		February 2, 2013				January 28, 2012
		Carrying		Fair		Carrying		Fair
		Amount		Value		Amount		Value
Notes 7.00%, maturing fiscal year 2013		$	2,125	$	2,207	$	2,125	$	2,183
Convertible notes 7.50%, maturing fiscal year 2013, net			87,374		170,557		109,549		228,592
Convertible notes 2.00%, maturing fiscal year 2024, net			219,551		228,224		210,840		234,894
Capital lease obligations (1)			50,542		n/a		52,920		n/a
	Total debt		359,592		400,988		375,434		465,669

Less current portion:
Notes 7.00%, maturing fiscal year 2013			(2,125)		(2,207)		―		―
Convertible notes 7.50%, maturing fiscal year 2013, net			(87,374)		(170,557)		―		―
Capital lease obligations (1)			(9,490)		n/a		(7,472)		n/a
	Current portion of long-term debt		(98,989)		(172,764)		(7,472)		―
Long-term debt		$	260,603	$	228,224	$	367,962	$	465,669

The fair values of our debt instruments are classified as Level 2 within the fair value hierarchy and were determined based on recently reported market transactions for the identical liability when traded as an asset or pricing information obtained from a third-party financial institution. The inputs and assumptions used in the pricing models of the financial institution are primarily derived from market-observable sources.

We have a $500,000 revolving credit facility, subject to a borrowing base equal to a specified percentage of eligible inventory and certain credit card receivables. The availability is based primarily on current levels of inventory, less outstanding letters of credit.

In March 2011, we entered into an amendment to our existing revolving credit agreement. The amendment extended the maturity date of this facility from November 23, 2013 to March 29, 2016 and revised certain terms of the existing revolving credit facility. The maximum committed borrowing capacity of the amended facility remains at $500,000. Fees incurred in 2011 associated with the amendment to the revolving credit agreement were $2,961.

The obligations under the facility are guaranteed by certain of our existing and future domestic subsidiaries and are secured by their merchandise inventories and certain third party receivables. Borrowings under the facility bear interest at a per annum rate of either: (i) LIBOR plus a percentage ranging from 2.00% to 2.50%, or (ii) the higher of the prime rate or the federal funds rate plus a percentage ranging from 1.00% to 1.50%. Letters of credit are charged a per annum fee equal to the then applicable LIBOR borrowing spread (for standby letters of credit) or the applicable LIBOR spread minus 0.50% (for documentary or commercial letters of credit). We also pay an unused line fee ranging from 0.38% to 0.50% per annum on the average daily unused balance of the facility.

During periods in which availability under the agreement is $62,500 or more, we are not subject to financial covenants. If and when availability under the agreement decreases to less than $62,500, we will be subject to a minimum fixed charge coverage ratio of 1.0 to 1.0. There are no debt-ratings-based provisions. As of February 2, 2013, we were not subject to the minimum fixed charge coverage ratio. The facility contains default provisions that are typical for this type of financing, including a provision that would trigger a default under the credit agreement if a default were to occur in another debt instrument resulting in the acceleration of more than $20,000 of principal under that other instrument.

The revolving credit agreement permits additional debt in specific categories including the following (each category being subject to limitations as described in the revolving credit agreement): (i) debt arising from permitted sale/leaseback transactions; (ii) debt to finance purchases of machinery, equipment, real estate and other fixed assets; (iii) debt in connection with permitted acquisitions; and (iv) unsecured debt. The revolving credit agreement also permits other debt (including permitted sale/leaseback transactions) in an aggregate amount not to exceed $500,000 at any time, including secured debt, so long as it is a permitted lien as defined by the revolving credit agreement. The revolving credit agreement also places certain restrictions on, among other things, asset sales, the ability to make acquisitions and investments, and to pay dividends.

Our outstanding stand-by and documentary letters of credit principally relate to trade payables and debt obligations. Outstanding letters of credit reduce availability under the revolving line of credit. During 2012, the average amount of letters of credit issued under the credit agreement was $6,472. The highest amount of letters of credit outstanding under the agreement during 2012 was $7,811. As of February 2, 2013, we had no direct outstanding borrowings under our revolving credit facility and had letters of credit outstanding of $6,363. Based on the letters of credit outstanding and the balance of eligible inventory and credit card receivables, we had $493,637 of availability under the facility as of February 2, 2013.

As of February 2, 2013, we had $2,125 of unsecured senior notes outstanding that mature in December 2013 with an interest rate of 7.0%. The senior notes are guaranteed by all of the subsidiaries that guarantee our revolving credit facility. The notes permit certain sale/leaseback transactions but place certain restrictions around the use of proceeds generated from a sale/leaseback transaction. The terms of the senior notes require all principal to be repaid at maturity. There are no financial covenants associated with these notes, and there are no debt-ratings-based provisions.

During April 2011, we redeemed $1,911 of our 7.375% senior notes that were set to mature in 2019. The redemption of these notes resulted in a loss on extinguishment of $539.

During May 2010, we repurchased $797 of our 7.0% senior notes that were set to mature in 2013. The repurchase of these notes resulted in a loss on extinguishment of $4.

We issued $120,000 of 7.5% convertible notes in May 2009 (the “7.5% Convertible Notes”). The 7.5% Convertible Notes mature in December 2013 and are convertible, at the option of the holders at any time, into shares of our common stock at a conversion rate of 180.5869 shares per one thousand dollars in principal amount of notes, which is equivalent to a conversion price of $5.54 per share (21,670 shares of common stock to be issued upon conversion). The conversion rate is subject to adjustment for certain events, including but not limited to the issuance of stock dividends on our common stock; the issuance of rights or warrants; subdivisions, combinations, distributions of capital stock, indebtedness or assets; cash dividends; and certain issuer tender or exchange offers. We can settle a conversion of the notes with shares, cash, or a combination thereof at our discretion.

Authoritative accounting literature requires the allocation of convertible debt proceeds between the liability component and the embedded conversion option (i.e., the equity component). The liability component of the debt instrument is accreted to par value using the effective interest method over the remaining life of the debt. The accretion is reported as a component of interest expense. The equity component is not subsequently revalued as long as it continues to qualify for equity treatment. Upon issuance, we estimated the fair value of the liability component of the 7.5% Convertible Notes, assuming a 13.0% non-convertible borrowing rate, to be $97,994. The difference between the fair value and the principal amount of the 7.5% Convertible Notes was $22,006. This amount was recorded as a debt discount and as an increase to additional paid-in capital as of the issuance date. The discount is being accreted to interest expense over the 4.5 year period to the maturity date of the notes in December 2013 resulting in an increase in non-cash interest expense.

During the year ended February 2, 2013, note holders converted a principal amount of $28,796 of our outstanding 7.5% Convertible Notes into 5,200 shares of common stock. The early retirement of these notes resulted in a loss on extinguishment of $3,530.

The following tables provide additional information about our 7.5% Convertible Notes.

	February 2,		January 28,
	2013		2012
Carrying amount of the equity component (additional paid-in capital)	$	16,725	$	22,006
Principal amount of the 7.5% Convertible Notes	$	91,204	$	120,000
Unamortized discount of the liability component	$	3,830	$	10,451
Net carrying amount of liability component	$	87,374	$	109,549

	2012		2011		2010
Effective interest rate on liability component		12.8%		12.9%		12.9%
Cash interest expense recognized	$	8,640	$	9,000	$	9,000
Non-cash interest expense recognized	$	5,270	$	4,772	$	4,207

The remaining period over which the unamortized discount will be recognized is 0.8 years. As of February 2, 2013, the if-converted value of the notes exceeded its principal amount by $85,519.

The 7.5% Convertible Notes are classified within current portion of long-term debt on the Consolidated Balance Sheet as of February 2, 2013 as the notes mature in December 2013. The 7.5% Convertible Notes are classified as long-term debt on the Consolidated Balance Sheet as of January 28, 2012 because we can settle the principal amount of the notes with shares, cash, or a combination thereof at our discretion.

We issued $230,000 of 2.0% convertible senior notes in March 2004 (the “2.0% Convertible Notes”). The 2.0% Convertible Notes mature in 2024 and, in certain circumstances, allow the holders to convert the notes to shares of our common stock at a conversion rate of 83.5609 per one thousand dollars in principal amount of notes, which is equivalent to a conversion price of $11.97 per share of common stock (19,219 shares of common stock to be issued upon conversion). The conversion rate is subject to adjustment for certain events, including but not limited to the issuance of stock dividends on our common stock; the issuance of rights or warrants; subdivisions, combinations, distributions of capital stock, indebtedness or assets; cash dividends; and certain issuer tender or exchange offers. The holders may put the debt back to us in 2014 or 2019 and the debt became callable at our option on March 21, 2011. We can settle a conversion of the notes with shares, cash or a combination thereof at our discretion. The holders may convert the notes at the following times, among others: (i) if our share price is greater than 120% of the applicable conversion price for a certain trading period; (ii) if the credit ratings of the notes are below a certain threshold; or (iii) upon the occurrence of certain consolidations, mergers or share exchange transactions involving us. As of February 2, 2013, none of the conversion criteria were met.

In connection with the issuance of the 2.0% Convertible Notes, we entered into a convertible note hedge and written call options on our common stock to reduce our exposure to dilution from the conversion of the 2.0% Convertible Notes. These transactions were accounted for as a net reduction of shareholders' equity of $25,000 in 2004. The convertible note hedge and written call options expired during 2011.

We estimated the fair value of the liability component of the 2.0% Convertible Notes at the date of issuance, assuming a 6.25% non-convertible borrowing rate, to be $158,148. The difference between the fair value and the principal amount of the 2.0% Convertible Notes was $71,852. This amount was recorded as a debt discount and as an increase to additional paid-in capital as of the issuance date. In accordance with the authoritative accounting guidance, the debt discount should be amortized over the expected life of a similar liability that does not have an associated equity component (considering the effects of embedded features other than the conversion option). Since the holders of the notes have put options in 2014 and 2019, the debt instrument is accreted to par value using the effective interest method from issuance until the first put date in 2014 resulting in an increase in non-cash interest expense.

The following tables provide additional information about our 2.0% Convertible Notes.

	February 2,		January 28,
	2013		2012

Carrying amount of the equity component (additional paid-in capital)	$	71,852	$	71,852
Principal amount of the 2.0% Convertible Notes	$	230,000	$	230,000
Unamortized discount of the liability component	$	10,449	$	19,160
Net carrying amount of liability component	$	219,551	$	210,840

	2012		2011		2010
Effective interest rate on liability component		6.2%		6.2%		6.2%
Cash interest expense recognized	$	4,600	$	4,600	$	4,600
Non-cash interest expense recognized	$	8,711	$	8,192	$	7,702

The remaining period over which the unamortized discount will be recognized is 1.1 years. As of February 2, 2013, the if-converted value of the notes did not exceed its principal amount.

The 2.0% Convertible Notes were classified within long-term debt on the Consolidated Balance Sheets as of February 2, 2013 and January 28, 2012 because we could settle the principal amount of the notes with shares, cash or a combination thereof at our discretion.

On March 15, 2013, we gave notice to holders of our 2.0% Convertible Notes that we are redeeming all of the outstanding notes on April 15, 2013. See Note 13 for more information.

Saks Incorporated is the issuer of our outstanding notes, which include the 7.0% senior notes, the 7.5% convertible notes, and the 2.0% convertible senior notes. Substantially all of Saks Incorporated's subsidiaries guarantee our outstanding notes which are the same subsidiaries that guarantee the revolving credit facility. Separate condensed consolidating financial information is not included because Saks Incorporated has no independent assets or operations, the subsidiary guarantees related to the notes are full and unconditional and joint and several, and subsidiaries not guaranteeing the debt are minor. All subsidiaries of Saks Incorporated are 100% owned and there are no contractual restrictions on the ability of Saks Incorporated to obtain funds from our subsidiaries.

At February 2, 2013, maturities of long-term debt and capital lease obligations for the next five years and thereafter were as follows:

			Maturities
2013		$	102,819
2014			9,373
2015			8,032
2016			6,685
2017			3,534
Thereafter			243,428
			373,871
Less: unamortized discount at February 2, 2013			(14,279)
	Total debt	$	359,592

We made interest payments of $22,278, $37,932, and $41,840 during 2012, 2011, and 2010, respectively. Total interest costs incurred were $39,196, $49,070, and $57,446, of which $2,014, $955, and $721 was capitalized into property and equipment during 2012, 2011, and 2010, respectively.