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Credit Agreement and Debt
 6 Months Ended
Jul. 30, 2022
Debt Disclosure [Abstract]  
Credit Agreement and Debt
Note 7 – Credit Agreement and Debt
On March 24, 2021, we entered into a First Amendment to our Amended & Restated Credit Agreement as of July 30, 2020 (the “Existing Credit Agreement”) with Bank of America, N.A., as lender (the “Lender”), and our subsidiaries, ANI ApS and TrojanLabel. The Amended & Restated Credit Agreement, which we entered into on July 30, 2020, amended and restated the Credit Agreement dated as of February 28, 2017, by and among us, ANI ApS and TrojanLabel and the Lender.
The
Existing
Credit Agreement provides for (i) a term loan in the principal amount of $10.0 million, and (ii) a $22.5 million revolving credit facility available for general corporate purposes. 
The Existing
Credit Agreement requires that the term loan be paid in quarterly installments on the last day of each of our fiscal quarters with the final payment due on September 30, 2025. We may voluntarily prepay the term loan, in whole or in part, from time to time without premium or penalty (other than customary breakage costs, if applicable). We may repay borrowings under the revolving credit facility at any time without premium or penalty (other than customary breakage costs, if applicable), but in any event no later than September 30, 2025, at which time any outstanding revolving loans will be due and payable in full, and the revolving credit facility will terminate. We may reduce or terminate the revolving line of credit at any time, subject to certain thresholds and conditions, without premium or penalty.
The Existing
Credit Agreement includes an uncommitted accordion provision under which the term loan and/or revolving credit facility commitments may be increased in an aggregate principal amount not exceeding $10.0 million, subject to obtaining the agreement of the Lender and the satisfaction of certain other conditions.
The interest rates under the Existing Credit Agreement, as amended by the December 14, 2021 LIBOR Transition Amendment,
are as follows: the term loan and revolving credit loans bear interest at a rate per annum equal to, at our option, either (a) the BSBY Rate as defined in the LIBOR
Amendment (or in the case of revolving credit loans denominated in Pounds Sterling, Euros or another currency other than U.S. Dollars, the SONIA
Rate as defined in the LIBOR
Amendment, EURIBOR
Rate as defined in the LIBOR Amendment, or the applicable quoted rate, respectively), plus a
margin that varies within a range of 1.60% to 2.30% based on our consolidated leverage ratio, or (b) a fluctuating reference rate equal to the highest of (i) the federal fund rate plus 0.50%, (ii) Bank of America’s publicly announced prime rate, (iii) the BSBY Rate, SONIA Rate, EURIBOR Rate or other applicable quoted rate plus 1.00% or (iv) 0.50%, plus a margin that varies within a range of 0.60% to 1.30% based on our consolidated leverage ratio. In addition to certain other fees and expenses that we are required to pay to the Lender, we are required to pay a commitment fee on the undrawn portion of the revolving credit facility that varies within a range of 0.15% and 0.30% based on our consolidated leverage ratio.
The loans under the Existing Credit Agreement are subject to certain mandatory prepayments, subject to various exceptions, from (a) net cash proceeds from certain dispositions of property, (b) net cash proceeds from certain issuances of equity, (c) net cash proceeds from certain issuances of additional debt and (d) net cash proceeds from certain extraordinary receipts.
Amounts repaid under the revolving credit facility may be reborrowed, subject to continued compliance with the Existing Credit Agreement. No amount of the term loan that is repaid may be reborrowed.
We must comply with various customary financial and
non-financial
covenants under the Existing Credit Agreement. The financial covenants under the Existing Credit Agreement consist of a maximum consolidated leverage ratio and a minimum consolidated fixed charge coverage ratio. The primary
non-financial
covenants limit our and our subsidiaries’ ability to incur future indebtedness, to place liens on assets, to pay dividends or distributions on our capital stock, to repurchase or to acquire their capital stock, to conduct mergers or acquisitions, to sell assets, to alter our capital structure, to make investments and loans, to change the nature of our business, and to prepay subordinated indebtedness, in each case subject to certain exceptions and thresholds as set forth in the Existing Credit Agreement, certain of which provisions were modified by the First Amendment.
The Lender is entitled to accelerate repayment of the loans and to terminate its revolving credit commitment under the Existing Credit Agreement upon the occurrence of any of various customary events of default, which include, among other events, the following (which are subject, in some cases, to certain grace periods): failure to pay when due any principal, interest or other amounts in respect of the loans, breach of any of our covenants or representations under the loan documents, default under any other of our or our subsidiaries’ significant indebtedness agreements, a bankruptcy, insolvency or similar event with respect to us or any of our subsidiaries, a significant unsatisfied judgment against us or any of our subsidiaries, or a change of control.
Our obligations under the Existing Credit Agreement continue to be secured by substantially all of our personal property assets (including a pledge of the equity interests we hold in ANI ApS, in our wholly-owned German subsidiary AstroNova GmbH, and in our wholly-owned French subsidiary AstroNova SAS), subject to certain exceptions, and by a mortgage on our owned real property in West Warwick, Rhode Island.
Summary of Outstanding Debt
Revolving Credit Facility
During
the first six months of the current year, we borrowed $4.5 million on our revolving line of credit. The balance outstanding under the revolving line of credit bore interest at a weighted average rate of 5.17% and 4.79% for the three and six months ended July 3
0
, 2022, and we incurred $45,000 and $69,000 for interest on this obligation during the three and six months ended July 30, 2022.
Additionally, during the six months ended July 30, 2022, we incurred $20,000 of commitment fees on the undrawn portion of our revolving credit facility. At
July 31, 2021, there was no balance outstanding on the revolving line of credit, and no interest was incurred for the three and six months ended July 31, 2021.
We
incurred $30,000 of commitment fees on the undrawn portion of our revolving credit
facility for the six months ended July 31, 2021.
Both the interest expense and commitment fees are included as interest expense in the accompanying condensed consolidated income statement for all periods presented. At July 30, 2022, there is $18.0 million remaining available for borrowing under the revolving line of credit.
Long-Term Debt
Long-term debt in the accompanying condensed consolidated balance sheets is as follows:
 
(In thousands)
  
July 30, 2022
 
  
January 31, 2022
 
USD Term Loan (3.45% as of July 30, 2022, and
2.35%
as of
January 31, 2022); maturity date of
September 30, 2025
    $ 9,000      $ 9,250  
Debt Issuance Costs, net of accumulated amortization
      (83 )       (96 ) 
Current Portion of Term Loans
      (1,000 )       (1,000 ) 
    
 
 
     
 
 
  
Long-Term Debt
    $ 7,917      $ 8,154  
 
  
 
 
 
  
 
 
 
During the three and six months ended July 30, 2022, we recognized $65,000 and $118,000 of interest expense on debt, respectively, which
is
included in interest expense in the accompanying condensed consolidated income statement. During the three and six months ended July 31, 2021, we recognized $65,000 and $179,000 of interest expense on debt, respectively, which
is
included in interest expense in the accompanying condensed consolidated income statement.
The schedule of required principal payments remaining during the next five years on long-term debt outstanding as of July 30, 2022, is as follows:
 
(In thousands)
       
Fiscal 2023, remainder
    $ 750  
Fiscal 2024
      1,000  
Fiscal 2025
      1,250  
Fiscal 2026
      6,000  
    
 
 
  
     $ 9,000