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DEBT | 3 Months Ended
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May 01, 2021
Debt Disclosure [Abstract] |
DEBT | DEBT Revolving Credit Facilit y The Company and certain of its subsidiaries maintain an asset-based revolving credit facility (the “ABL Credit Facility”) with Wells Fargo Bank, National Association (“Wells Fargo”), Bank of America, N.A., HSBC Business Credit (USA) Inc., and JPMorgan Chase Bank, N.A., as lenders (collectively, the “Lenders”) and Wells Fargo, as Administrative Agent, Collateral Agent, and Swing Line Lender. The ABL Credit Facility, which expires in May 2024, consists of a $360 million asset-based revolving credit facility that was increased from $325 million as a result of finalizing an amendment with the Lenders on April 24, 2020 to secure the Company an additional $35 million available under the accordion feature for a period of one year. The ABL Credit Facility includes a $25 million Canadian sublimit and a $50 million sublimit for standby and documentary letters of credit. On October 5, 2020, the Company further amended the ABL Credit Facility to provide for certain changes that permitted the issuance of an $80 million term loan (the “Term Loan”) on that date and align certain terms of the ABL Credit Facility to those of the Term Loan. The Term Loan is discussed in more detail below. On April 23, 2021, the Company and its Lenders extended the $35 million of additional availability for an additional year until April 23, 2022. Borrowings outstanding under the ABL Credit Facility bear interest, at the Company’s option, at: (i)the prime rate, plus a margin of 1.75% to 1.88% based on the amount of the Company’s average excess availability under the facility; or (ii)the London InterBank Offered Rate, or “LIBOR”, for an interest period of one, two, three, or six months, as selected by the Company, plus a margin of: a) 2.50% to 2.75% and b) 1.00%, based on the amount of the Company’s average excess availability under the facility. The Company is charged an unused line fee of 0.25% on the unused portion of the commitments. Letter of credit fees range from 1.25% to 1.38% for commercial letters of credit and from 2.00% to 2.25% for standby letters of credit. Letter of credit fees are determined based on the amount of the Company’s average excess availability under the facility. The amount available for loans and letters of credit under the ABL Credit Facility is determined by a borrowing base consisting of certain credit card receivables and certain trade receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves. The outstanding obligations under the ABL Credit Facility may be accelerated upon the occurrence of certain events, including, among others, non-payment, breach of covenants, the institution of insolvency proceedings, defaults under other material indebtedness, and a change of control, subject, in the case of certain defaults, to the expiration of applicable grace periods. The Company is not subject to any early termination fees. The ABL Credit Facility contains covenants, which include conditions on stock buybacks and the payment of cash dividends or similar payments. These covenants also limit the ability of the Company and its subsidiaries to incur certain liens, to incur certain indebtedness, to make certain investments, acquisitions, or dispositions or to change the nature of its business. Credit extended under the ABL Credit Facility is secured by a first priority security interest in substantially all of the Company’s U.S. and Canadian assets, excluding intellectual property, software, equipment, and fixtures. In connection with the Term Loan, the Lenders under the ABL Credit Facility entered into an intercreditor agreement with the Term Loan lender and were granted a second priority security interest in the Term Loan collateral, which includes the Company’s intellectual property, certain furniture, fixtures and equipment, and pledges of subsidiary capital stock. As of May 1, 2021 the Company has capitalized an aggregate of approximately $6.2 million in deferred financing costs related to the ABL Credit Facility. The unamortized balance of deferred financing costs as of May 1, 2021 was approximately $1.3 million. Unamortized deferred financing costs are amortized over the remaining term of the ABL Credit Facility. The table below presents the components of the Company’s ABL Credit Facility:
| May 1, 2021 |  | January 30, 2021 |  | May 2, 2020
| (in millions)
Credit facility maximum | $ | 360.0 |  |  | $ | 360.0 |  |  | $ | 360.0 |
Borrowing base (1) | 330.4 |  |  | 282.2 |  |  | 329.1 |
Outstanding borrowings | 196.9 |  |  | 169.8 |  |  | 234.6 |
Letters of credit outstanding—standby | 7.4 |  |  | 8.2 |  |  | 6.2 |
Utilization of credit facility at end of period | 204.3 |  |  | 178.0 |  |  | 240.7 |
Availability (2) | $ | 126.1 |  |  | $ | 104.2 |  |  | $ | 88.4 |
Interest rate at end of period | 4.0 | % |  | 4.2 | % |  | 3.4 | %
| First Quarter 2021 |  | Fiscal 2019 |  | First Quarter 2020
Average end of day loan balance during the period | $ | 210.3 |  |  | $ | 216.2 |  |  | $ | 237.2 |
Highest end of day loan balance during the period | 260.6 |  |  | 275.6 |  |  | 272.2 |
Average interest rate | 4.0 | % |  | 3.8 | % |  | 3.1 | %
____________________________________________ (1)Lower of the credit facility maximum or the total borrowing base collateral. (2)The sub-limit availability for letters of credit was $42.6 million at May 1, 2021, $41.8 million at January 30, 2021, and $43.8 million at May 2, 2020. Long-Term Debt Long-term debt is solely comprised of the Term Loan transaction completed during Third Quarter 2020, as discussed below. On October 5, 2020, the Company and certain of its subsidiaries entered into a loan agreement (the “Loan Agreement”) dated October 5, 2020 with SLR Credit Solutions (formerly known as Crystal Financial LLC), as Lender, Administrative Agent, and Collateral Agent, providing for an $80 million Term Loan. The net proceeds from the Term Loan, after deducting related fees and expenses, were used to repay borrowings under the Company’s ABL Credit Facility. The Term Loan: (i) matures on the earlier of October 5, 2025 or the maturity date under the ABL Credit Facility, currently in May 2024; (ii) bears interest, payable monthly, at the greater of (a) the three month LIBOR Rate published in the Wall Street Journal, and (b) 1.00%, plus 7.75% or 8.00% depending on the average excess availability of credit under the ABL Credit Facility, adjusted quarterly; and (iii) amortizes by (x) 5.00% per annum payable quarterly beginning with the fiscal quarter ending on or around July 31, 2021 through the fiscal quarter ending on or around April 30, 2022, (y) 7.50% per annum payable quarterly beginning with the fiscal quarter ending on or around July 31, 2022 through the fiscal quarter ending on or around April 30, 2023, and (z) 10.00% per annum payable quarterly thereafter. For the First Quarter 2021, the Company recognized $1.8 million in interest expense related to the Term Loan. The Term Loan is secured by a first priority security interest in the Company’s intellectual property, certain furniture, fixtures and equipment, and pledges of subsidiary capital stock, and a second priority security interest in the collateral securing the ABL Credit Facility. The Term Loan is guaranteed, subject to certain exceptions, by each of the Company’s subsidiaries that guarantee the ABL Credit Facility. The Term Loan is, in whole or in part, pre-payable any time and from time to time, subject to certain prepayment premiums specified in the Loan Agreement, plus accrued and unpaid interest. Among other covenants, the Loan Agreement limits the ability of the Company and its subsidiaries to incur certain liens, to incur certain indebtedness, including under the ABL Credit Facility, to make certain investments, acquisitions, dispositions or restricted payments, or to change the nature of its business. These covenants are substantially the same covenants as provided in the ABL Credit Facility. The Loan Agreement contains customary events of default, which include (subject in certain cases to customary grace and cure periods), nonpayment of principal or interest, breach of other covenants in the Loan Agreement, failure to pay certain other indebtedness, including under the ABL Credit Facility, and certain events of bankruptcy, insolvency or reorganization. The following table summarizes the current and long-term portion of the long-term debt:
| May 1, 2021 |  |  |  |
| (in thousands)
Term Loan principal | $ | 80,000 |  |  |  |  |
Less: Unamortized discount, net | (1,052) |  |  |  |  |
Less: Unamortized debt issuance costs, net | (1,152) |  |  |  |  |
Term Loan, net | 77,796 |  |  |  |  |
Less: Current portion, net | (3,270) |  |  |  |  |
Long-term debt, net | $ | 74,526 |  |  |  |  |
Future principal payments of long-term debt due in each of the next four years subsequent to May 1, 2021 are as follows:
Period | Future Principal Payments
| (in thousands)
Remainder of 2021 | $ | 3,000 |
2022 | 5,500 |
2023 | 7,500 |
2024 | 64,000 |
2025 | — |
Total future principal payments | $ | 80,000 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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