Short- and Long-Term Obligations

6 Months Ended

Jun. 27, 2020

Short- and long-term obligations are as follows:



	June 27, 2020			December 28, 2019
(In thousands)	June 27, 2020			December 28, 2019
Revolving Credit Facility, due 2023	$	248,743		$	265,419
Commercial Real Estate Loan, due 2020 (a)	18,900			19,425
Senior Promissory Notes, due 2023 to 2028	10,000			10,000
Finance Leases, due 2020 to 2025	1,882			2,308
Other Borrowings, due 2020 to 2023	3,740			4,000
Unamortized Debt Issuance Costs	(118		)	(127		)
Total	283,147			301,025
Less: Short-term Obligations and Current Maturities of Long-Term Obligations	(20,387		)	(2,851		)
Long-Term Obligations	$	262,760		$	298,174

(a) See further details on the repayment of this loan under the header Commercial Real Estate Loan below and Note 14, Subsequent Event.

See Note 10, Derivatives, for the fair value information related to the Company's short- and long-term obligations.

Revolving Credit Facility

The Company entered into a five-year, unsecured multi-currency revolving credit facility, dated as of March 1, 2017 (as amended and restated to date, the Credit Agreement). Pursuant to the Credit Agreement, the Company has a borrowing capacity of $400,000,000, with an uncommitted, unsecured incremental borrowing facility of $150,000,000, and a maturity date of December 14, 2023. Interest on borrowings outstanding accrues and is payable in arrears calculated at one of the following rates selected by the Company: (i) the Base Rate, plus an applicable margin of 0% to 1.25%, or (ii) LIBOR (with a zero percent floor), as defined, plus an applicable margin of 1% to 2.25%. The Base Rate is calculated as the highest of (a) the federal funds rate plus 0.50%, (b) the prime rate as published by Citizens Bank, N.A. (Citizens) and (c) thirty-day U.S. dollar LIBOR (USD LIBOR), as defined, plus 0.50%. The applicable margin is determined based upon the ratio of the Company's total debt, net of unrestricted cash up to $30,000,000 and certain debt obligations, to earnings before interest, taxes, depreciation, and amortization as defined in the Credit Agreement.

Obligations under the Credit Agreement may be accelerated upon the occurrence of an event of default, which includes customary events of default under such financing arrangements. In addition, the Credit Agreement contains negative covenants applicable to the Company and its subsidiaries, including financial covenants requiring the Company to maintain a maximum consolidated leverage ratio of 3.75 to 1.00, or for the quarter during which a material acquisition occurs and for the three fiscal quarters thereafter, 4.00 to 1.00, and limitations on making certain restricted payments (including dividends and stock repurchases).

Loans under the Credit Agreement are guaranteed by certain domestic subsidiaries of the Company. In addition, one of the Company’s foreign subsidiaries entered into a separate guarantee agreement limited to certain obligations of two foreign subsidiary borrowers. As of June 27, 2020, the outstanding balance under the Credit Agreement was $248,743,000, and included $58,905,000 of euro-denominated borrowings and $22,838,000 of Canadian dollar-denominated borrowings. As of June 27, 2020, the Company had $150,830,000 of borrowing capacity available under the Credit Agreement, which was calculated by translating its foreign-denominated borrowings using borrowing date foreign exchange rates.

See Note 10, Derivatives, under the heading Interest Rate Swap Agreements, for information relating to the swap agreements used to hedge the Company’s exposure to movements in the three-month USD LIBOR on its U.S. dollar-denominated debt borrowed under the Credit Agreement.

The weighted average interest rate for the outstanding balance under the Credit Agreement was 1.85% as of June 27, 2020.

Commercial Real Estate Loan

In 2018, the Company and certain domestic subsidiaries borrowed $21,000,000 under a ten-year promissory note (Real Estate Loan), which was repayable in quarterly principal installments of $262,500 with the remaining principal balance of $10,500,000 due July 6, 2028. Interest accrued and was payable quarterly in arrears at a fixed rate of 4.45% per annum. The effective interest rate for the Real Estate Loan, including amortization of debt issuance costs, was 4.60% as of June 27, 2020.

The Real Estate Loan was secured by real estate and related personal property of the Company and certain of its domestic subsidiaries, pursuant to mortgage and security agreements (Mortgage and Security Agreements). Obligations under the Real Estate Loan could have been accelerated upon the occurrence of an event of default under the Real Estate Loan and the Mortgage and Security Agreements, which included customary events of default for financings of this type. In addition, a default under the Credit Agreement or any successor credit facility would have been an event of default under the Real Estate Loan.

On June 18, 2020, the Company delivered a prepayment notice to the lender bank of its intent to prepay the outstanding principal balance on the Real Estate Loan of $18,900,000 on July 20, 2020, together with accrued interest and a prepayment fee of 1.00% of the outstanding principal balance. In connection with the prepayment of the Real Estate Loan, the Mortgage and Security Agreements terminated. Accordingly, the outstanding balance and the associated unamortized debt issuance costs are included in short-term obligations in the accompanying condensed consolidated balance sheet as of June 27, 2020. See Note 14, Subsequent Event, for further details.

Senior Promissory Notes

In 2018, the Company entered into an uncommitted, unsecured Multi-Currency Note Purchase and Private Shelf Agreement (Note Purchase Agreement). Simultaneous with the execution of the Note Purchase Agreement, the Company issued senior promissory notes (Initial Notes) in an aggregate principal amount of $10,000,000, with a per annum interest rate of 4.90% payable semiannually, and a maturity date of December 14, 2028. The Company is required to prepay a portion of the principal of the Initial Notes beginning on December 14, 2023 and each year thereafter, and may optionally prepay the principal on the Initial Notes, together with any prepayment premium, at any time (in a minimum amount of $1,000,000, or the foreign currency equivalent thereof, if applicable) in accordance with the Note Purchase Agreement. The obligations of the Initial Notes may be accelerated upon an event of default as defined in the Note Purchase Agreement, which includes customary events of default under such financing arrangements.

In accordance with the Note Purchase Agreement, the Company may also issue additional senior promissory notes (together with the Initial Notes, the Senior Promissory Notes) up to an additional $115,000,000 until the earlier of December 14, 2021 or the thirtieth day after written notice to terminate the issuance and sale of additional notes pursuant to the Note Purchase Agreement. The Senior Promissory Notes are pari passu with the Company’s indebtedness under the Credit Agreement, and any other senior debt, subject to certain specified exceptions, and participate in a sharing agreement with respect to the obligations of the Company and its subsidiaries under the Credit Agreement. The Senior Promissory Notes are guaranteed by certain of the Company’s domestic subsidiaries.

Debt Compliance

As of June 27, 2020, the Company was in compliance with the covenants related to its debt obligations.

Finance Leases

The Company's finance leases primarily relate to contracts for its vehicles.

Other Borrowings

Other borrowings include a sale-leaseback financing arrangement for a manufacturing facility in Germany. Under this arrangement, the quarterly lease payment includes principal, interest, and a payment to the landlord toward a loan receivable. The interest rate on the outstanding obligation is 1.79%. The secured loan receivable, which is included in other assets in the accompanying condensed consolidated balance sheet, was $1,026,000 at June 27, 2020. The lease arrangement provides for a fixed price purchase option, net of the projected loan receivable, of $1,493,000 at the end of the lease term in 2022. If the Company does not exercise the purchase option for the facility, it will receive cash from the landlord to settle the loan receivable. As of June 27, 2020, $3,630,000 was outstanding under this obligation.