Note 10 - Long-term Debt

12 Months Ended

Feb. 26, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

10. LONG-TERM DEBT

On

January

15,

2016,

the Company entered into a

three

-year revolving credit facility agreement (the “Credit Agreement”) with HSBC Bank USA, National Association (“HSBC Bank”). This Credit Agreement replaced the Amended Credit Agreement that the Company entered into with PNC Bank in

February

2014.

The Credit Agreement provides for loans up to

$75,000

and letters of credit up to

$2,000.

During the

2016

fiscal year, the Company made no payments in accordance with the Credit Agreement. The

$75,000

is payable in

twelve

quarterly installments of

$750

each, with the remaining amount outstanding under the Credit Agreement payable on

January

26,

2019.

Pursuant to an amendment entered into on

April

21,

2017,

the

first

and

second

installments due in the

2018

fiscal year were increased from

$750

to

$1,000.

Borrowings under the Credit Agreement bear interest at a rate equal to, at the Company’s option, either (a) a fluctuating rate per annum (computed on the basis of a year of

365

or

366

days, as the case

may

be, and actual days elapsed) equal to the Base Rate, such interest rate to change automatically from time to time effective as of the effective date of each change in the Base Rate or (b) a rate per annum (computed on the basis of a year of

360

days and actual days elapsed) equal to the

one,

two,

three

or

six

month LIBOR Rate plus

1.15%.

Under the Credit Agreement, the Company is also obligated to pay to HSBC Bank a nonrefundable commitment fee equal to

0.10%

per annum (computed on the basis of a year of

360

days and actual days elapsed) multiplied by the average daily difference between the amount of (i) the revolving credit commitment plus the letter of credit facility and (ii) the revolving facility usage, payable quarterly in arrears.

On

January

5,

2017,

the Company entered into an amendment to the Credit Agreement (the “Amended Credit Agreement”) with HSBC Bank that modified the LIBOR interest rate and certain covenants. Under the Amended Credit Agreement, the LIBOR interest rate will be equal to the

one,

two,

three,

or

six

month LIBOR plus (a)

1.65%

through

April

5,

2017,

(b)

1.90%

from

April

6,

2017

through

July

5,

2017,

(c)

2.15%

from

July

6,

2017

through

October

5,

2017

and (d)

2.65%

after

October

5,

2017.

The Credit Agreement and the Amended Credit Agreement contain certain customary affirmative and negative covenants, including customary financial covenants. The covenants require the Company to (a) maintain a gross leverage charge ratio not to exceed

4.50

to

1.00

for the fiscal quarters ending

February

26,

2017

and

May

28,

2017,

4.25

to

1.00

for the fiscal quarter ending

August

27,

2017

and

3.75

to

1.00

each fiscal quarter thereafter, (b) maintain a minimum fixed charge coverage ratio of

0.30

to

1.00

for the fiscal quarter ending

February

26,

2017,

0.20

to

1.00

for the fiscal quarter ending

May

28,

2017,

0.50

to

1.00

for the fiscal quarter ending

August

27,

2017

and

1.10

to

1.00

for each fiscal quarter thereafter, and (c) maintain a minimum quick ratio of

2.00

to

1.00

beginning with the fiscal quarter

first

ending after

January

26,

2016

and continuing thereafter. In addition, the Company must maintain minimum domestic liquid assets of

$10,000

in cash held at all times in a domestic deposit account. The Company is in compliance with all the financial covenants.

At

February

26,

2017,

$72,000

of indebtedness was outstanding under the Credit Agreement with an interest rate of

2.49%.

Interest expense recorded under both the PNC Bank Amended Credit Agreement and the Credit Agreement was approximately

$1,432,

$1,365

and

$1,438

during the

2017,

2016

and

2015

fiscal years, respectively, which is included in interest expense on the Consolidated Statements of Operations. In addition, the Company accelerated the deferred financing costs of

$292

which related to the PNC Bank Amended Credit Agreement that was recorded as interest expense in the

fourth

quarter of the

2016

fiscal year.

At

February

26,

2017,

scheduled principal maturities of long-term debt were as follows:

Fiscal Year	Amount
2018	$	3,500
2019		68,500
		72,000
Less: current portion		3,500
	$	68,500