Debt

12 Months Ended

Aug. 28, 2016

Debt Disclosure [Abstract]

Debt

3. DEBT

Long-term debt consists of the following:

	August 28, 2016		August 30, 2015
Building related mortgages & term debt	$	3,675,794	$	3,842,499
Capitalized lease obligations		4,667,439		6,028,115
		8,343,233		9,870,614
Less current portion		1,557,801		1,527,688
Long-term debt	$	6,785,432	$	8,342,926

The Company expanded its Monticello, Minnesota facility during fiscal 2013 which increased the total facility size to approximately 107,000 square feet. The expansion cost approximately $3.8 million which was paid for by a combination of cash on hand and a new mortgage agreement with its bank which was finalized in May 2013. The new mortgage was for $4.2 million, which satisfied the original mortgage of $1.1 million and provided the Company $3.1 million to use toward the building expansion project. The mortgage carries an interest rate of 2.843%, requires monthly payments of $22,964 based on a 20 year amortization schedule and matures on May 8, 2018. The mortgage is secured by all assets of the Company.

Maturities of long-term debt are as follows:

Fiscal years ending August:
2017	$	1,557,801
2018		4,820,500
2019		994,447
2020		628,513
2021		216,057
Thereafter		125,915

Included in the consolidated balance sheet at August 28, 2016 are cost and accumulated depreciation on equipment subject to capitalized leases of $9,510,889 and $5,086,481 respectively. At August 30, 2015, the amounts were $10,433,179 and $4,617,133, respectively. The capital leases carry interest rates from 3.5% to 5.2% and mature from 2017 – 2022.

The present value of the net minimum payments on capital leases which is included in long-term debt as of August 28, 2016 is as follows:

Fiscal years ending August:
2017	$	1,534,035
2018		1,412,563
2019		1,046,852
2020		651,216
2021		224,619
Thereafter		127,319
Total minimum lease payments		4,996,604
Less amount representing interest		329,165
Present value of net minimum lease payments		4,667,439
Current portion		1,385,911
Capital lease obligation, less current portion	$	3,281,528

Line of Credit:

At August 26, 2016, the Company amended and modified its Revolving Line of Credit with its bank. Under the agreement the Company can borrow up to $1 million. The agreement expires on February 28, 2017, is collateralized by all assets of the Company and carries an interest rate of LIBOR plus 2%. The agreement also contains restrictive provisions requiring a minimum year-to-date earnings before interest, taxes, depreciation and amortization (EBITDA) measured quarterly, a minimum liquidity, a maximum debt to tangible net worth ratio, as well as a debt service coverage ratio. In addition, the Company is required to keep $1,250,000 in a deposit account maintained by the bank. Since the Company has no right of withdrawal, and the account is to serve as collateral for outstanding debt obligations, restricted cash has been excluded from cash and cash equivalents. At August 28, 2016, the Company was in compliance with these provisions. There were no amounts outstanding related to its revolving credit agreement at August 28, 2016 and August 30, 2015, respectively.