Debt and Financing Arrangements

12 Months Ended

Dec. 29, 2018

DEBT AND FINANCING ARRANGEMENTS

Bank Credit Facility

The Company's Credit Agreement ("Credit Agreement"), dated February 21, 2017, provides for borrowings of up to $95.0 million, subject to the satisfaction of certain terms and conditions, comprised of a term loan of $30.0 million and up to $65.0 million of borrowings under a revolving loan. The actual amount of borrowings available under the revolving loan portion of the Credit Agreement is limited by the Company's total leverage ratio. The amount available to draw at any point in time would be further reduced by any standby letters of credit issued.

Loans made under the Credit Agreement may be Base Rate Loans or LIBOR Rate Loans, at the election of the Company subject to certain exceptions. Base Rate Loans have an interest rate equal to (i) the higher of (a) the federal funds rate plus 0.5%, (b) the London Interbank Offering Rate (“LIBOR”) plus 1%, or (c) Bank of America's prime rate, plus (ii) a variable margin of between 0.75% and 1.75% depending on the Company's total leverage ratio, calculated on a consolidated basis. LIBOR rate loans have an interest rate equal to (i) the LIBOR rate plus (ii) a variable margin of between 1.75% and 2.75% depending on the Company's total leverage ratio. Amounts borrowed under the Credit Agreement are secured by a security interest in substantially all of the Company's tangible and intangible assets. Please see "Item 1A. Risk Factors" for more information in regard to the phasing out of LIBOR after 2021.

The Credit Agreement contains customary terms and provisions (including representations, covenants, and conditions) for transactions of this type. Certain covenants, among other things, restrict the Company's and its subsidiaries' ability to incur indebtedness, grant liens, make investments and sell assets. The Credit Agreement also contains customary events of default, covenants and representations and warranties. Financial covenants include:

•An interest coverage ratio (based on interest expense and EBITDA) of at least 3.5 to 1.0;

•A total leverage ratio no greater than 3.0 to 1.0, provided that in the event of a permitted acquisition having an aggregate consideration equal to $10.0 million or more, at the Borrower’s election, the foregoing 3.00 to 1.00 shall be deemed to be 3.25 to 1.00 for the fiscal quarter in which such permitted acquisition occurs and the three immediately following fiscal quarters and will thereafter revert to 3.00 to 1.00; and

•A capital expenditures covenant limiting capital expenditures to $100.0 million plus, if the capital expenditures permitted have been fully utilized, an additional amount for the remaining term of the Credit Agreement equal to 35% of EBITDA for the thirteen “four-week” periods most recently ended immediately prior to the full utilization of such $100.0 million basket

The Credit Agreement places certain limitations on acquisitions and the payment of dividends.

Debt at December 28, 2019 and December 29, 2018 consisted of the following:


(thousands)	December 28, 2019		December 29, 2018
Principal amount	$	30,000	$	30,000
Less: unamortized debt issuance costs	652		954
Long-term debt, less current maturities	$	29,348	$	29,046

In fiscal 2019, the Company recorded interest expense of $1.7 million, of which approximately $1.2 million of interest expense was on our term loan, and $0.3 million was amortization of debt issuance costs. In fiscal 2018, the Company recorded interest expense of $1.5 million, of which $1.2 million of interest expense was on our term loan, and $0.3 million was amortization of debt issuance costs. No interest was capitalized in fiscal years 2019 and 2018.

As of December 28, 2019 and December 29, 2018, the Company was in compliance with all covenants under the Credit Agreement. As of December 28, 2019, and December 29, 2018, the Company had $1.1 million and $1.3 million of standby letters of credit issued, respectively, and $63.9 million and $63.7 million was available for borrowing under the bank credit facility, respectively.

The Company's weighted average and effective interest rates as December 28, 2019, December 29, 2018, and December 30, 2017 were 4.1%, 3.9%, and 3.5%, respectively.

Future Maturities

The aggregate contractual annual maturities for debt as of December 28, 2019 are as follows:



Fiscal Year:	Term Loan (thousands)

2020	$	—
2021	—
2022	30,000
2023	—
2024	—
Aggregate Maturities	$	30,000