Long-Term Debt and Credit Arrangements

As of April 24, 2015, long-term debt was comprised of the outstanding balance on our Revolving Credit Facility Amended and Restated Credit Agreement ("Credit Agreement") of $447,599, the long term portion of a $3,000 Research and Development Investment Loan ("R&D Loan") with the State of Ohio totaling $2,222 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 $855. Refer to the table below:



(in thousands)	April 24, 2015			April 25, 2014
Credit Agreement borrowings (1)	$	447,599		$	458,898
R&D Loan (1)	2,631			—
Interest-free loan (1)	855			835
Total borrowings	451,085			459,733
Less current portion	(409		)	(458,898		)
Long term debt	$	450,676		$	835


(1)	The Credit Agreement, R&D Loan and Interest-free loan mature in fiscal 2019, 2021 and 2022, respectively.

On January 2, 2014, we entered into a $750,000 long-term Credit Agreement which replaced the previous credit facility. 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 1.00% 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 0.5%, (ii) the Prime Rate, or (iii) the Daily LIBOR Rate, plus 1.0%. 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. The Credit Agreement has a maturity date of January 1, 2019.

In the first quarter of fiscal 2015, 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.

On May 11 2015, we entered into a Second Amendment to the Credit Agreement. The amendment has an effective date of April 24, 2015. The terms of the Credit Agreement were amended related to: (a) an increase to the Maximum Leverage Ratio for the period starting April 24, 2015, through the remaining term of the agreement, (b) a change in the restrictions related to payments for share repurchases, and (c) a change in the definition of the LIBOR and Daily LIBOR rates that are used to calculate interest on outstanding borrowings. We incurred fees of $1,705 associated with this amendment, which will be paid in the first quarter of fiscal 2016 and amortized over the remaining term of the Credit Agreement 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 April 24, 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 4.50 to 1.00. As of April 24, 2015, our coverage ratio was 11.89, and our leverage ratio was 3.37, as defined in our credit facility. Our credit facility also limits repurchases of our common stock and the amount of dividends that we pay to holders of our common stock in certain circumstances. A breach of any of these covenants could result in a default under our credit facility, in which all amounts under our credit facility may become immediately due and payable, and all commitments under our credit facility extend further credit may be terminated. We are in compliance with the financial covenant requirements of our credit facility as of April 24, 2015.

As of April 24, 2015, we had $447,599 outstanding on the Credit Agreement. The primary purposes of the Credit Agreement are for trade and stand-by letters of credit in the ordinary course of business as well as working capital, refinancing of existing indebtedness, if any, capital expenditures, joint ventures and acquisitions, stock repurchases and other general corporate purposes. A one percent increase in the benchmark rate used for our credit facility would increase our annual interest expense by approximately $4,538 assuming the $447,599 outstanding at the end of fiscal 2015 was outstanding for the entire year.

Outstanding borrowings on the Credit Agreement are classified as a noncurrent liability as of April 24, 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 current 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.

At April 24, 2015, we had outstanding letters of credit that totaled approximately $12,424, of which $12,123 is utilized as part of the total amount available under our Credit Agreement. If certain conditions are met under these arrangements, we would be required to satisfy the obligations in cash. Due to the nature of these arrangements and based on historical experience and future expectations, we do not expect to make any significant payment outside of the terms set forth in these arrangements.

Our effective interest rate for the Credit Agreement was 2.09% during the year ended April 24, 2015. Interest costs of $471, $611 and $835 incurred in fiscal 2015, fiscal 2014 and fiscal 2013, respectively, were capitalized in connection with our ERP and construction activities. Interest paid in fiscal 2015, fiscal 2014 and fiscal 2013 was $10,399, $4,544 and $12,442, respectively. Net interest expense in fiscal 2015, 2014 and 2013 was comprised of the following:



(in thousands)	2015			2014			2013
Interest Expense:
Variable-rate debt (1)	$	10,373		$	4,885		$	1,672
Fixed-rate debt (2)	1,177			391			10,844
Capitalized interest	(471		)	(611		)	(835		)
Total Interest Expense on outstanding borrowings	11,079			4,665			11,681
Interest income:
Accretion on note receivable	(1,859		)	(1,918		)	—
Other (3)	(571		)	(733		)	(196		)
Total Interest Income	(2,430		)	(2,651		)	(196		)
Net Interest Expense	$	8,649		$	2,014		$	11,485


(1)	Primarily interest expense on our Credit Agreement Borrowings


(2)	Primarily the amortization of debt issuance costs in fiscal 2015 and 2014, respectively. Fiscal 2013 includes a $6.2 million "make-whole" payment related to the prepayment of our outstanding note purchase agreements, as well as interest previously incurred on those notes.


(3)	Primarily interest income on our $30,000 note receivable, obtained as part of the sale of Mimi’s Café to Le Duff.

On November 30, 2012, we provided the agents for the Note Purchase Agreement, dated July 28, 2004, as amended (“2004 Notes”), and the Note Purchase Agreement, dated July 28, 2008, as amended (“2008 Notes”), with a prepayment notice. The interest rates under the 2004 Notes was Series 5.12% and 5.67%, and under the 2008 Notes was 6.39% and 6.39%. Per the terms of the 2004 Notes and the 2008 Notes (collectively, “Private Placement Notes”), notice of prepayment was required at least 30 days, but not more than 60 days, prior to payment. On December 31, 2012, we prepaid the Private Placement Notes in full, consisting of $97,145 in current aggregate principal amount, plus a make-whole amount of $6,150 determined in accordance with the provisions of the Private Placement Notes. Absent their early termination and prepayment, the maturity date of the 2004 Notes and the 2008 Notes would have been July 28, 2016, and July 28, 2014, respectively. We used cash on hand and borrowings from the credit facility to prepay the Private Placement Notes.