Debt

As of January 23, 2015, long-term debt was comprised of the outstanding balance on our Revolving Credit Facility Amended and Restated Credit Agreement ("Credit Agreement") of $444,409, the long term portion of a $3,000 Research and Development Investment Loan ("R&D Loan") with the State of Ohio totaling $2,323 and an interest-free loan of $1,000, due ten years from the date of borrowing, with imputed interest, which as a result is discounted to $850. Refer to the table below:



	January 23, 2015				April 25, 2014
Credit Agreement borrowings	$	444,409			$	458,898
R&D Loan	2,732				—
Interest-free loan	850				835
Total borrowings	447,991				459,733
Less current portion	(409		)	⁽¹⁾	(458,898		)	⁽²⁾
Long term debt	$	447,582			$	835

⁽¹⁾ Obligations due in the next twelve months on the R&D Loan, as of January 23, 2015.

⁽²⁾ Credit Agreement borrowings were classified as a current liability as of April 25, 2014.

On January 2, 2014, we entered into a $750,000 Credit Agreement. The Credit Agreement represents a syndicated secured revolving credit facility under which up to $750,000 will be available, with a letter of credit sub-facility of $50,000, and an accordion option to increase the revolving credit commitment to $1,050,000. It is secured by the stock pledges of certain material subsidiaries. This agreement replaced our existing variable-rate revolving credit facility. Borrowings under the Credit Agreement bear interest, at Borrower’s option, at a rate based on LIBOR or the Base Rate, plus a margin based on the Leverage Ratio, ranging from 0.00% to 2.75% per annum for LIBOR, and ranging from 0.00% to 1.75% per annum for Base Rate. The Base Rate means for any day, a fluctuating per annum rate of interest equal to the highest of (i) the Federal Funds Open Rate, plus 0.50%, (ii) the Prime Rate, or (iii) the Daily LIBOR Rate, plus 1.00%. We are also required to pay a commitment fee of 0.15% per annum to 0.25% per annum of the average unused portion of the total lender commitments then in effect. We incurred financing costs of $2,064 associated with this refinancing, which along with previous unamortized debt financing costs of $760 are being amortized over five years.

On July 23, 2014, we entered into a First Amendment to the Credit Agreement. The terms of the Credit Agreement that were amended related to: (a) an increase to the Maximum Leverage Ratio for the period starting July 25, 2014, through July 22, 2016, (b) certain restricted payment requirements related to share repurchases and (c) an update to the Pricing Grid, which determines variable pricing and fees, to reflect changes in the allowable maximum leverage ratio. We incurred financing costs of $1,279 associated with this amendment, which are being amortized using the straight line method, which approximates the effective interest method.

Our Credit Agreement contains financial and other various affirmative and negative covenants that are typical for financings of this type. Our Credit Agreement contains financial covenants that require us to maintain a specified minimum coverage ratio and maximum leverage ratio at January 23, 2015, of (1) a minimum coverage ratio of not less than 3.00 to 1.00; and (2) a maximum leverage ratio that may not exceed 4.25 to 1.00. The maximum leverage ratio decreases to 4.00 to 1.00 as of fiscal 2015 year end. As of January 23, 2015, our minimum coverage ratio was 12.81, and our leverage ratio was 3.69, as defined in our Credit Agreement. A breach of any of these covenants could result in a default under our Credit Agreement, in which all amounts under our Credit Agreement may become immediately due and payable, and all commitments under our Credit Agreement to extend further credit may be terminated. There were no covenant violations during the three months ended January 23, 2015. The Credit Agreement also allows for the incurrence of additional indebtedness of up to $300,000, a sale leaseback of our real estate of up to $100,000, and mortgage indebtedness on our corporate headquarters of up to $50,000.

Our effective interest rate for the Credit Agreement was 2.31% and 1.57% for the three months ended January 23, 2015, and January 24, 2014, respectively, and 2.00% and 1.50% for the nine months ended January 23, 2015, and January 24, 2014, respectively. Of our total letter of credit sub-facility, $12,424 was used for certain stand-by letters of credit at January 23, 2015. The Credit Agreement has a maturity date of January 2, 2019.

As of January 23, 2015, we had $444,409 outstanding on the Credit Agreement. The primary purposes of the Credit Agreement is to fund working capital, capital expenditures, stock repurchases, joint ventures and acquisitions and other general corporate purposes as well as for trade and standby letters of credit. A one percent increase in the benchmark rate used for our Credit Agreement would increase our annual interest expense by approximately $4,506 assuming the $444,409 outstanding at the end of the third quarter of fiscal 2015 was outstanding for the entire year. Outstanding borrowings on the Credit Agreement are classified as a long-term liability as of January 23, 2015, and were classified as a current liability as of April 25, 2014. At the end of fiscal 2014 our Credit Agreement borrowings were classified as short term based on our assessment of the Company's inability to meet its leverage ratio covenant, as defined at that time, during fiscal 2015. The change in classification was made in the first quarter of fiscal 2015 as the Company amended the Credit Agreement to increase the leverage ratio requirement.

In the first quarter of fiscal 2015, we obtained a $3,000 R&D Loan from the State of Ohio. The R&D Loan has a term of seven years, a variable interest rate as low as 2.00% and certain available tax incentives provided we meet certain requirements related to headcount, wages and capital expenditures. The inability to meet these requirements could result in a change in interest rate or make the loan become immediately due and payable. The R&D Loan was used to fund the purchase cost of machinery and equipment for our test kitchen.