Note 8 - Line of Credit

3 Months Ended

Apr. 01, 2023

Notes to Financial Statements

Debt Disclosure [Text Block]

8.     Line of Credit

The Company’s Revolving Credit Facility was amended and restated as of April 24, 2023.  See Note 17, “Subsequent Events.”  The disclosure set forth in this Note 8 is as of April 1, 2023, prior to such amendment and restatement.

The Company’s Revolving Credit Facility provides for a $45.0 million revolving credit facility, has no sub-limit for letters of credit, and expires on August 8, 2023.

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) SOFR (Secured Overnight Financing Rate) (which replaced LIBOR (London Interbank Offered Rate) upon the phasing out of LIBOR), plus applicable margin, typically borrowed in fixed 30-day increments, 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 weeks ended April 1, 2023 and April 2, 2022 were 6.0% and 1.6%, respectively.

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 the Company’s ability to borrow in order to pay dividends. As of April 1, 2023, the Company was in compliance with all covenants contained in the Revolving Credit Facility (as amended). The Company believes that it will maintain compliance with its financial covenants for the foreseeable future.

Borrowings under the line of credit as of April 1, 2023 and December 31, 2022 were $19.2 million and $8.8 million, respectively. There were letters of credit outstanding at April 1, 2023 and December 31, 2022 for $2.0 million and $1.9 million, respectively. At April 1, 2023 and December 31, 2022, the Company had availability for additional borrowings under the Revolving Credit Facility of $23.8 million and $34.3 million, respectively.