Note 10 - Long-term Debt

6 Months Ended

Mar. 28, 2020

Notes to Financial Statements

Long-term Debt [Text Block]

(

10

) Long-Term Debt

Revolving Credit Facility

.

We have a

$100.0

million revolving credit facility (the “Credit Facility”) that is used to supplement our operating cash flow and fund our working capital, capital expenditure, general corporate and growth requirements. In

May 2019,

we entered into a new credit agreement, which amended and restated in its entirety the previous agreement pertaining to the revolving credit facility that had been in effect since

June 2010.

The new credit agreement, among other changes, extended the maturity date of the Credit Facility from

May 13, 2020

to

May 15, 2024

and provided for an incremental feature whereby its size

may

be increased by up to

$50.0

million, subject to our lender’s approval. Advances under the Credit Facility are limited to the lesser of the revolving loan commitment amount (currently

$100.0

million) or a borrowing base amount that is calculated based upon a percentage of eligible receivables and inventories. As of

March 28, 2020,

no

borrowings were outstanding on the Credit Facility,

$89.6

million of borrowing capacity was available and outstanding letters of credit totaled

$1.6

million.

Interest rates on the Credit Facility are based upon (

1

) an index rate that is established at the highest of the prime rate,

0.50%

plus the federal funds rate or the LIBOR rate plus the excess of the then-applicable margin for LIBOR loans over the then-applicable margin for index rate loans, or (

2

) at our election, a LIBOR rate, plus in either case, an applicable interest rate margin. The applicable interest rate margins are adjusted on a quarterly basis based upon the amount of excess availability on the Credit Facility within the range of

0.25%

to

0.50%

for index rate loans and

1.25%

to

1.50%

for LIBOR loans. In addition, the applicable interest rate margins would be increased by

2.00%

upon the occurrence of certain events of default provided for under the terms of the Credit Facility. Based on our excess availability as of

March 28, 2020,

the applicable interest rate margins on the Credit Facility were

0.25%

for index rate loans and

1.25%

for LIBOR loans.

Our ability to borrow available amounts under the Credit Facility will be restricted or eliminated in the event of certain covenant breaches, events of default or if we are unable to make certain representations and warranties provided for under the terms of the Credit Facility. We are required to maintain a fixed charge coverage ratio of

not

less than

1.0

at the end of each fiscal quarter for the

twelve

-month period then ended when the amount of liquidity on the Credit Facility is less than

$10.0

million. In addition, the terms of the Credit Facility restrict our ability to, among other things: engage in certain business combinations or divestitures; make investments in or loans to

third

parties, unless certain conditions are met with respect to such investments or loans; pay cash dividends or repurchase shares of our stock subject to certain minimum borrowing availability requirements; incur or assume indebtedness; issue securities; enter into certain transactions with our affiliates; or permit liens to encumber our property and assets. The terms of the Credit Facility also provide that an event of default will occur upon the occurrence of, among other things: defaults or breaches under the loan documents, subject in certain cases to cure periods; defaults or breaches by us or any of our subsidiaries under any agreement resulting in the acceleration of amounts above certain thresholds or payment defaults above certain thresholds; certain events of bankruptcy or insolvency; certain entries of judgment against us or any of our subsidiaries, which are

not

covered by insurance; or a change of control. As of

March 28, 2020,

we were in compliance with all of the financial and negative covenants under the Credit Facility and there have

not

been any events of default.

Amortization of capitalized financing costs associated with the Credit Facility was

$16,000

for each of the

three

-month periods ended

March 28, 2020

and

March 30, 2019,

and

$32,000

for each of the

six

-month periods ended

March 28, 2020

and

March 30, 2019.