Long-Term Debt and Credit Arrangements

As of April 28, 2017, long-term debt was comprised of the long term portion of a $3,000 Research and Development Investment Loan ("R&D Loan") and an interest-free loan of $1,000, due ten years from the date of borrowing, with imputed interest.

In the fourth quarter of fiscal 2017, in conjunction with the sale of our Restaurants Business, we paid all outstanding borrowings and terminated our Revolving and Restated Credit Agreement ("Credit Agreement"). Under the terms of the Credit Agreement, we were required to use proceeds from the sale of our Restaurants Business to pay off outstanding borrowings, which occurred on the date the Restaurants Transaction closed. In the fourth quarter of fiscal 2017, we also paid off all outstanding borrowings on the mortgage credit agreement on our corporate headquarters facility (the "Mortgage Loan"). Our corporate headquarters facility was sold as part of the Restaurants Transaction and the termination of the Mortgage Loan prior to closing the Restaurants Transaction was a requirement under the BER Sale Agreement. Interest expense associated with the Mortgage Loan, including the write off of unamortized debt issuance costs of $972, was recorded in the results from discontinued operations. We expensed $2,005 of unamortized debt issuance costs in the fourth quarter of fiscal 2017 associated the termination of the Credit Agreement. Interest expense associated with the Credit Agreement, including the write off of unamortized debt issuance costs, were recorded in the Net Interest Expense line of the Consolidated Statements of Net Income.

Refer to the table below for outstanding borrowings as of April 28, 2017, and April 29, 2016, respectively:



(in thousands)	April 28, 2017			April 29, 2016
Credit Agreement borrowings	$	—		$	307,000
Mortgage Loan	—			28,963
R&D Loan (1)	1,801			2,219
Interest-free loan (1)	894			875
Total borrowings	2,695			339,057
Less current portion	(428		)	(3,419		)
Long term debt	$	2,267		$	335,638


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

Establishment of New Credit Facility

On April 28, 2017, the Company entered into a new $300,000 Credit Facility (the “Credit Facility”). The Credit Facility represents a syndicated secured revolving credit facility under which up to $300,000 will be available, with a letter of credit sub-facility of $20,000, and an accordion option to increase the revolving credit commitment to $400,000. All obligations under the Credit Facility are unconditionally guaranteed by the Company as well as certain wholly owned subsidiaries, and is secured by a first-priority security interest in certain property and assets of the Company, including accounts receivable, inventory, equipment, intellectual property and certain other assets, including stock pledges of certain material direct subsidiaries. The Credit Facility has a maturity date of April 28, 2022. We incurred financing costs of $1,542 associated with this Credit Facility, which will be amortized over the five-year term of the facility.

The primary purposes of the Credit Facility are for stand-by letters of credit in the ordinary course of business as well as working capital, capital expenditures, acquisitions, stock repurchases, dividends, including a special dividend paid to the Company’s stockholders at the close of business on June 16, 2017, and other general corporate purposes.

Borrowings under the Credit Facility bear interest, at Borrower’s option, at a rate based on the Eurodollar Rate or the Base Rate, plus a margin based on the Consolidated Leverage Ratio, as detailed in the Credit Facility, ranging from 1.25% to 2.00% per annum for Eurodollar Rate, and ranging from 0.25% to 1.00% per annum for Base Rate. Base Rate means, for any day, a fluctuating per annum rate of interest equal to the highest of (i) the Federal Funds Rate, plus 0.50%, and (ii) Bank of America, N.A.’s “prime rate”, and (iii) the Eurodollar Rate, plus 1.0%. As of April 28, 2017, the margin on LIBOR-based loans was 1.50% per annum and the margin on Base Rate-based loans was 0.50% per annum. Commitment fees payable under the Credit Facility are also based on the Consolidated Leverage Ratio and range from 0.20% per annum to 0.30% per annum of the average unused portion of the total lender commitments then in effect.

The terms of the Credit Facility provide for customary representations and warranties and affirmative covenants. The Credit Facility contains negative covenants usual and customary for a transaction of this nature. The Credit Agreement also contains financial covenants that require us to maintain a specified minimum coverage ratio of not less than 3.00 to 1.00, and a maximum leverage ratio that may not exceed 3.50 to 1.00. As of April 28, 2017, there were no outstanding borrowings on the Credit Facility and we were in compliance with all covenants. A breach of any of these covenants could result in a default under our Credit Facility, in which all amounts under the Credit Facility may become immediately due and payable, and all commitments under our Credit Facility to extend further credit may be terminated.

At April 28, 2017, we had outstanding letters of credit that totaled approximately $12,036, of which $11,736 is utilized as part of the total amount available under our Credit Facility. 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. Approximately $3,300 of these letters of credit were associated with our Restaurants Business and have subsequently been canceled or released.

Our combined effective annual interest rate for the now terminated Credit Agreement and Mortgage Loan was 2.37% during the year ended April 28, 2017. Interest costs of $445, $210 and $471 incurred in fiscal years 2017, 2016 and 2015, respectively, were capitalized in connection with our ERP system implementation and other construction activities. Interest paid in fiscal years 2017, 2016 and 2015 was $9,718, $10,579 and $10,399, respectively. Net interest expense from continuing operations in fiscal years 2017, 2016 and 2015 was comprised of the following:



(in thousands)	2017			2016			2015
Interest Expense:
Variable-rate debt (1)	$	7,817		$	10,925		$	10,373
Fixed-rate debt (2)	3,213			2,262			1,177
Capitalized interest	(445		)	(210		)	(471		)
Total Interest Expense on outstanding borrowings	10,585			12,977			11,079
Interest Income:
Accretion on note receivable (3)	(1,133		)	(2,082		)	(1,859		)
Other (4)	(236		)	(468		)	(571		)
Total Interest Income	(1,369		)	(2,550		)	(2,430		)
Net Interest Expense	$	9,216		$	10,427		$	8,649


(1)	Primarily interest expense on our Credit Agreement borrowings.


(2)	Includes the amortization of debt issuance costs


(3)	Accretion on our $30,000 note receivable, obtained as part of the sale of Mimi’s Café to Le Duff which was settled in fiscal 2017.


(4)	Primarily interest income on the $30,000 note receivable, obtained as part of the sale of Mimi’s Café to Le Duff which was settled in fiscal 2017.