Long-Term Debt

3 Months Ended

Apr. 03, 2018

Debt Disclosure [Abstract]

Long-Term Debt

Long-Term Debt

As of April 3, 2018, the Company had a credit facility with Bank of America, N.A. (the “Existing Credit Facility”) expiring in June 2019. The Company had $63.9 million of indebtedness and $3.3 million of letters of credit outstanding under the Existing Credit Facility at April 3, 2018. The Company’s ability to borrow funds pursuant to the Existing Credit Facility was limited by the requirement that it comply with the Existing Credit Facility’s financial covenants upon the measurement dates specified therein. These financial covenants included a maximum lease-adjusted leverage ratio and a minimum consolidated fixed charge coverage ratio. The Existing Credit Facility also contained other customary covenants, including limitations on additional borrowings, acquisitions, dividend payments and lease commitments.

The Existing Credit Facility bore interest between 4.95% and 7.25% during the first quarter of 2018. As of April 3, 2018, the Company also maintained outstanding letters of credit to secure obligations under its workers’ compensation program and certain lease obligations. The Company was in compliance with all of its debt covenants as of April 3, 2018.

On May 9, 2018, the Company entered into a credit facility with U.S. Bank National Association (the “2018 Credit Facility”). The 2018 Credit Facility consists of a term loan facility in an aggregate principal amount of $25.0 million and a revolving line of credit of $65.0 million (which may be increased to $75.0 million), which includes a letter of credit subfacility in the amount of $15.0 million and a swingline subfacility in the amount of $10.0 million. The 2018 Credit Facility has a four-year term and matures on May 9, 2022.

Upon execution of the 2018 Credit Facility, the Company repaid in full its outstanding indebtedness under its Existing Credit Facility using funds drawn on its 2018 Credit Facility. Upon repayment, the Existing Credit Facility and all related agreements were terminated.

Borrowings under the 2018 Credit Facility, including the term loan facility, bear interest annually, at the Company’s option, at either (i) LIBOR plus a margin of 2.25% to 3.25% per annum, based upon the consolidated total lease-adjusted leverage ratio or (ii) the highest of the following base rates plus a margin of 1.25% to 2.25% per annum: (a) the federal funds rate plus 0.50%; (b) the U.S. Bank prime rate or (c) the one-month LIBOR plus 1.00%. The 2018 Credit Facility includes a commitment fee of 0.30% to 0.50% per annum, based upon the consolidated total lease-adjusted leverage ratio, on any unused portion of the revolving credit facility.