NOTE 8 - LONG-TERM DEBT

12 Months Ended

Feb. 03, 2013

NOTE 8 – LONG-TERM DEBT

Our loan agreement with Bank of America, N.A., which is scheduled to expire on July 31, 2013, includes the following terms:

§	A $15.0 million unsecured revolving credit facility, up to $3.0 million of which can be used to support letters of credit;

§	A floating interest rate, adjusted monthly, based on LIBOR, plus an applicable margin based on the ratio of our funded debt to our EBITDA (each as defined in the agreement);

§	A quarterly unused commitment fee, based on our ratio of funded debt to EBITDA; and

§	No pre-payment penalty.

The loan agreement includes customary representations and warranties and requires us to comply with customary covenants, including, among other things, the following financial covenants:

§	Maintain a tangible net worth of at least $95.0 million;

§	Limit capital expenditures to no more than $15.0 million during any fiscal year; and

§	Maintain a ratio of funded debt to EBITDA not exceeding 2.0:1.0.

We were in compliance with each of these financial covenants at February 3, 2013 and expect to remain in compliance with existing covenants for the foreseeable future.

During the fiscal 2013 second quarter we amended our loan agreement to reduce the minimum required tangible net worth from $108 million to $95 million, primarily to provide additional flexibility to purchase our common shares under a share repurchase authorization approved by our board in April 2012. The loan agreement does not restrict our ability to pay cash dividends on, or repurchase shares of our common stock, subject to complying with the financial covenants under the agreement.

As of February 3, 2013, we had an aggregate $13.2 million available under our revolving credit facility to fund working capital needs. Standby letters of credit in the aggregate amount of $1.8 million, used to collateralize certain insurance arrangements and for imported product purchases, were outstanding under the revolving credit facility as of February 3, 2013. There were no additional borrowings outstanding under the revolving credit facility on February 3, 2013.

We are currently in negotiations with Bank of America, N.A. and other lenders to extend or replace our credit facility and expect to have a new agreement in place before the expiration of our current loan agreement on July 31, 2013.