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Note 4 - Long-term debt and capital leases
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Jan. 01, 2012
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| Debt Disclosure [Text Block] |
Long-term
debt
The
following table shows the components of long-term debt as
at:
On
September 22, 2011, the Company signed a Revolving Credit and
Security Agreement with PNC Bank, National Association and
its Canadian branch (collectively, “PNC”). This
revolving credit facility in both the United States and
Canada, (collectively, the “PNC
Facility”) has a term of three years. The
previous revolving loan agreement with Wells Fargo Capital
Finance Corporation (“Wells Fargo”) was repaid on
the same date. The Company continues to have a term debt
facility with Export Development Canada (“EDC”,
and the “EDC Facility”), and on September 22,
2011 signed an amendment to its agreement with EDC to
accommodate the change in revolving credit lender, but is
otherwise largely unchanged from the existing
agreement.
The
maximum amount of funds available under the PNC Facility is
$45 million. Availability under the revolving credit facility
is subject to certain borrowing base conditions based on the
eligible inventory and accounts receivable. Advances made
under the revolving credit facility will bear interest at the
base commercial lending rate of PNC in the respective
country, which should approximate prime rate. The EDC
Facility bears interest at LIBOR plus 2.5% to 3.5% depending
on the achievement of financial performance levels as
specified in the amended debt agreement.
The
Company incurred costs of $997 in fiscal 2011 related to the
PNC Facility and the amended EDC Facility. These costs were
recorded as a non-current deferred charge and are being
amortized over the terms of the respective debt
agreements.
Remaining
principal repayments of the term loan to EDC consist of one
quarterly installment of $1,237, followed by six quarterly
installments of $926 until the maturity date of August 13,
2013.
The
PNC Facility and EDC Facility are jointly and severally
guaranteed by the Company and secured by the assets and
capital stock of each of the Company’s subsidiaries and
its future subsidiaries.
The
Company is required to use a “lock-box”
arrangement, whereby remittances from customers are swept
daily to reduce the borrowings under the revolving credit
facilities, for which events of default are objectively
determined.
At
January 1, 2012 there was a Canadian dollar denominated debt
balance of $1,312. At January 2, 2011, there was a Canadian
dollar denominated cash balance of $78, which was classified
as an offset to debt balances as it was used to reduce the
outstanding revolving credit facilities.
The
Company is in compliance with the financial covenants
included in the PNC Facility and the EDC Facility as at
January 1, 2012 and management believes that the Company will
be in compliance with these covenants for at least the next
twelve months. Continued compliance with its covenants,
however, is dependent on the Company achieving certain
forecasts. While management is confident in its plans, market
conditions have been difficult to predict and there is no
assurance that the Company will achieve its forecasts. In the
event of non-compliance, the Company’s lenders have the
right to demand repayment of the amounts outstanding under
the lending agreements or pursue other remedies or, if the
Company can reach an agreement with its lenders, to amend or
waive the financial covenants.
Obligations
under capital leases
Minimum
lease payments for capital leases due within each of the next
three years consist of the following
Debt
principal repayments
At
January 1, 2012, principal repayments due within each of the
next three years on long-term debt are as
follows:
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