LONG TERM DEBT

Long-term debt consists of the following:



	September 28, 2014		December 29, 2013
Revolving credit facility	$	74,247	$	51,358
First lien term loan	120,075		120,075
Second lien term loan	94,307		89,925
Capital lease obligations	12,411		8,111
Total	301,040		269,469
Less current portion	13,877		5,589
Long-term portion	$	287,163	$	263,880

Under the Second Lien Term Loan ("Second Lien") the Company has the right at certain times to increase the outstanding principal on the loan in lieu of paying cash for interest due. The payment-in-kind ("PIK") interest amounts follow the same maturity schedule as the rest of the Second Lien principal. The Company has elected to use the PIK interest option for the full amount of interest in the amounts of $2,302 in the third quarter, and $4,382 year-to-date. The use of PIK interest in the prior quarter did not change the interest rate applied to the Second Lien principal. Beginning with the current quarter, an additional 1.5% of interest will be added to the base rate for any amount of PIK interest elected that exceeds 50% of the interest due for the Second Lien in the period the election is made. The additional 1.5% will also be added to the base rate for the period if any amount of PIK interest is elected in the third year. PIK interest is included in interest expense on the Statement of Income.

Our revolving credit facility ("Credit Facility") requires that we maintain certain levels of liquidity, initially the greater of $15,000 or 15% of our aggregate commitments, which are currently $125,000. Failure to maintain this liquidity level would trigger an activation period and would give our lenders the right to dominion of our bank accounts. This would not make the underlying debt callable by the lender and would not affect our ability to borrow on the Credit Facility. However, we would be required to reclassify the Credit Facility balance to “Current maturities of long-term debt” on our Consolidated Balance Sheet, as our Credit Facility does contain a subjective acceleration clause. In the third quarter our liquidity was $36,136 and our required minimum was $12,500. In addition, the Credit Facility contains a fixed charge coverage covenant of 1:1 that becomes applicable if liquidity falls below 12.5% of the aggregate commitments or $12,500, whichever is greater.

The First and Second Liens require the Company to be in compliance with specified quarterly financial covenants, the levels of which are required to improve in subsequent quarters. The most stringent of these covenants is the total leverage ratio. As of September 28, 2014, our leverage ratio was 4.38:1 compared to a required 4.89:1. The Company was in compliance with all covenants as of September 28, 2014.