Note 10 - Revolving Credit Facility

12 Months Ended

Oct. 01, 2016

Notes to Financial Statements

Debt Disclosure [Text Block]

10.

REVOLVING CREDIT FACILITY

In

May

2015,

we renewed our revolving credit facility from a bank.   As part of the renewal, we extended the line for

three

years until

April

30,

2018.

At our request, the maximum principal amount we can borrow at any

one

time was reduced to

$5.0

million. There is

no

longer an unused commitment fee charged for the credit facility. The previously included covenant that restricted dividend payments to

50%

of net income was eliminated.

The credit agreement is unsecured and accrues interest at a variable rate equal to

30

- day LIBOR plus a margin ranging from

85

to

165

basis points, depending on our leverage ratio (as defined in the credit agreement). The interest rate, including the margin of

85

basis points, was

1.2795%

in

January

2016,

which was the last time we had an outstanding balance due on the line of credit. Interest - only payments are required monthly. We have pledged to grant the bank a security interest in our accounts, instruments, and chattel paper upon its request in the event of a default as defined in the credit agreement. Our obligations under the credit agreement are guaranteed by Span - Canada.

The credit facility includes financial covenants relating to tangible net worth and leverage ratios, and restricts mergers and acquisitions, assets sales, indebtedness, liens and capital expenditures without prior written consent of or waiver by the lending bank. Also, our subsidiary is not restricted in its ability to pay dividends or make distributions to us. Violation of loan covenants could result in the acceleration of the term of the credit agreement. The lending bank waived any event of default in connection with

(1)

our regular quarterly dividend payments of

$1.8

million during fiscal year

2015,

which represented

46%

of our net income for the fiscal year and

(2)

the special dividend of

$1.00

per share declared in

November

2014

and paid on

January

7,

2015.

The bank also granted a consent dated

September

29,

2015

to our repurchase of an aggregate of

261,310

shares of Company common stock at a price of

$17.49

per share from Robert Johnston, a former director of the Company, and his affiliate, The Jerry Zucker Revocable Trust.

We paid approximately

$5,000,

$6,000

and

$13,000

of interest expense in

2016,

2015

and

2014,

respectively.

No

amounts were outstanding under the credit facility at

October

1,

2016.