Borrowings Under Revolving Credit Facility

12 Months Ended

Mar. 27, 2016

Borrowings Under Revolving Credit Facility

Borrowings Under Revolving Credit Facility

Note 7. Borrowings Under Revolving Credit Facility 

On May 31, 2007, pursuant to a Credit Agreement, the Company established a revolving credit facility with both Wells Fargo Bank, National Association and SunTrust Bank. The facility is unsecured and provides for monthly payments of interest accruing at a rate of LIBOR plus an applicable margin. The terms of the revolving credit facility require the Company to meet certain financial covenants and ratios and contain other limitations, including certain restrictions on dividend payments. Borrowing availability under the facility is also subject to a borrowing base, based on levels of trade accounts receivable and inventory. This credit facility has been amended several times, most recently on September 24, 2015 (the Tenth Modification Agreement).  Currently the credit facility has a maximum borrowing limit of $35.0 million and has a term expiring in October 2018.  In addition, the credit facility now contains an accordion feature that permits the lenders’ aggregate commitment to be increased to a maximum of $45.0 million, subject to lenders’ discretion and other customary conditions. The amount of dividend payments allowed to be made by the Company under the Credit Facility is $9.0 million in any 12 month period.  The dollar amount of stock repurchases permitted under the term of the credit facility is $30.0 million. As of March 27, 2016, the Company had the ability to purchase approximately $11.7 million in additional shares of common stock without violating this covenant. The financial covenants included in the Credit Agreement for the unsecured revolving credit facility are also applicable to the Company's existing term loan (see Note 8) with the same lenders. Accordingly, any amendment to the financial covenants in the Credit Agreement also has the effect of amending the financial covenants applicable to the term loan.

The facility provides for monthly payments of interest accruing at a rate of LIBOR plus an applicable margin ranging from 1.50% to 2.50%. The weighted average interest rate on borrowings under the Company’s revolving credit facilities was 1.69%,  1.65%, and 2.35% for fiscal years 2016, 2015, and 2014, respectively. Interest expense on this revolving credit facility for fiscal years 2016, 2015, and 2014 totaled $59,000,  $78,200, and $53,400, respectively. Average borrowings under this revolving credit facility totaled $3,454,500,  $4,672,300, and $2,243,900 and maximum borrowings totaled $12,301,100,  $17,331,900, and $13,467,000, for fiscal years 2016, 2015, and 2014, respectively.

As of March 27, 2016 and March 29, 2015, the Company had no outstanding balance on its revolving credit facility. Therefore, the Company had $35.0 million available on its revolving line of credit facility as of both March 27, 2016 and March 29, 2015.

The Company was in compliance with the terms and financial covenants applicable to each of the revolving credit facility and term loan facility at the end of fiscal years 2016, 2015, and 2014.