5. Long-Term Debt

Our long-term debt consists of the following (in thousands):

	March 30,			December 29,
	2013			2012
Equipment term loan due monthly through March 2020.	8,500			—
Bluffton, IN mortgage loan due monthly through December 2016	1,979			2,000
Lynden, WA equipment term loan due monthly through May 2014	1,071			1,286
Lynden, WA real estate term loan due monthly through July 2017	2,974			3,028
Capital lease obligations, primarily due September 2017	2,108			2,229
	16,632			8,543
Less current portion of long-term debt	(2,770		)	(1,646		)
Long-term debt, less current portion	$	13,862		$	6,897

On March 22, 2013, we entered into a Loan and Security Agreement (the “New Loan Agreement”) with U.S. Bank National Association (“U.S. Bank”). Each of our subsidiaries is a co-borrower under the New Loan Agreement, which is secured by all of the assets of our consolidated group. The New Loan Agreement amended and restated (a) the Loan Agreement (Revolving Line of Credit Loan and Term Loan) dated as of May 16, 2007, between us and U.S. Bank and (b) the Term Loan Agreement, dated as of June 28, 2007, between us and U.S. Bank ((a) and (b) collectively, the “Prior Agreement”). U.S. Bank extended certain term and revolving loans to us under the Prior Agreement. We entered into the New Loan Agreement in substitution of the Prior Agreement and not in satisfaction thereof. The additions to the New Loan Agreement consisted of:

· A $30.0 million revolving line of credit maturing on March 22, 2018; there was no outstanding balance at March 30, 2013. Based on eligible assets, there was $20.1 million of borrowing availability under the line of credit at March 30, 2013. All borrowings under the revolving line of credit will bearing interest at the 30-day LIBOR rate plus a floating rate of interest which is set quarterly between the range of 1.125% and 1.750% depending on our financial performance.

· Equipment term loan due March 2020; interest at 2.69%; secured by lien on certain equipment purchased after 2009 at all three of our manufacturing facilities as well as our personal property business assets.

The New Loan Agreement maintained the terms and borrowing capacity of the Prior Agreement with respect to the following:

· Bluffton, IN mortgage loan due December 2016; interest rate at 30 day LIBOR plus 165 basis points, fixed through a swap agreement to 6.85%; collateralized by land and building in Bluffton, IN.

· Lynden, WA equipment term loan due May 2014; interest at LIBOR plus 165 basis points; collateralized by equipment purchased as part of the acquisition of Rader Farms, Inc. in Lynden, WA in May 2007.

· Lynden, WA real estate term loan due July 2017; interest at LIBOR plus 165 basis points; fixed through a swap agreement to 4.28%; secured by a leasehold interest in the real property in Lynden, WA.

As is customary in such financings, U.S. Bank may terminate its commitments and accelerate the repayment of amounts outstanding and exercise other remedies upon the occurrence of an event of default (as defined in the New Loan Agreement), subject, in certain instances, to the expiration of an applicable cure period. As compared to the Prior Agreement, the maximum leverage ratio under the New Loan Agreement was increased to 3.25 from 3.0 to 1.0 and a minimum asset coverage ratio of 1.75 to 1.0 was added, the minimum fixed charge coverage ratio of 1.2 to 1.0 was not changed. At March 30, 2013, we were in compliance with all of the financial covenants.

The present value of minimum lease payments under our capital lease and the current portion thereof are included in our debt balances as summarized above. The value of the equipment held under the capital lease of $3.5 million is included in property and equipment. Accumulated depreciation on the capital lease assets was $0.9 million and $0.8 million as of March 30, 2013 and December 29, 2012, respectively.

Interest Rate Swaps

To manage exposure to changing interest rates, we selectively enter into interest rate swap agreements. Our interest rate swaps qualify for and are designated as cash flow hedges. Changes in the fair value of a swap that is highly effective and that is designated and qualifies as a cash flow hedge to the extent that the hedge is effective, are recorded in other comprehensive income.

We entered into an interest rate swap in 2006 to convert the interest rate of the mortgage loan to purchase the Bluffton, Indiana plant from the contractual rate of 30 day LIBOR plus 165 basis points to a fixed rate of 6.85%. The swap has a fixed pay-rate of 6.85% and a notional amount of approximately $2.0 million at March 30, 2013 and expires in December 2016. The interest rate swap had fair value of $0.3 million at March 30, 2013, which is recorded as a liability on the accompanying condensed consolidated balance sheet. The swap value was determined in accordance with the fair value measurement guidance discussed earlier using Level 2 observable inputs and approximates the loss that would have been realized if the contract had been settled on March 30, 2013.

We entered into another interest rate swap in January 2008 to effectively convert the interest rate on the real estate term loan to a fixed rate of 4.28%. The interest rate swap is structured with decreasing notional amounts to match the expected pay down of the debt. The notional value of the swap at March 30, 2013 was $3.0 million. The interest rate swap is accounted for as a cash flow hedge derivative and expires in July 2017. The interest rate swap had fair value of $0.4 million at March 30, 2013, which is recorded as a liability on the accompanying condensed consolidated balance sheet. This value was determined in accordance with the fair value measurement guidance discussed earlier using Level 2 observable inputs and approximates the loss that would have been realized if the contract had been settled on March 30, 2013.