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Long-Term Debt
6 Months Ended
Mar. 31, 2015
Debt Disclosure [Abstract]  
Long-Term Debt

7. Long-Term Debt

The Company had no long-term debt outstanding at March 31, 2015 and September 30, 2014.

On March 2, 2011, the Company entered into a credit agreement with Frost Bank.  On September 27, 2013, the Company amended the credit agreement and increased its borrowing availability to $50.0 million (as amended, the “Credit Agreement”).  The Company’s borrowings under the Credit Agreement were principally secured by its accounts receivable, inventories and equipment.  In addition, certain domestic subsidiaries of the Company guaranteed the obligations of the Company under the Credit Agreement and such subsidiaries secured the obligations by the pledge of certain of the assets of such subsidiaries.  The Company was required to make quarterly interest payments on borrowed funds.  The Credit Agreement limited the incurrence of additional indebtedness, required the maintenance of certain financial ratios, restricted the Company and its subsidiaries’ ability to pay cash dividends and contained other covenants customary in agreements of this type.  The interest rate for borrowings under the Credit Agreement was a LIBOR based rate with a margin spread of 250 to 325 basis points depending upon the maintenance of certain ratios.  At March 31, 2015, the Company was in compliance with all covenants under the Credit Agreement; however, a covenant requiring the Company to maintain a minimum ratio of Funded Debt to EBITDA restricted the Company’s potentially available borrowings under the Credit Agreement to $19.7 million at March 31, 2015.  At March 31, 2015 and September 30, 2014, the Company had standby letters of credit outstanding in the amount of $59,000 and $51,000, respectively.

On May 4, 2015, the Company again amended the Credit Agreement which reduced its borrowing availability to $30.0 million with amounts available for borrowing determined by a borrowing base.  Under the amendments to the Credit Agreement, the borrowing base is determined based upon certain of the Company’s and its U.S. subsidiaries’ assets which include (i) 80% of certain accounts receivable plus (ii) 50% of certain notes receivable (such result not to exceed $10 million) plus (iii) 25% of certain inventories (excluding work-in-process inventories).  On a pro forma basis as of March 31, 2015, the Company’s borrowing base was $37.9 million resulting in borrowing availability of $30.0 million less any outstanding letters of credit.  Borrowings under the Credit Agreement as amended are secured by substantially all of the Company’s assets.  In addition, the Company’s domestic subsidiaries have guaranteed the obligations of the Company under the Credit Agreement and such subsidiaries have secured the obligations by the pledge of substantially all of the assets of such subsidiaries.  The Credit Agreement as amended expires on May 4, 2018 and all borrowed funds are due and payable at that time.  The Company is required to make monthly interest payments on borrowed funds.  The Credit Agreement as amended limits the incurrence of additional indebtedness, requires the maintenance of a single financial ratio that compares certain of the Company’s assets to certain of its liabilities, restricts the Company and its subsidiaries’ ability to pay cash dividends and contains other covenants customary in agreements of this type.  The interest rate for borrowings under the Credit Agreement as amended is based on the Wall Street Journal prime rate, which was 3.25% at March 31, 2015.