Debt

12 Months Ended

Aug. 27, 2017

Debt Disclosure [Abstract]

Debt

3. DEBT

Long-term debt consists of the following:

	August 27, 2017		August 28, 2016
Building related mortgages & term debt	$	3,598,377	$	3,675,794
Capitalized lease obligations		3,281,528		4,667,439
		6,879,905		8,343,233
Less current portion		1,438,057		1,557,801
Long-term debt,	$	5,441,848	$	6,785,432

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 mortgage agreement with its prior bank which was finalized in May 2013. The mortgage carried an interest rate of 2.843%, required monthly payments of $22,964 based on a 20-year amortization schedule and was secured all assets of the Company.

During the quarter ended February 26, 2017, the Company entered into a new loan agreement with a new bank for a new mortgage term loan. The new mortgage paid off the prior mortgage in its entirety and released all obligations in connection with that mortgage including the requirement to maintain a restricted cash balance of $1.25 million. The new mortgage was for $3.7 million and carries an interest rate of 3.99% fixed for five years after which the interest rate will reset at a fixed rate for the subsequent five years. The mortgage requires monthly payments of $22,511 based on a 20-year amortization schedule and matures in February 2027. The mortgage is secured by all assets of the Company. The mortgage agreement provides for certain restrictive covenants including a minimum tangible net worth and a minimum working capital. At August 27, 2017, the Company was in compliance with these provisions.

Maturities of long-term debt are as follows:

Fiscal years ending August:
2018	$	1,438,057
2019		1,121,076
2020		760,523
2021		353,670
2022		269,361
Thereafter		2,937,218

Included in the consolidated balance sheet at August 27, 2017 are cost and accumulated depreciation on equipment subject to capitalized leases of $9,015,281 and $6,079,373 respectively. At August 28, 2016, the amounts were $9,510,889 and $5,086,481, respectively. The capital leases carry interest rates from 3.5% to 5.2% and mature from 2018 – 2022.

The present value of the net minimum payments on capital leases which is included in long-term debt as of August 27, 2017 is as follows:

Fiscal years ending August:
2018	$	1,412,563
2019		1,046,852
2020		651,216
2021		224,619
2022		127,319
Thereafter		-
Total minimum lease payments		3,462,569
Less amount representing interest		181,041
Present value of net minimum lease payments		3,281,528
Current portion		1,316,597
Capital lease obligation, less current portion	$	1,964,931

During fiscal 2017, the Company placed purchase orders for two new pieces of equipment for approximately $2,055,000 that will be delivered and put into service during fiscal 2018. The Company also made advance deposits on that equipment totaling $687,000 which has been classified as machinery and equipment on the balance sheet. During fiscal 2017, the Company entered into a debt agreement related to one of the pieces of equipment and subsequent to the August 27, 2017 entered into a second debt agreement on the other piece of equipment. There were no amounts outstanding related to either debt agreement at August 27, 2017. Both debt agreements will commence once the equipment is delivered and accepted by the Company. Upon commencement, both agreements will be for five years and will have interest rates from 4.25% - 5.36%.

Line of Credit:

During the quarter ended February 26, 2017, the Company entered into a loan agreement with its new bank for a revolving line of credit. The agreement provides for a maximum loan of $1,500,000 with interest at the thirty-day LIBOR rate plus 2.0% with a base rate of 2.75%. The revolver has a maturity date of February 15, 2018. The loan agreement provides for certain restrictive covenants including a minimum tangible net worth and a minimum working capital. At August 27, 2017, the Company was in compliance with these provisions. There were no amounts outstanding related to its revolving loan agreement at August 27, 2017.