Long-term Debt |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term Debt |
Long-term Debt
On August 19, 2011, the Company amended its Credit Agreement with a regional bank which provided a $20,000,000 line of credit that was to expire on June 30, 2014. In connection with the Palmer acquisition, on August 21, 2012, the Company modified the Credit Agreement to increase the limit of the credit facility by $5,000,000 to a maximum of $25,000,000, and extended the maturity date to August 21, 2015. In connection with the Specialty acquisition discussed in Note 18, on November 21, 2014, the Company modified the Credit Agreement to increase the limit of the credit facility by $15,000,000 to a maximum of $40,000,000, and extended the maturity date to November 21, 2017. The Total Funded Debt to EBITDA ratio (as defined in the Credit Agreement), tangible net worth floor (as defined in the Credit Agreement), and Total Liabilities to Tangible Net Worth ratio (as defined in the Credit Agreement) were changed as a result of this modification. None of the other provisions of the Credit Agreement were changed as a result of this modification. Interest on the Credit Agreement is calculated using the One Month LIBOR (as defined in the Credit Agreement), plus a pre-defined spread, based on the Company's Total Funded Debt to EBITDA ratio (as defined in the Credit Agreement).
In connection with the acquisition of Specialty, discussed in Note 18, the Credit Agreement modification on November 21, 2014 also provided for a five-year term loan, expiring November 21, 2019, in the amount of $10,000,000 that requires equal monthly payments of $166,667, plus interest, calculated using the One Month LIBOR (as defined in the Credit Agreement), plus a pre-defined spread, based on the Company's Total Funded Debt to EBITDA ratio (as defined in the Credit Agreement). The interest rate was 2.30 percent at December 31, 2015.
In connection with the acquisition of CRI, discussed in Note 18, on August 9, 2013 the Company amended its Credit Agreement for an additional ten-year mortgage in the amount of $4,033,250, with monthly principal payments customized to account for the 20-year amortization of the real estate assets combined with a 5-year amortization of the equipment assets purchased. The interest rate was 2.40 percent at December 31, 2015. In conjunction with this term loan, to mitigate the variability of interest rate risk, the Company entered into an interest rate swap contract (the "CRI swap") on September 3, 2013; see Note 17.
In connection with the Palmer acquisition on August 21, 2012, the Credit Agreement provided for a ten-year term loan in the amount of $22,500,000 that requires equal monthly payments of $187,500 plus interest. The interest rate was 2.65 percent at December 31, 2015. In conjunction with this term loan, to mitigate the variability of the interest rate risk, the Company entered into an interest rate swap contract (the "Palmer swap") on August 21, 2012 with its current bank; see Note 17.
Although both swap agreements are expected to effectively offset variable interest in the borrowings, hedge accounting was not utilized. Therefore, their fair values are recorded in current assets or liabilities, as appropriate, with corresponding changes in their fair value recorded to other income (expense). The Company recorded a $40,000 liability and an $11,000 asset for the fair value of the Palmer swap as of December 31, 2015 and January 3, 2015, respectively. As of December 31, 2015 and January 3, 2015, the Company recorded a liability of $206,000 and $215,000, respectively, for the fair value of the CRI swap. During 2013, a portion of the initial change in fair value on the CRI swap was deemed to be attributable to a cost of underwriting the term loan obtained for the CRI acquisition; therefore $70,000 of the total change in fair value was classified as an acquisition cost, and the remainder as other income (expense).
Pursuant to the Credit Agreement, the Company was required to pledge all of its tangible and intangible properties, including the acquired assets of Specialty, Palmer and CRI. Covenants under the Credit Agreement include maintaining a certain Total Funded Debt to EBITDA ratio (as defined in the Credit Agreement), a minimum tangible net worth and a total liabilities to tangible net worth ratio. The Company is also limited to a maximum amount of capital expenditures per year, which is in line with the Company's currently projected needs. At December 31, 2015, the Company was in compliance with all debt covenants.
The line of credit interest rates were 2.00 percent, 1.77 percent, and 2.16 percent at December 31, 2015, January 3, 2015, and December 28, 2013, respectively. Additionally, the Company is required to pay a fee equal to 0.125 percent on the average daily unused amount of the line of credit on a quarterly basis. As of December 31, 2015, the amount available for borrowing under the line of credit was $40,000,000 of which $1,876,000 was borrowed, leaving $38,124,000 of availability. Average line of credit borrowings outstanding during fiscal 2015, 2014 and 2013 were $6,446,000, $2,735,000 and $19,860,000 with weighted average interest rates of 2.48 percent, 1.35 percent and 1.74 percent, respectively. The average borrowings for 2014 and 2013 were determined based on the period the Company had an outstanding balance on the line of credit. During 2013, the line of credit was completely paid in October 2013 and the Company had no borrowings on the line of credit until December 2014.
Scheduled maturities of total term debt obligations are as follows: 2016 - $4,534,000; 2017 - $4,534,000; 2018 - $4,497,000; 2019 - $4,258,000; 2020 - $2,424,000; and thereafter - $5,957,000.
The Company made interest payments on all credit facilities of $1,149,000 in 2015, $930,000 in 2014 and $1,202,000 in 2013.
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