Note 8 - Debt

12 Months Ended

Jan. 31, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

8.

DEBT

	January 31, 2017			January 31, 2016
	(in thousands)
Note payable	$	14,269		$	14,680
Less current maturities		(446	)		(422	)
Less loan origination costs, net		(56	)		(67	)
Long-term debt	$	13,767		$	14,191

Note Payable

Effective

May

30,

2012,

QAD Ortega Hill, LLC entered into a variable rate credit agreement (the

“2012

Mortgage”) with Rabobank, N.A., to refinance a pre-existing mortgage. The

2012

Mortgage has an original principal balance of

$16.1

million and bears interest at the

one

month LIBOR rate plus

2.25%.

One month LIBOR was

0.77%

at

January

31,

2017.

The

2012

Mortgage matures in

June

2022

and is secured by the Company’s headquarters located in Santa Barbara, California. In conjunction with the

2012

Mortgage, QAD Ortega Hill, LLC entered into an interest rate swap with Rabobank, N.A. The swap agreement has an initial notional amount of

$16.1

million and a schedule matching that of the underlying loan that synthetically fixes the interest rate on the debt at

4.31%

for the entire term of the

2012

Mortgage. The terms of the

2012

Mortgage provide for QAD Ortega Hill, LLC to make net monthly payments of

$88,100

consisting of principal and interest and

one

final payment of

$11.7

million. The unpaid balance as of

January

31,

2017

was

$14.3

million.

Credit Facility

The Company has an unsecured credit agreement with Rabobank, N.A. (the “Facility”). The Facility provides a commitment through

July

15,

2017

for a

$20

million line of credit for working capital or other business needs. The Company pays a commitment fee of

0.25%

per annum of the daily average of the unused portion of the

$20

million Facility. Borrowings under the Facility bore interest at a rate equal to

one

month LIBOR plus

0.75%.

At

January

31,

2017,

the effective borrowing rate would have been

1.52%.

The Facility provides that the Company maintain certain financial and operating ratios which include, among other provisions, minimum liquidity on a consolidated basis of

$25

million in cash and equivalents at all times, a current ratio (calculated using current liabilities excluding deferred revenue) of not less than

1.3

to

1.0

determined at the end of each fiscal quarter, a leverage ratio of not more than

1.5

to

1.0

determined at the end of each fiscal quarter, and a debt service coverage ratio of not less than

1.5

to

1.0

determined at the end of each fiscal year. The Facility also contains customary covenants that could restrict the Company’s ability to incur additional indebtedness.

As of

January

31,

2017,

there were

no

borrowings under the Facility and the Company was in compliance with all financial covenants.