Note 9 - Line of Credit

3 Months Ended

Mar. 30, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

9. Line of Credit

The Company and its subsidiaries amended and restated its Revolving Credit Facility with Citizens Bank of Pennsylvania on

August 9, 2018. 

As amended and restated, the Revolving Credit Facility provides for a

$45.0

million revolving credit facility (increased from

$40.0

million),

no

longer has a sub-limit for letters of credit (from a sub-limit of

$5.0

million) and expires on

August 8, 2023.

The amended and restated Revolving Credit Facility provides the Company with waivers from certain financial covenant calculations of up to

$1.4

million in the borrowers’ fiscal year ended

December 29, 2018

for certain expenses, including severance accrued for the Company’s former chief executive officer and related payroll taxes, continuation of certain benefits and professional fees, charges incurred related to transactional financial advisory fees, legal fees associated with defending an ongoing frivolous lawsuit with a competitor of the Company, and search fees associated with hiring a senior executive.  Except as noted, all material terms remain unchanged.

Borrowings under the Revolving Credit Facility bear interest at

one

of

two

alternative rates, as selected by the Company at each incremental borrowing.  These alternatives are: (i) LIBOR (London Interbank Offered Rate), plus applicable margin, typically borrowed in fixed

30

-day increments or (ii) the agent bank’s prime rate generally borrowed over shorter durations.  The Company also pays unused line fees based on the amount of the Revolving Credit Facility that is

not

drawn.  Unused line fees are recorded as interest expense.  The effective weighted average interest rate, including unused line fees, for the

thirteen

week period ended

March 30, 2019

was

4.7%.

All borrowings under the Revolving Credit Facility are collateralized by all of the assets of the Company and its subsidiaries and a pledge of the stock of its subsidiaries.  The Revolving Credit Facility also contains various financial and non-financial covenants, such as a covenant that restricts on the Company’s ability to borrow in order to pay dividends.  The Company was

not

in compliance with

one

of its financial covenants as of

March 30, 2019,

based on the ratio of funded debt to Company’s operating income before depreciation and amortization (subject to certain other adjustments as defined in the Revolving Credit Facility) for the

twelve

months ended

March 30, 2018.

However, the Company obtained a

one

-time waiver from its lender, Citizens Bank.  As of

March 30, 2019,

the Company was in compliance with all other covenants contained in the Revolving Credit Facility.

Borrowings under the line of credit as of

March 30, 2019

and

December 29, 2018

were

$34.4

million and

$27.5

million, respectively.  At

March 30, 2019

and

December 29, 2018

there were letters of credit outstanding for

$1.6

million.  At

March 30, 2019,

the Company had availability for additional borrowings under the Revolving Credit Facility of

$9.0

million.