Bank Borrowing Arrangements

6 Months Ended

Jun. 28, 2015

Debt Disclosure [Abstract]

Bank Borrowing Arrangements

Bank Borrowing Arrangements

In November 2007, the Company entered into an agreement with Associated Bank, N.A. (“Associated Bank”) providing for a $10 million revolving credit facility (the “revolving facility”).  Borrowings under the revolving facility bore interest at the London Interbank Offering Rate (“LIBOR”) plus 1.5%, with borrowing levels determined by a borrowing base formula as defined in the agreement, which included the level of eligible accounts receivable.  The revolving facility also supports the issuance of letters of credit, places certain restrictions on the Company’s ability to pay dividends or make acquisitions, and includes covenants that require minimum operating profit levels and limit annual capital expenditures.  Borrowings under the revolving facility were originally collateralized by the Company’s accounts receivable and inventory. 

The Company has subsequently entered into several amendments to the revolving facility, mainly to extend the maturity date of the revolving facility, to broaden the security interest of Associated Bank to collateralize all assets of the Company, and to establish or modify certain covenants with which the Company must comply under the terms of the amended revolving facility.

On June 14, 2015, the Company and Associated Bank entered into the ninth amendment to the revolving facility. The ninth amendment primarily (i) extended the maturity date of the Credit Agreement to June 12, 2016; (ii) retained the commitment amount of Associated Bank at $12.5 million; (iii) lowered the interest rate from LIBOR plus 2.75% to LIBOR plus 2.25%; and (iv) established a maximum cash amount that can be contributed to the Company’s defined benefit pension plan for the term of the agreement.

There were no amounts outstanding on the amended revolving facility, and the Company was in compliance with all covenants of the revolving facility, as amended, as of June 28, 2015.