10-K
12. DEBT Debt, including capitalized lease obligations, is comprised of the following (in thousands):
June 30, 2012
Short-term and current maturities Loan and Security Agreement Short-term foreign credit facility Capitalized leases
Long-term debt Loan and Security Agreement Capitalized leases
Total Future maturities of debt are as follows (in thousands):
Fiscal Year 2013 2014 2015 2016 2017
Later years Total
$
1,800 1,535
17,048 1,553 1,543 7,708
$ 31,187
The Company completed the negotiations for an amended Loan and Security Agreement (“Line of Credit”) and executed the new agreement as of April 25, 2012. Borrowings under this agreement are secured by the assets of the Company’s domestic subsidiaries. The new Line of Credit is effective for three years commencing April 25, 2012 and expires on April 30, 2015. The new agreement continues the previous line of $23.0 million and interest rate of LIBOR plus 1.5%. The material financial covenants of the new Loan and Security Agreement are: 1) total liabilities cannot exceed 85% of tangible net worth, 2) annual capital expenditures cannot exceed $15.0 million, 3) maintain a Debt Service Coverage Rate of a minimum of 1.25 to 1 and 4) maintain consolidated cash plus liquid investments of not less than $10.0 million at any time. Based upon the terms of the amended Security and Loan Agreement, the Line of Credit has been reclassified to long-term debt in fiscal 2012 as the Agreement has a maturity greater than one year and meets all of the criteria necessary to be so classified.
The effective interest rate on the Line of Credit for fiscal 2012 was 1.68%.
As of June 30, 2012, the Company was in compliance with three of the four covenants. However, due to the increase in the pension liability, the Company was not in compliance with the tangible net worth covenant. The Company received a waiver for default of the tangible net worth covenant. On September 7, 2012, the Company executed a new amendment to the Loan and Security Agreement. The new agreement modifies EBITDA to begin with income from continuing operations and to exclude non-cash pension and retirement benefits expenses and replaces the tangible net worth covenant with a new covenant which states that the Company will not permit the ratio of funded debt to EBITDA to exceed 1.45 to 1, effective with the fiscal period ending September 30, 2012. The Company expects to be able to meet this revised covenant in future periods.
On November 22, 2011, in conjunction with the Bytewise acquisition, the Company entered into a new $15.5 million term loan (the “Term Loan”) under the then existing Loan and Security Agreement. The term loan is a ten year loan bearing a fixed interest rate of 4.5% and is payable in fixed monthly payments of principal and interest of $160,640. The $15.5 million term loan is subject to the same financial covenants as the Loan and Security Agreement.
Availability under the Line of Credit is subject to a borrowing base comprised of accounts receivable and inventory. The Company believes that the borrowing base will consistently produce availability under the line of Credit in excess of $23.0 million. As of June 30, 2012, the Company had borrowings of $15.5 million under this facility. A 0.25% commitment fee is charged on the unused portion of the Line of Credit.
The Company has two standby letters of credit totaling $0.2 million which reduce the $23 million available line of credit to $22.8 million. As of June 30, 2012, the Company has approximately $7.3 million available in the Line of Credit.
43 B43 $
$ $
$
1,289 $ 231 280
1,800 $ 28,985 $ 29,387
402 31,187 $ June 30, 2011
8,000 27
211
8,238 -
721 721
8,959
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