Annual report pursuant to Section 13 and 15(d)

Credit Agreements Credit Agreements (Notes)

v2.4.1.9
Credit Agreements Credit Agreements (Notes)
12 Months Ended
Jan. 31, 2015
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]
Credit Agreement
The Company's long-term credit facility consists of:
 
 
January 31, 2015
 
February 1, 2014
Credit Facility
 
 
 
 
  Revolving loan
 
$
40,700,000

 
$
38,000,000

  Term loan
 
12,007,000

 

Total long-term credit facility
 
52,707,000

 
38,000,000

Less current portion of long-term credit facility
 
(1,736,000
)
 

Long-term credit facility, excluding current portion
 
$
50,971,000

 
$
38,000,000

On February 9, 2012, the Company entered into a credit and security agreement (as amended to date, the "Credit Facility") with PNC Bank, N.A. ("PNC"), a member of The PNC Financial Services Group, Inc., as lender and agent which was most recently amended on March 6, 2015. The Credit Facility, which added The Private Bank to the facility, provides a revolving line of credit of $75 million and provides for a $15 million term loan on which the Company has drawn and may continue to draw to fund improvements at the Company's distribution facility in Bowling Green, Kentucky. The amended Credit Facility also provides an accordion feature that would allow the Company to expand the size of the revolving line of credit by another $15 million upon certain conditions being met.
All borrowings under the amended Credit Facility mature and are payable on May 1, 2018. Subject to certain conditions, the Credit Facility also provides for the issuance of letters of credit in an aggregate amount up to $6 million which, upon issuance, would be deemed advances under the Credit Facility. Maximum borrowings and available capacity under the revolving line of credit under the Credit Facility are equal to the lesser of $75 million or a calculated borrowing base comprised of eligible accounts receivable and eligible inventory. The Credit Facility is secured by substantially all of the Company’s personal property, as well as the Company’s real properties located in Eden Prairie, Minnesota and Bowling Green, Kentucky. Under certain circumstances, the borrowing base may be adjusted if there were to be a significant deterioration in value of the Company’s accounts receivable and inventory.
The revolving line of credit under the Credit Facility bears interest at LIBOR plus 3% per annum. The term loan bears interest at either (i) a fixed rate based on the LIBOR Rate for interest periods of one, two, three or six months, or (ii) a daily floating alternate base rate (the “Base Rate”), plus until January 31, 2015, a margin of 5% on the Base Rate and 6% on the LIBOR Rate and then the margin adjusts each fiscal year to a rate consisting of between 4% and 5% on Base Rate term loans and 5% to 6% on LIBOR Rate term loans based on the Company’s leverage ratio as demonstrated in its financial statements. As of January 31, 2015, the Company had borrowings of $40.7 million under its revolving credit facility. Remaining capacity under the revolving credit facility as of January 31, 2015 is $19.3 million, of which $7.3 million is earmarked for our distribution facility expansion, provides liquidity for working capital and general corporate purposes. The Credit Facility also provides for a $15 million term loan on which the Company draws to fund an expansion at the Company's distribution facility in Bowling Green, Kentucky. As of January 31, 2015, there were $12.0 million of borrowings under the Credit Facility term loan of which $1.7 million was classified as current in the accompanying balance sheet.
Principal borrowings under the term loan are to be payable in monthly installments over an 84 month amortization period commencing on January 1, 2015 and are also subject to mandatory prepayment in certain circumstances, including, but not limited to, upon receipt of certain proceeds from dispositions of collateral. Borrowings under the term loan are also subject to mandatory prepayment starting in the fiscal year ending January 31, 2016 in an amount equal to fifty percent (50%) of excess cash flow for such fiscal year, with any such payment not to exceed $2,000,000 in any such fiscal year. The Credit Facility is subject to mandatory prepayment in certain circumstances. In addition, if the total Credit Facility is terminated prior to maturity, the Company would be required to pay an early termination fee of 1.0% if terminated on or before May 1, 2015; 0.5% if terminated on or before May 1, 2016; and no fee if terminated after May 1, 2016. Interest expense recorded under the Credit Facility's revolving line of credit was $1,554,000, $1,435,000 and $1,503,000 for fiscal 2014, fiscal 2013 and fiscal 2012, respectively.
The Credit Facility contains customary covenants and conditions, including, among other things, maintaining a minimum of unrestricted cash plus facility availability of $10 million at all times and limiting annual capital expenditures. As our unused line availability is greater than $10 million at January 31, 2015, no additional cash is required to be restricted. Certain financial covenants, including minimum EBITDA levels (as defined in the Credit Facility) and a minimum fixed charge coverage ratio, become applicable only if unrestricted cash plus facility availability falls below $16 million or upon an event of default. In addition, the Credit Facility places restrictions on the Company’s ability to incur additional indebtedness or prepay existing indebtedness, to create liens or other encumbrances, to sell or otherwise dispose of assets, to merge or consolidate with other entities, and to make certain restricted payments, including payments of dividends to common shareholders.
Costs incurred to obtain amendments to the Credit Facility of approximately $718,000 and unamortized costs incurred to obtain the original Credit Facility totaling $466,000 have been deferred and are being expensed as additional interest over the five-year term of the Credit Facility. In connection with a previous term loan refinancing, the Company was required to pay an early termination fee of $500,000, which was recorded as a loss on debt extinguishment in the accompanying statement of operations for the year ending February 2, 2013.
The aggregate maturities of the Company's long-term Credit Facility is as follows:
 
 
Credit Facility
 
 
Fiscal year
 
Term loan
 
Revolving loan
 
Total
2015
 
$
1,736,000

 
$

 
$
1,736,000

2016
 
1,736,000

 

 
1,736,000

2017
 
1,736,000

 

 
1,736,000

2018
 
6,799,000

 
40,700,000

 
47,499,000

2019
 

 

 

 
 
$
12,007,000

 
$
40,700,000

 
$
52,707,000