Note 8 - Line of Credit

3 Months Ended

Apr. 02, 2022

Notes to Financial Statements

Debt Disclosure [Text Block]

8.     Line of Credit

The Company and its subsidiaries amended and restated its Revolving Credit Facility with Citizens Bank of Pennsylvania on October 18, 2019.  As amended and restated, the Revolving Credit Facility provides for a $45.0 million revolving credit facility, has no sub-limit for letters of credit, and expires on August 8, 2023.

Borrowings under the Revolving Credit Facility bear interest at one of two alternative rates, as selected by the Company at each incremental borrowing.  These alternatives are: (i) LIBOR (London Interbank Offered Rate), plus applicable margin, typically borrowed in fixed 30-day increments or (ii) the agent bank’s prime rate generally borrowed over shorter durations.  At the option of Citizens Bank, LIBOR can be replaced with SOFR (Secured Overnight Financing Rate). Citizens Bank has not indicated when this switch may occur, but in any event, the Company does not believe there will be any material impact on its borrowing rate. The Company also pays unused line fees based on the amount of the Revolving Credit Facility that is not drawn.  Unused line fees are recorded as interest expense.  The effective weighted average interest rate, including unused line fees, for the thirteen week periods ended April 2, 2022 and April 3, 2021 were 1.6% and 2.4%, respectively.

All borrowings under the Revolving Credit Facility are collateralized by all of the assets of the Company and a pledge of the stock of its subsidiaries.  The Revolving Credit Facility also contains various financial and non-financial covenants, such as a covenant that restricts the Company’s ability to borrow in order to pay dividends. As of April 2, 2022, the Company was in compliance with all covenants contained in the Revolving Credit Facility (as amended).     

Borrowings under the line of credit as of April 2, 2022 and January 1, 2022 were $15.3 million and $14.2 million, respectively.  At both April 2, 2022 and January 1, 2022 there were letters of credit outstanding for $1.9 million.  At April 2, 2022 and January 1, 2022, the Company had availability for additional borrowings under the Revolving Credit Facility of $27.8 million and $28.9 million, respectively.