Notes Payable and Bank Credit Facility

Our notes payable consist of the following:

	August 27, 2016
	Principal Balance			Unamortized Discount			Net Carrying Amount

Zenith acquisition note payable	$	6,000		$	(154	)	$	5,846
Transportation equipment notes payable		6,787			-			6,787
Real estate notes payable		1,447			-			1,447

Total Debt		14,234			(154	)		14,080
Less current portion		(5,125	)		122			(5,003	)

Total long-term debt	$	9,109		$	(32	)	$	9,077

	November 28, 2015
	Principal Balance			Unamortized Discount			Net Carrying Amount

Zenith acquisition note payable	$	9,000		$	(312	)	$	8,688
Transportation equipment notes payable		2,152			-			2,152
Real estate notes payable		2,933			-			2,933

Total Debt		14,085			(312	)		13,773
Less current portion		(5,477	)		204			(5,273	)

Total long-term debt	$	8,608		$	(108	)	$	8,500

The future maturities of our notes payable are as follows:

Remainder of fiscal 2016	$	503
Fiscal 2017		5,171
Fiscal 2018		5,246
Fiscal 2019		2,324
Fiscal 2020		990
Fiscal 2021		-
Thereafter		-
	$	14,234

Zenith

Acquisition Note Payable

As part of the consideration given for our acquisition of Zenith on February 2, 2015, we issued an unsecured note payable to the former owner in the amount of $9,000, payable in three annual installments of $3,000 due on each anniversary of the note, the first installment having been paid on February 2, 2016. Interest is payable annually at the one year LIBOR rate, which was established at 0.62% on February 2, 2015 and resets on each anniversary of the note, having reset to the current rate of 1.14% on February 2, 2016. The note was recorded at its fair value in connection with the acquisition resulting in a debt discount that is amortized to the principal amount through the recognition of non-cash interest expense over the term of the note. Interest expense resulting from the amortization of the discount was $46 and $158 for the three and nine months ended August 27, 2016, respectively, and $76 and $177 for the three and nine months ended August 29, 2015, respectively. The current portion of the note due within one year, including unamortized discount, was $2,878 and $2,796 at August 27, 2016 and November 28, 2015, respectively.

Transportation Equipment Notes Payable

Certain of the transportation equipment operated in our logistical services segment is financed by notes payable in the amount of $6,787 and $2,152 at August 27, 2016 and November 28, 2015, respectively. These notes are payable in fixed monthly payments of principal and interest at variable rates of approximately 2.69% at August 27, 2016, with remaining terms of forty to fifty months. The current portion of these notes due within one year was $1,756 and $901 at August 27, 2016 and November 28, 2015, respectively. The notes are secured by tractors, trailers and local delivery trucks with a total net book value of $7,948 and $3,796 at August 27, 2016 and November 28, 2015, respectively.

Real Estate Notes Payable

Certain of our retail real estate properties have been financed through commercial mortgages with outstanding principal totaling $1,447 and $1,709 at August 27, 2016 and November 28, 2015, respectively. The mortgages bear interest at fixed rates of 6.73%. They are collateralized by the respective properties with net book values totaling approximately $5,892 and $5,993 at August 27, 2016 and November 28, 2015, respectively. The current portion of these mortgages due within one year was $369 and $351 as of August 27, 2016 and November 28, 2015, respectively.

Certain of the real estate located in Conover, North Carolina and operated in our logistical services segment was subject to a note payable in the amount of $1,224 at November 28, 2015, all of which was classified as current at that time. The remaining balance due on this note was paid in full during the third quarter of fiscal 2016.

Fair Value

We believe that the carrying amount of our notes payable approximates fair value at both August 27, 2016 and November 28, 2015. In estimating the fair value, we utilize current market interest rates for similar instruments. The inputs into these fair value calculations reflect our market assumptions and are not observable. Consequently, the inputs are considered to be Level 3 as specified in the fair value hierarchy in ASC Topic 820,

Fair Value Measurements and Disclosures

. See Note 3.

Bank

Credit Facility

Effective December 5, 2015, we entered into a new credit facility with our bank which provides for a line of credit of up to $15,000. This credit facility, which matures in December of 2018, is unsecured and contains covenants requiring us to maintain certain key financial ratios. We are in compliance with all covenants under the agreement and expect to remain in compliance for the foreseeable future.

At August 27, 2016, we had $1,970 outstanding under standby letters of credit against our line, leaving availability under our credit line of $13,030. In addition, we have outstanding standby letters of credit with another bank totaling $381.