CREDIT FACILITY

3 Months Ended

May 02, 2020

CREDIT FACILITY

The Company and certain of its subsidiaries maintain a credit agreement (the “Credit Agreement”) 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 Credit Agreement, which expires in May 2024, consists of a $360 million asset based revolving credit facility, that was recently increased from $325 million as a result of finalizing an amendment with lenders on April 24, 2020 to secure the Company an additional $35 million available under the accordion feature for a period of one year, and including a $25 million Canadian sublimit, with a $50 million sublimit for standby and documentary letters of credit. Revolving credit loans outstanding under the Credit Agreement 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 2.50% to 2.75% based on the amount of the Company’s average excess availability under the facility.

The Company is charged a 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 Credit Agreement is determined by a borrowing base consisting of certain credit card receivables, certain trade and franchise receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves.

The outstanding obligations under the Credit Agreement 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 Credit Agreement contains covenants which include conditions on stock buybacks and the payment of cash dividends or similar payments. Credit extended under the Credit Agreement 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.

The Company has capitalized an aggregate of approximately $5.3 million in deferred financing costs related to the Credit Agreement. The unamortized balance of deferred financing costs at May 2, 2020 was approximately $1.1 million. Unamortized deferred financing costs are amortized over the remaining term of the Credit Agreement.

The table below presents the components of the Company’s credit facility:


	May 2, 2020			February 1, 2020			May 4, 2019
	(In millions)
Credit facility maximum	$	360.0		$	325.0		$	250.0
Borrowing base	329.1			282.1			250.0

Outstanding borrowings	234.6			170.8			153.1

Letters of credit outstanding—standby	6.2			6.2			6.3
Utilization of credit facility at end of period	240.7			177.0			159.4

Availability ⁽¹⁾	$	88.4		$	105.1		$	90.6

Interest rate at end of period	3.4		%	3.4		%	3.8		%


	First Quarter 2020			Fiscal 2019			First Quarter 2019
Average end of day loan balance during the period	$	237.2		$	192.0		$	141.8
Highest end of day loan balance during the period	272.2			262.5			196.8
Average interest rate	3.1		%	4.0		%	4.6		%

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(1)The sublimit availability for the letters of credit were $43.8 million at