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Note 5 - Long-term Debt

9 Months Ended

Oct. 01, 2022

On September 1, 2022, we entered into an Amended and Restated Credit Agreement (the “2022 Credit Agreement”), which provides for a five-year secured revolving loan facility with an aggregate principal amount of up to $350 million, along with other components and options, such as a letter of credit, swingline loan, and expansion of revolving and/or term loan commitments, currently not in use.

We drew down an initial $150 million revolving loan at closing, which we used along with $1.9 million of cash to (i) repay the $150.5 million term loan, revolving loan, and accrued interest obligations outstanding under our previous Credit Agreement (the “2019 Credit Agreement”), and (ii) pay fees and expenses totaling $1.4 million incurred in connection with the 2022 Credit Agreement. We intend to use the revolving loan facility for working capital and general corporate purposes.

At our option, the revolving loans accrue interest at a per annum rate based on ranges determined by our consolidated total leverage ratio of either (i) the base rate (as defined in the 2022 Credit Agreement) plus a margin ranging from 0.25% to 1.00%, or (ii) the adjusted Term Secured Overnight Financing Rate ("SOFR") for interest periods of 1, 3 or 6 months plus a margin ranging from 1.25% to 2.00%. Interest is due and payable in arrears quarterly for loans bearing interest at the base rate and at the end of an interest period (or at each three-month interval in the case of loans with interest periods greater than three months) in the case of loans bearing interest at the adjusted Term SOFR. In addition, we pay a quarterly commitment fee of 0.20% on the unused portion of the revolving facility.

With the amendment of our 2019 Credit Agreement pursuant to the 2022 Credit Agreement, we capitalized $0.9 million of the new debt costs, and expensed $0.7 million of debt costs and existing original issue discount ("OID") as a loss on refinancing in Other (expense) income, net on our Consolidated Statements of Operations for the third quarter of fiscal 2022. We determine the Current portion of long-term debt, if any, as the sum of the required debt payments to be made over the next twelve months, reduced by the OID and the debt issuance costs to be amortized over the next twelve months.

The revolving loans under the 2022 Credit Agreement may be repaid and reborrowed at our discretion, with any remaining outstanding principal amount due and payable on the maturity date of the revolving loan on September 1, 2027. During the first six months of fiscal 2022, we paid required quarterly installments totaling $8.8 million on the term loans outstanding under the 2019 Credit Agreement.

The fair value of our long-term debt approximates the carrying value, which is reflected in our Consolidated Balance Sheets as follows:

	*October 1,*			*January 1,*
(In thousands)	*2022*			*2022*
Principal amount	$	150,000		$	158,750
Unamortized original issuance discount and debt costs		(1,315	)		(817	)
Less: Current portion of long-term debt		—			(17,173	)
Long-term debt, net of current portion and unamortized debt issue costs	$	148,685		$	140,760

As of October 1, 2022, the effective interest rate on the revolving loan was 3.94%. Interest expense related to our long-term debt was included in Interest expense on our Consolidated Statements of Operations as follows:

	*Three Months Ended*				*Nine Months Ended*
	*October 1,*		*October 2,*		*October 1,*		*October 2,*
(In thousands)	*2022*		*2021*		*2022*		*2021*
Contractual interest	$	1,328	$	568	$	2,690	$	1,753
Amortization of original issuance discount and debt costs		76		90		243		274
Total interest expense related to long-term debt	$	1,404	$	658	$	2,933	$	2,027