Revolving Credit Facility

6 Months Ended

Jul. 01, 2016

Revolving Credit Facility

Revolving Credit Facility

4.Revolving Credit Facility

The Company has a senior secured revolving credit facility with JP Morgan Chase Bank, NA, as Administrative Agent, Bank of America, as Syndication Agent, and certain other lenders (the “Facility”).  The Facility consists of a $175 million credit line with a maturity date of November 15, 2020 and an “accordion” feature providing for potential future expansion of the Facility to $250 million.  Borrowings (other than letters of credit) under the credit facility generally will bear interest at a rate varying from the London Interbank Offered Rate (LIBOR) plus 1.75% to LIBOR rate plus 3.00%, depending on leverage.  The Facility is secured by substantially all of the Company’s assets and the stock of its subsidiaries.  Debt issuance costs of $1.3 million incurred in connection with the credit facility are recorded in prepaid and other assets and are being amortized to interest expense through November 15, 2020.

Borrowings under the Facility are subject to various covenants including a multiple of 3.5 times earnings before interest, taxes, depreciation and amortization (“EBITDA”). “EBITDA” may include “Acquired EBITDA” from pro-forma acquisitions as defined. Borrowings under the Facility may be used for general corporate purposes, including acquisitions.  The Company had irrevocable letters of credit totaling $14.8 million outstanding in connection with the Company’s self-insurance programs.  Application of the Facility’s borrowing formula as of July 1, 2016, permitted an additional $12.6 million to be used.  As of July 1, 2016, the Company was in compliance with the various financial covenants.  Under the most restrictive of its covenants, the Company was required to maintain minimum net worth of at least $181.9 million at July 1, 2016.  At such date, the Company’s net worth was approximately $290.5 million.

The effective interest rates on the Company’s borrowings were 5.76% and 2.58% for the three month periods ended July 1, 2016 and July 3, 2015, respectively.