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Long-Term Debt | 12 Months Ended
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Sep. 25, 2021
Long-Term Debt [Abstract] |
Long-Term Debt | 7. Long-Term Debt Long-term debt and short-term loans are summarized as follows:
|  | 2021 |  | 2020
Bonds payable: |  |  |  |  |  |
Senior notes, interest rate of 5.75%, maturing 2023 |  | $ | — |  | $ | 295,000,000
Senior notes, interest rate of 4.00%, maturing 2031 |  | $ | 350,000,000 |  | $ | —
Recovery Zone Facility Bonds, maturing 2036 |  |  | 63,500,000 |  |  | 68,030,000
Outstanding line of credit, weighted average interest rate of 3.75% for 2020 |  |  | — |  |  | 38,884,070
Notes payable due to banks, weighted average interest rate of 1.74% for 2021 and 2.12% for 2020 |  |  | 182,859,017 |  |  | 206,838,237
Less unamortized prepaid loan costs |  |  | (6,845,074) |  |  | (3,247,971)
Total long-term debt |  |  | 589,513,943 |  |  | 605,504,336
Less current portion |  |  | 17,600,739 |  |  | 19,305,976
Long-term debt, net of current portion |  | $ | 571,913,204 |  | $ | 586,198,360
In June 2021, the Company issued at par $350.0 million aggregate principal amount of 4.00% senior notes due in 2031 (the “2031 Notes”). Upon issuance of the 2031 Notes, the Company issued an irrevocable notice to redeem the remaining $295.0 million aggregate principal amount of its 5.75% senior notes due in 2023 (the “2023 Notes”) and invested $295.0 million of 2031 Notes proceeds in short term investments pending redemption of the 2023 Notes. The 2023 Notes were redeemed at par value on July 16, 2021. The Company recognized debt extinguishment costs of approximately $1.1 million during fiscal year 2021. The Company may redeem all or a portion of the 2031 Notes at any time at the following redemption prices (expressed as percentages of the principal amount), if redeemed during the 12-month period beginning June 15 of the years indicated below:
Year |
2026 | 102.000%
2027 | 101.333%
2028 | 100.667%
2029 and thereafter | 100.000%
Additionally, The Company may also redeem all or part of the 2031 Notes at any time prior to June 15, 2026 at a redemption price equal to 100% of the principal amount of the 2031 Notes to be redeemed plus the Applicable Premium (as defined in the indenture governing the 2031 Notes), as of, and accrued and unpaid interest to, the redemption date. Additionally, the Company may redeem up to 40% of the aggregate principal amount of the 2031 Notes prior to June 15, 2024 with the net cash proceeds of certain sales of its capital stock at a redemption price equal to 104.0% of the principal amount of the 2031 Notes, plus accrued and unpaid interest, if any, to the date of redemption; provided, that, after such redemption, at least 60% of the aggregate principal amount of the 2031 Notes originally issued remains outstanding. In November 2019, the Company closed a $155 million amortizing loan secured by real estate (the “Loan”) and issued notice to redeem a like principal amount of the 2023 Notes. The Loan was funded and the 2023 Notes were redeemed thirty days after the redemption notice in December 2019. The 2023 Notes were redeemed at 101.917% of par value, and the Company recognized debt extinguishment costs of approximately $3.7 million during the quarter ended December 28, 2019. The Loan matures January 31, 2030 and has monthly principal payments of $0.65 million plus floating rate interest payments based on LIBOR. In June 2020, the Company issued an irrevocable notice to redeem $150 million principal amount of the 2023 Notes. The 2023 Notes were redeemed at 100.958% of par value on July 9, 2020. The Company recognized debt extinguishment costs of approximately $2.0 million during the quarter ending September 26, 2020. In July 2020, the Company issued an irrevocable notice to redeem $100 million principal amount of the 2023 Notes. The 2023 Notes were redeemed at 100.958% of par value on August 27, 2020. The Company recognized debt extinguishment costs of approximately $1.4 million during the quarter ending September 26, 2020. Following this redemption, there were $295.0 million aggregate principal amount of the 2023 Notes outstanding. In June 2021, the Company entered into a $150.0 million line of credit (the “Line”) that matures in June 2026. The Line provides the Company with various interest rate options based on the prime rate, the Federal Funds Rate, or LIBOR. The Line allows the Company to issue up to $10.0 million in letters of credit, of which none were issued at September 25, 2021. The Company is not required to maintain compensating balances in connection with the Line. At September 25, 2021, the Company had no borrowings outstanding under the Line. In December 2010, the Company completed the funding of $99.7 million of Recovery Zone Facility Bonds (the “Bonds”) for construction of new warehouse and distribution center to be located in Buncombe County, North Carolina (the “Project”). The final maturity date of the Bonds is January 1, 2036. Under a Continuing Covenant and Collateral Agency Agreement (the “Covenant Agreement”) between certain financial institutions and the Company, such financial institutions hold the Bonds until September 2026, subject to certain events. Mandatory redemption of the Bonds by the Company in the annual amount of $4.5 million began on January 1, 2014. The Company may redeem the Bonds without penalty or premium at any time prior to September 26, 2026. Interest earned by bondholders on the Bonds is exempt from Federal and North Carolina income taxation. The interest rate on the Bonds is equal to one-month LIBOR (adjusted monthly) plus a credit spread, adjusted to reflect the income tax exemption. The Company’s obligation to repay the Bonds is collateralized by the Project. The Covenant Agreement incorporates substantially all financial covenants included in the Line. The 2031 Notes, the Bonds and the Line contain provisions that under certain circumstances would permit lending institutions to terminate or withdraw their respective extensions of credit to the Company. Included among the triggering factors permitting the termination or withdrawal of the Line to the Company are certain events of default, including both monetary and non-monetary defaults, the initiation of bankruptcy or insolvency proceedings, and the failure of the Company to meet certain financial covenants designated in its respective loan documents. The Company was in compliance with all financial covenants related to the 2031 Notes, the Bonds and Line at September 25, 2021. The Company has an interest rate swap agreement for a current notional amount of $36.5 million at a fixed rate of 3.92%. Under this agreement, the Company pays monthly the fixed rate of 3.92% and receives the one-month LIBOR plus 1.65%. The interest rate swap effectively hedges floating rate debt in the same amount as the current notional amount of the interest swap. Both the floating rate debt and the interest rate swap have monthly principal amortization of $0.5 million and mature October 1, 2027. The Company has an interest rate swap agreement for a current notional amount of $140.1 million at a fixed rate of 2.95%. Under this agreement, the Company pays monthly the fixed rate of 2.95% and receives the one-month LIBOR plus 1.50%. The interest rate swap effectively hedges floating rate debt in the same amount as the current notional amount of the interest swap. Both the floating rate debt and the interest rate swap have monthly principal amortization of $0.65 million and mature in fiscal year 2030. The Company recognizes differences between the variable rate interest payments and the fixed interest rate settlements with the swap counterparties as an adjustment to interest expense each period over the life of the swaps. The Company has designated the swaps as cash flow hedges and records the changes in the estimated fair value of the swaps to other comprehensive income each period. For the fiscal year ended September 25, 2021, the Company recorded $6.8 million of other comprehensive income, net of income taxes, in its Consolidated Statements of Comprehensive Income. Unrealized losses of $4.5 million are recorded as a liability at fair value in the line “Other Long-Term Liabilities” on the Consolidated Balance Sheet as of September 25, 2021. For the fiscal year ended September 26, 2020, the Company recorded $9.0 million of other comprehensive expense, net of income taxes, in its Consolidated Statements of Comprehensive Income. Unrealized losses of $13.6 million are recorded as a liability at fair value in the line “Other Long-Term Liabilities” on the Consolidated Balance Sheet as of September 26, 2020. Failure of the swap counterparty to make payments would result in the loss of any potential benefit to the Company under the swap agreement. In this case, the Company would still be obligated to pay the variable interest payments underlying the debt agreements. Additionally, failure of the swap counterparty would not eliminate the Company’s obligation to continue to make payments under the existing swap agreement if it continues to be in a net pay position. The Company’s long-term debt agreements generally contain provisions that under certain circumstances would permit lending institutions to terminate or withdraw their respective extensions of credit to the Company. Included among the triggering factors permitting the termination or withdrawal of the Line to the Company are certain events of default, including both monetary and non-monetary defaults, the initiation of bankruptcy or insolvency proceedings, and the failure of the Company to meet certain financial covenants designated in its respective loan documents. The Company was in compliance with all financial covenants at September 25, 2021. At September 25, 2021, property and equipment with an undepreciated cost of approximately $280.2 million was pledged as collateral for long-term debt. Long-term debt and Line agreements contain various restrictive covenants requiring, among other things, minimum levels of net worth and maintenance of certain financial ratios. While there are no current restrictions on net income or retained earnings available for the payment of dividends, certain loan agreements contain provisions outlining minimum tangible net worth requirements that restrict the ability of the Company to pay cash dividends in excess of the current annual per share dividends paid on the Company’s Class A and Class B Common Stock. Components of interest costs are as follows:
|  | 2021 |  | 2020 |  | 2019
Total interest costs |  | $ | 25,463,076 |  | $ | 42,204,652 |  | $ | 48,675,993
Interest capitalized |  |  | (1,130,933) |  |  | (1,675,556) |  |  | (1,265,889)
Interest expense |  | $ | 24,332,143 |  | $ | 40,529,096 |  | $ | 47,410,104
Maturities of long-term debt at September 25, 2021 are as follows:
Fiscal Year |  |  |
2022 |  | $ | 18,367,504
2023 |  |  | 18,371,485
2024 |  |  | 18,375,140
2025 |  |  | 22,281,554
2026 |  |  | 18,280,000
Thereafter |  |  | 500,683,334
Less unamortized prepaid loan costs |  |  | (6,845,074)
Total |  | $ | 589,513,943

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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