Commitments and Contingencies

9 Months Ended

Oct. 01, 2011

Commitments and Contingencies [Abstract]

Commitments and Contingencies

3. Commitments and Contingencies

During the current period, we entered into a credit agreement for the issuance of letters of credit to cover estimated exposures, most notably with workman’s compensation claims. This agreement requires us to maintain a compensating balance with the issuer for the amounts outstanding. We currently have letters of credit outstanding in the amount of $1.6 million. The compensating balance amount is reflected as restricted cash on the balance sheet.

During the current quarter we exercised our renewal option and entered into a five-year operating lease for the Martinsville facility we currently utilize. The lease commences on January 1, 2012 with minimum lease payments as follows: $384,000 in 2012, $396,000 in 2013, $408,000 in 2014, $420,000 in 2015 and $432,000 in 2016. The commencement date of the lease coincides with the end of rent free period included in our initial sale and lease agreement for this facility.

During the second quarter we entered into a capital lease obligation for certain machinery and equipment. At October 1, 2011, the total capital lease obligation was $885,000, of which $133,000 was classified as a short-term liability, with the remaining $752,000 classified as a long-term liability. The future minimum lease payments are as follows: $24,000 for the remainder of 2011, $147,000 per year in years 2012 through 2016, and $171,000 thereafter. The interest rate on the obligation is 1.59%.