10. Line of Credit
|3 Months Ended|
Apr. 01, 2017
|Debt Disclosure [Abstract]|
|Line of Credit||
We have a Revolving Credit, Term Loan and Security Agreement, as amended, (“PNC Revolver Credit Agreement”) with PNC Bank, National Association (“PNC”) that provides us with a $15,000 revolving line of credit. The Revolving Credit Agreement includes a lockbox agreement and a subjective acceleration clause and as a result we have classified the revolving line of credit as a current liability. The Revolving Credit Agreement is collateralized by a security interest in substantially all of our assets and PNC is also secured by an inventory repurchase agreement with Whirlpool Corporation for Whirlpool purchases only. We also issued a $750 letter of credit in favor of Whirlpool Corporation. The Revolving Credit Agreement requires, starting with the fiscal quarter ending April 2, 2016, that we meet some minimum earnings before interest, taxes, depreciation and amortization, and continuing at the end of each quarter thereafter, that we meet a minimum fixed charge coverage ratio of 1.1 to 1.0. The Revolving Credit Agreement limits investments we can purchase, the amount of other debt and leases we can incur, the amount of loans we can issue to our affiliates and the amount we can spend on fixed assets, along with prohibiting the payment of dividends.
The interest rate on the Revolving Credit Agreement, in our renewal agreement on January 22, 2016, is PNC Base Rate plus 1.75% to 3.25%, or 1-, 2- or 3-month PNC LIBOR Rate plus 2.75% to 4.25%, with the rate being dependent on our level of fixed charge coverage. The PNC Base Rate shall mean, for any day, a fluctuating per annum rate of interest equal to the highest of (i) the interest rate per annum announced from time to time by PNC as its prime rate, (ii) the Federal Funds Open Rate plus 0.5%, and (iii) the one-month LIBOR rate plus 100 basis points (1%).
The amount of revolving borrowings under the Revolving Credit Agreement is based on a formula using accounts receivable and inventories. We may not have access to the full $15,000 revolving line of credit due to the formula using accounts receivable and inventories, the amount of the letter of credit issued in favor of Whirlpool Corporation and the amount of outstanding loans between PNC and our AAP joint venture. On April 1, 2017 and December 31, 2016, our available borrowing capacity under the Revolving Credit Agreement was $3,011 and $3.234, respectively. A total of $750 of Letters of credit was outstanding at April 1, 2017 and December 31, 2016, respectively. The weighted average interest rate for the period of January 1, 2017 through April 1, 2017 was 9.00%. We borrowed $28,249 and repaid $36,208 on the PNC Revolver during the thirteen weeks ended April 1, 2017, leaving an outstanding balance on the PNC Revolver of $2,374 and $10,333 at April 1, 2017 and December 31, 2016, respectively. As disclosed by the Company in item 2.01 of its current report on Form 8-K filed on January 31, 2017. The Company sold its Compton, California building and land for $7,103. The net proceeds from the sale, after costs of sale and payoff of the existing PNC term loan were used to reduce the outstanding balance under our PNC Revolver.
On May 1, 2017, the PNC Revolver loan and agreement was amended and extended through June 2, 2017. The amendment effective May 2, 2017 reduced the maximum amount of borrowing under the PNC Revolver to $6 million. The PNC revolver was paid in full on May 10, 2017 with funds provided by new financing with MidCap Financial. See Subsequent Events Footnote 15.
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.
Reference 1: http://www.xbrl.org/2003/role/presentationRef