $0.9 million, respectively, of OID and financing costs related to the Amended Term Loan Credit Agreement. The OID and financing costs are amortized over the Amended Term Loan Credit Agreement’s seven-year term and are reflected as a direct deduction of the face amount of the term loan in our condensed consolidated balance sheets. We recognize interest payments, together with amortization of the OID and financing costs, in interest expense in our condensed consolidated statements of operations and comprehensive (loss) income. Senior Secured Asset-Based Revolving Credit Facility In May 2015, we entered into a credit agreement for a senior secured asset-based revolving credit facility with Bank of America, N.A., which was subsequently amended in October 2017, June 2019, September 2019 and June 2021 (“ABL Facility”). Under the ABL Facility, as amended, the aggregate commitments available are $150.0 million (subject to a borrowing base), and we have the right to request additional commitments up to $50 million plus the aggregate principal amount of any permanent principal reductions we may take (subject to customary conditions precedent). The principal amount of the outstanding loans are due and payable on June 14, 2026. On April 21, 2023, we entered into a fourth amendment to the ABL Facility (the “4th Amendment”). The 4th Amendment replaced the LIBOR interest rate benchmark with the SOFR benchmark. All other material terms of the ABL Facility, as amended, remained substantially the same after giving effect to the 4th Amendment. We elected to apply the practical expedients included in ASU 2020-04 and 2021-01, accordingly, the 4th Amendment did not have a material impact on our condensed consolidated financial statements. As of the end of the third quarter of fiscal year 2024, the applicable interest rate for borrowings under the ABL Facility, as amended, was approximately 8% per annum. As of the end of the third quarter of fiscal year 2024, we were compliant with our debt covenants under the ABL Facility, as amended. As of the end of the third quarter of fiscal year 2024, the maximum restricted payment utilizing the ABL Facility, as amended, that our subsidiaries could make from their net assets was $101.3 million. We consider the carrying amounts of the ABL Facility, as amended, to approximate fair value because of the variable interest rate of this facility, a Level 2 measurement (as defined in “Note 18—Fair Value Measurements”). Availability under the ABL Facility, as amended, as of the end of the third quarter of fiscal year 2024 was $107.8 million, which reflects no borrowings. Availability under the ABL Facility, as amended, at the end of fiscal year 2023 was $102.7 million, which reflects borrowings of $7.3 million. Standby letters of credit issued and outstanding were $11.4 million as of the end of the third quarter of fiscal year 2024 and $11.4 million as of the end of fiscal year 2023. We amortize financing costs associated with the ABL Facility, as amended, over the five-year term of the ABL Facility, as amended, and reflect them in prepaid expenses and other current assets and deposits and other noncurrent assets in our condensed consolidated balance sheets. During the three-month periods ended November 2, 2024 and October 28, 2023, amortization of financing costs for the ABL Facility, as amended, was not material. During the nine-month periods ended November 2, 2024 and October 28, 2023, amortization of financing costs for the ABL Facility, as amended, was $0.1 million and $0.1 million, respectively. During the three- and nine-month periods ended November 2, 2024, interest payments were $0.2 million and $0.7 million, respectively. During the three- and nine-month periods ended October 28, 2023, interest payments were $0.3 million and $1.2 million, respectively. We recognize amortization of financing costs and interest payments for the revolving credit facility in interest expense in our condensed consolidated statements of operations and comprehensive (loss) income.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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