Long-term Debt |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Long-term Debt |
Long-term Debt
In connection with the Palmer acquisition on August 21, 2012, the Company amended its Credit Agreement with a regional bank for an additional ten-year term loan (the "Palmer note") in the amount of $22,500,000 that required equal monthly payments of $187,500 plus interest. 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. On August 31, 2016, the Palmer note was refinanced and consolidated into the new credit facility in the form of an asset-based revolving line of credit (the "Line") as part of the amendment to the Credit Agreement discussed below.
In connection with the acquisition of CRI, on August 9, 2013 the Company amended its Credit Agreement for an additional ten-year mortgage (the "CRI note") 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. 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. On September 30, 2016, the Company paid the remaining balance of the CRI note and settled the CRI swap with its bank in conjunction with the sale leaseback transaction; see Note 12.
In connection with the Specialty acquisition discussed in Note 18, on November 21, 2014, the Company modified its Credit Agreement to increase the limit of the current revolving line of credit 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).
The Credit Agreement modification on November 21, 2014, also provided for a five-year term loan (the "Specialty note"), expiring November 21, 2019, in the amount of $10,000,000 that required 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). On August 31, 2016, the balance of this note was refinanced and consolidated into the Line as part of the amendment to the Credit Agreement discussed below.
On August 31, 2016, the Company amended its Credit Agreement with its bank to create a new credit facility in the form of an asset-based revolving line of credit in the amount of $45,000,000. The Line was used to refinance and consolidate the existing line of credit, the Palmer note, and the Specialty note. The maturity date of the Line is February 28, 2019. Interest on the Line is calculated using the One Month LIBOR Rate (as defined in the Credit Agreement), plus a pre-defined spread. Borrowings under the Line are limited to an amount equal to a Borrowing Base calculation (as defined in the Credit Agreement) that includes eligible accounts receivable and inventory. The Company evaluated this transaction in accordance with ASC 470-50-40-10 and ASC 470-50-40-21 and determined the restructuring should be accounted for as a debt modification. The Company incurred lender and third party costs associated with the debt restructuring that were capitalized on the balance sheet while certain other third party costs were expensed.
Pursuant to the Credit Agreement, the Company was required to pledge all of its tangible and intangible properties, including the stock and membership interests of its subsidiaries. In the Credit Agreement, the Company's bank agreed to release its liens on the real estate properties covered by the Purchase and Sale Agreement ("PSA"), as described in Note 12. Covenants under the Credit Agreement include maintaining a minimum fixed charge coverage ratio and a limitation on the Company’s maximum amount of capital expenditures per year, which is in line with currently projected needs. At December 31, 2016, the Company was in compliance with all debt covenants.
The line of credit interest rates were 2.62 percent, 2.00 percent, and 1.77 percent at December 31, 2016, December 31, 2015, and January 3, 2015, 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, 2016, the amount available for borrowing under the line of credit was $30,466,000 of which $8,804,000 was borrowed, leaving $21,662,000 of availability. Average line of credit borrowings outstanding during fiscal 2016, 2015 and 2014 were $6,830,000, $6,446,000 and $2,735,000 with weighted average interest rates of 2.88 percent, 2.48 percent and 1.35 percent, respectively.
The Company made interest payments on all credit facilities of $826,000 in 2016, $1,149,000 in 2015 and $930,000 in 2014.
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