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Note 9 - Line of Credit | 3 Months Ended
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Mar. 28, 2020
Notes to Financial Statements |
Debt Disclosure [Text Block] |
9. | Line of Credit
The Company and its subsidiaries amended and restated its Revolving Credit Facility with Citizens Bank of Pennsylvania on October 18, 2019. As amended and restated, the Revolving Credit Facility provides for a $45.0 million revolving credit facility, has no sub-limit for letters of credit, and expires on August 8, 2023. Borrowings under the Revolving Credit Facility bear interest at one of two alternative rates, as selected by the Company at each incremental borrowing. These alternatives are: (i) LIBOR (London Interbank Offered Rate), plus applicable margin, typically borrowed in fixed 30 -day increments or (ii) the agent bank’s prime rate generally borrowed over shorter durations. The Company also pays unused line fees based on the amount of the Revolving Credit Facility that is not drawn. Unused line fees are recorded as interest expense. The effective weighted average interest rate, including unused line fees, for the thirteen week periods ended March 28, 2020 and March 30, 2019 were 3.7% and 4.7%, respectively. All borrowings under the Revolving Credit Facility are collateralized by all of the assets of the Company and its subsidiaries and a pledge of the stock of its subsidiaries. The Revolving Credit Facility also contains various financial and non-financial covenants, such as a covenant that restricts on the Company’s ability to borrow in order to pay dividends. As of March 28, 2020, the Company was in compliance with all covenants contained in the Revolving Credit Facility, except its financial covenant for the ratio of debt to EBITDA (earnings before interest, depreciation and amortization). The Company obtained an express waiver from Citizens Bank as of March 28, 2020. Beginning with the fiscal quarter ending June 28, 2020 and continuing for the foreseeable future thereafter, the Company believes that it may not be in compliance with its debt to EBITDA covenant. While the Company believes that Citizens Bank will provide future waivers or make changes to its current agreement so that compliance with the current debt to EBITDA covenant is no longer applicable, the Company can give no assurance that this will occur. Because the Company may not be in compliance with its debt to EBITDA covenant in the future, the Company has classified its revolving line of credit as a current liability as of March 28, 2020. Borrowings under the line of credit as of March 28, 2020 and December 28, 2019 were $32.8 million and $34.8 million, respectively. At March 28, 2020 and December 28, 2019 there were letters of credit outstanding for $1.7 million and $1.6 million, respectively. At March 28, 2020, the Company had availability for additional borrowings under the Revolving Credit Facility of $10.5 million. Impact to Line of Credit from COVID- 19 The Company is negatively impacted by COVID- 19 as more fully described in Footnote 18 - Subsequent Events, and the Segment Discussion and Liquidity and Capital Resources sections in Management’s Discussion and Analysis of Financial Condition and Results of Operations. The Company believes that its current line of credit is adequate to provide the necessary liquidity while COVID- 19 impacts its operations. However, the Company does not expect to be in compliance with its debt to EBITDA covenant in the line of credit for the foreseeable future, and therefore can give no assurance that the line of credit will be available to the Company. While the Company anticipates significantly reducing the borrowings under its line of credit over the next two quarters, due to expected reductions in accounts receivable, the Company can give no assurance that it will be able to do so.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + 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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