Debt

3 Months Ended

Jan. 02, 2021

The Company's debt obligations consist of the Secured Credit Facility with J.P. Morgan Chase Bank, N.A. (the “Credit Facility”) and the J.P. Morgan Chase Bank, N.A. Secured Term Loan (the "Term Loan").

The Company’s short- and long-term debt obligations as of January 2, 2021 and October 3, 2020 were as follows:


	January 2, 2021				October 3, 2020
(In thousands, except percentages)
Term loan (1)	2.4	%	$	25,000	2.4 %	$	25,000
Unamortized debt issuance costs (2)			(63)			(82)
Total indebtedness			24,937			24,918
Less short-term portion			(24,937)			(6,667)
Long-term debt			$	—		$	18,251

(1)Due in October 2021 and bears interest at a variable rate equal to an adjusted LIBOR plus 2.25%, payable quarterly. Subsequent to the first quarter of fiscal 2021, the Company repaid all of its outstanding principal balance. For more information, refer to Note 14. Subsequent Event.

(2)Debt issuance costs are recorded as a debt discount and recorded as interest expense over the term of the agreement.

The Credit Facility allows the Company to borrow up to $80.0 million, restricted to the value of the borrowing base, which is based on the value of inventory and accounts receivable and is subject to quarterly redetermination. The Credit Facility matures in October 2021 and may be drawn as Commercial Bank Floating Rate Loans (at the higher of prime rate or adjusted LIBOR plus 2.50%) or Eurocurrency Loans (at LIBOR plus an applicable margin). As of both January 2, 2021 and October 3, 2020, the Company did not have any outstanding borrowings and had $0.1 million and $0.5 million, respectively, in undrawn letters of credit that reduce the availability under the Credit Facility.

Debt obligations under the Credit Facility and the Term Loan require the Company to maintain a consolidated fixed charge ratio of at least 1.0, restrict distribution of dividends unless certain conditions are met, such as having

a fixed charge ratio of at least 1.15, and require financial statement reporting and delivery of borrowing base certificates. As of January 2, 2021 and October 3, 2020, the Company was in compliance with all financial covenants. The Credit Facility and the Term Loan are collateralized by eligible inventory and accounts receivable of the Company, as well as the Company's intellectual property including patents and trademarks.