NOTE 6—CREDIT FACILITIES

A summary of borrowings at period end follows:



			December 30, 2016					September 30, 2016
Debt	Fixed/ Variable Rate	Maturity Date	Balance			Interest Rate		Balance			Interest Rate
($ in thousands)
M&T credit facilities:
Revolving Credit Facility	v	1/18/2018	$	2,643		5.02	%	$	3,961		3.28	%
Term Loan A⁽¹⁾	f	2/1/2020	48			3.98		3,693			3.98
Term Loan B	v	2/1/2023	8,633			3.87		8,983			3.03
Albuquerque Mortgage Loan⁽¹⁾	v	2/1/2018	—			—		2,200			3.55
Celmet Building Term Loan	f	11/7/2018	899			4.72		932			4.72

Other credit facilities:
Albuquerque Industrial Revenue Bond⁽¹⁾	f	3/1/2019	—			—		100			5.63
Total debt, gross			12,223					19,869
Unamortized debt issuance costs			(220		)			(229		)
Total debt, net			12,003					19,640
Less: current portion			(1,578		)			(2,908		)
Long-term debt			$	10,425				$	16,732

⁽¹⁾The Albuquerque Mortgage Loan and the Albuquerque Industrial Revenue Bond were repaid in connection with the sale-leaseback transaction described in Note 14—Capital Lease. The proceeds from the transaction were also used to pay down Term Loan A.

M&T Bank Credit Facilities

On November 28, 2016, the Company and M&T Bank entered into the Second Amendment to Fifth Amended and Restated Credit Facility Agreement (the “Second Amendment”), that amended the Fifth Amended and Restated Credit Facility Agreement dated as of December 14, 2015, as amended by the First Amendment to the Fifth Amended and Restated Credit Facility, dated as of June 20, 2016 (“Fifth Amended Credit Agreement”). The Second Amendment reduced M&T Bank’s revolving credit commitment to $16.0 million and modified the trigger for maintenance of the cash management system. The Second Amendment also modified the level adjustment dates for the Applicable Margin and the Applicable Unused Fee, as such terms are defined under the Fifth Amended Credit Agreement. In addition, the Second Amendment amended the covenants regarding the Company's Debt to EBITDAS Ratio, Minimum Quarterly EBITDAS amounts and the Fixed Charge Coverage Ratio, as such terms are defined under the Fifth Amended Credit Agreement. The Fifth Amended Credit Agreement prohibits the Company from paying dividends or repurchasing or redeeming its common stock without first obtaining the consent of M&T Bank.

Individual debt facilities provided under the Fifth Amended Credit Agreement, as amended, are described below:


a)	Revolving Credit Facility (“Revolver”): Up to $16 million is available through January 18, 2018. The maximum amount the Company may borrow is determined based on a borrowing base calculation described below.


b)	Term Loan A: $10.0 million was borrowed on January 18, 2013. Principal was being repaid in 108 equal monthly installments of $93 thousand. The proceeds of the sale-leaseback transaction described in Note 14—Capital Lease were used to paydown the loan. The Company repaid the remaining $48 thousand balance of the loan during January 2017.


c)	Term Loan B: $14.0 million was borrowed on January 18, 2013. Principal is being repaid in 120 equal monthly installments of $117 thousand.


d)	Albuquerque Mortgage Loan: $4.0 million was borrowed on December 16, 2009. The loan was secured by real property in Albuquerque, NM, and principal was being repaid in equal monthly installments of $22 thousand. The loan was repaid in connection with the sale-leaseback transaction described in Note 14—Capital Lease.

Celmet Building Term Loan: $1.3 million was borrowed on November 8, 2013 pursuant to an amendment to the Fourth Amended and Restated Credit Facility Agreement dated as of January 18, 2013. The proceeds were used to reimburse the Company’s cost of purchasing its Rochester, New York facility. Principal is being repaid in 59 equal monthly installments of $11 thousand plus a balloon payment due at maturity.

Borrowing Base

Under the Fifth Amended Credit Agreement, the maximum amount the Company can borrow under the Revolver is the lesser of (i) 85% of eligible receivables plus 35% of eligible inventories (up to a cap of $3.75 million) or (ii) $16.0 million at December 30, 2016 and $20.0 million at September 30, 2016.

At December 30, 2016 and September 30, 2016, the upper limit on Revolver borrowings was $11.5 million and $16.4 million, respectively. Average Revolver balances amounted to $2.8 million during the three months ended December 30, 2016.

Interest Rates

Under the Fifth Amended Credit Agreement, variable rate debt accrues interest at LIBOR plus the applicable marginal interest rate that fluctuates based on the Company's Debt to EBITDAS Ratio, as defined below. Under the Second Amendment, the applicable marginal interest rate was fixed on November 28, 2016 through the fiscal quarter ending September 30, 2017, as follows: 4.25% for the Revolver and 3.25% for Term Loan B. Beginning October 1, 2017, variable rate debt will again accrue interest at LIBOR plus the applicable margin interest rate that is based on the Company's Debt to EBITDAS Ratio. Changes to applicable margins and unused fees resulting from the Debt to EBITDAS Ratio generally become effective mid-way through the subsequent quarter.

Prior to December 14, 2015, the Sixth Amendment fixed each facility’s applicable margin through March 31, 2016 as follows: 4.25% for the Revolver, 4.50% for the Albuquerque Mortgage Loan and 3.25% for the Term Loan B. The applicable unused line fee of 0.50% also was extended through March 31, 2016, and thereafter if the Company is not in compliance with its financial covenants.

The Company incurs quarterly unused commitment fees ranging from 0.250% to 0.500% of the excess of $16.0 million over average borrowings under the Revolver. Fees incurred amounted to $15.7 thousand and $8.7 thousand during the three months ended December 30, 2016 and January 1, 2016, respectively. The fee percentage varies based on the Company's Debt to EBITDAS Ratio, as defined below.

Financial Covenants

The Fifth Amended Credit Agreement also contains various affirmative and negative covenants including financial covenants. The Company is required to maintain (i) a minimum level of quarterly EBITDAS, as defined below (“Quarterly EBITDAS”), (ii) a ratio of total debt to twelve month EBITDAS (“Debt to EBITDAS Ratio”) that is below a specified limit, (iii) a minimum fixed charge coverage ratio (“Fixed Charge Coverage Ratio”), (iv) a maximum level of inventory (“Maximum Inventory”), and (v) a maximum amount of capital expenditures (“Maximum Capital Expenditures”). The Debt to EBITDAS Ratio is the ratio of debt to earnings before interest, taxes, depreciation, amortization and non-cash stock compensation expense (“EBITDAS”). “Adjusted EBITDA” means, for the applicable period, EBITDAS less unfinanced capital expenditures and cash paid for taxes, all on a consolidated basis. The Fixed Charge Coverage Ratio compares (i) 12 month Adjusted EBITDA plus non-cash stock compensation expense minus unfinanced capital expenditures minus taxes paid, to (ii) the sum of interest expense, principal payments and dividends, if any (fixed charges). The Maximum Inventory covenant allows for specific levels of inventory as defined by the agreement. The Maximum Capital Expenditures covenants allow for a maximum amount of capital expenditures on an annual basis.

Covenant ratios in effect at December 30, 2016, pursuant to the Fifth Amended Credit Agreement, as amended by the Second Amendment, are as follows:



Debt to EBITDAS Ratio:
9/30/2016 through and including 12/30/16	< 3.00 to 1.00

Minimum Quarterly EBITDAS:
Fiscal Quarter ending December 30, 2016	$	(500,000	)

Fixed Charge Coverage Ratio:
9/30/16 through and including 12/30/16	> 0.72 to 1.00

Maximum Inventory:
As of December 30, 2016	$	26.0	m

Maximum Capital Expenditures:	Measured annually; maximum $4.5m

The Company was in compliance with all debt covenants at December 30, 2016.

Other Borrowings

When IEC acquired Albuquerque, the Company assumed responsibility for a $100 thousand Industrial Revenue Bond issued by the City of Albuquerque. Interest on the bond was paid semiannually, and principal was due in its entirety at maturity. The Bond was paid off in connection with the sale-leaseback transaction described in Note 14—Capital Lease.

Contractual Principal Payments

A summary of contractual principal payments under IEC's borrowings for the next five years taking into consideration the Fifth Amended Credit Agreement, as amended, follows:



Debt Repayment Schedule	Contractual Principal Payments
(in thousands)
Twelve months ended December
2017	$	1,578
2018 ⁽¹⁾	4,812
2019	1,400
2020	1,400
2021 and thereafter	3,033
	$	12,223

⁽¹⁾ Includes Revolver balance of $2.6 million at December 30, 2016 and final payment of Celmet Building Term Loan on November 7, 2018.