JanOne Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Borrowings

Borrowings

12 Months Ended

Dec. 29, 2012

Long-term debt, capital lease and other financing obligations as of December 29, 2012, and December 31, 2011, consist of the following:



	December 29, 2012		December 31, 2011
PNC term loan	2,040		2,295
Susquehanna term loans	4,154		4,537
2.75% note, due in monthly installments of $3, including interest, due October 2024, collateralized by equipment	411		440
10.00% note, due in monthly installments of $10, including interest, due December 2014	280		400
Capital leases and other financing obligations	427		568
	7,312		8,240
Less current maturities	955		989
	$	6,357	$	7,251

On January 24, 2011, we entered into a $2,550 Term Loan (“Term Loan”) with PNC Bank to finance the mortgage on our California facility. The Term Loan is payable as follows, subject to acceleration upon the occurrence of an event of default or termination of the Revolving Credit Agreement: 119 consecutive monthly principal payments of $21 plus interest commencing on February 1, 2011, and continuing on the first day of each month thereafter followed by a 120th payment of all unpaid principal, interest and fees on February 1, 2021. If the Revolving Credit Agreement is not renewed a balloon payment of $1,275 in principal plus interest and additional fees will be due on January 24, 2016. The Term Loan is collateralized with our California facility located in Compton, California. The Term Loan interest rate was PNC Base Rate plus 2.25%, or 1-, 2- or 3-month PNC LIBOR Rate plus 3.25%. As of both December 29, 2012, and December 31, 2011, the interest rate was 5.50%. On October 23, 2012, we received a letter from PNC (“default notice”) notifying us that we had failed to comply with certain financial covenants under the Term Loan. See Note 15 for further discussion regarding the notice of default and subsequent amendment to the Revolving Credit, Term Loan and Security Agreement, including waiver of the events of default.

On March 10, 2011, ARCA Advanced Processing, LLC entered into three separate commercial term loans (“Term Loans”) with Susquehanna Bank, pursuant to the guidelines of the U.S. Small Business Administration 7(a) Loan Program. The total amount of the Term Loans is $4,750, split into three separate loans for $2,100; $1,400; and $1,250. The Term Loans mature in ten years and bear an interest rate of Prime plus 2.75%. As of both December 29, 2012, and December 31, 2011, the interest rate was 6.00%. The total monthly interest and principal payments are $54 and began on July 1, 2011. Borrowings under the Term Loans are secured by substantially all of the assets of AAP along with liens on the business assets and certain personal assets of the owners of 4301 Operations, LLC. We are a guarantor of the Term Loans along with 4301 Operations, LLC and its owners.

The future annual maturities of borrowings are as follows:



	ARCA		AAP		Total
2013	$	320	$	635	$	955
2014	316		679		995
2015	311		538		849
2016	1,293		547		1,840
2017	—		564		564
Thereafter	—		2,109		2,109
	$	2,240	$	5,072	$	7,312

Capital leases and other financing obligations: We acquire certain equipment under capital leases and other financing obligations. The cost of equipment was approximately $1,969 and $1,940 at December 29, 2012, and December 31, 2011, respectively. Accumulated amortization at December 29, 2012, and December 31, 2011, was approximately $1,574 and $1,458, respectively. Depreciation and amortization expense for equipment under capital leases and other financing obligations is included in cost of revenues and selling, general and administrative expenses.

The following schedule by fiscal year is the approximate remaining minimum payments required under the capital leases and other financing obligations, together with the present value at December 29, 2012:



	ARCA		AAP		Total
2013	$	82	$	76	$	158
2014	72		76		148
2015	61		51		112
2016	18		30		48
2017	—		15		15
Total minimum lease and other financing obligation payments	233		248		481
Less amount representing interest	33		21		54
Present value of minimum payments	200		227		427
Less current portion	65		66		131
Capital lease and other financing obligations, net of current portion	$	135	$	161	$	296