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Note 4 - Credit Arrangements
3 Months Ended
Sep. 30, 2012
Debt Disclosure [Text Block]

Note 4 - Credit Arrangements

We have a $35 million credit facility, which expires in August 2015.  On November 12, 2012, we, along with our Canadian subsidiary, and our lender entered into a Sixth Amendment to Credit and Security Agreement (the “Amendment”).  Pursuant to the Amendment, our lender formally waived our failure to satisfy a fixed charge coverage ratio covenant for the fiscal month ending September 30, 2012.  In addition, the Amendment contains amendments to the Credit Agreement, including, but not limited to:  (1) increasing the percentage used in the calculation to determine the interest rate for borrowings and letters of credit; (2) adding a fee if a specified fixed charge coverage ratio is not achieved by the end of fiscal year 2013; (3) monthly requirements for fixed charge coverage ratios; (4) fixing the minimum excess availability under the Credit Agreement; and (5) lowering the maximum capital expenditures (in the aggregate for any fiscal year).  At September 30, 2012, we had $1.0 million borrowing availability based on our accounts receivable and inventory levels, outstanding letters of credit totaling $794,000, and $24.4 million outstanding borrowings under the facility.  Borrowings and letters of credit bear interest at either the daily three-month LIBOR rate plus 4.25% (which percentage may be adjusted downward to 3.75% at the end of fiscal year 2013 upon achievement of fixed charge coverage ratio) or a fixed LIBOR rate for three months plus 4.25% (which percentage may be adjusted downward to 3.75% at the end of fiscal year 2013 upon achievement of fixed charge coverage ratio).


The credit facility is guaranteed by substantially all of our subsidiaries and is secured by substantially all of our assets and those of our subsidiaries.  The credit facility contains certain negative covenants and it requires the maintenance of a fixed charge coverage and minimum availability covenant, which, if not met, could adversely impact our liquidity.  The facility also limits our ability to engage in certain actions without the lender’s consent, including, repurchasing our common stock, entering into certain mergers or consolidations, guaranteeing or incurring certain debt, engaging in certain stock or asset acquisitions, paying dividends, making certain investments in other entities, prepaying debt, and making certain property transfers.  In addition, the facility contains customary representations and warranties and we have agreed to certain affirmative covenants, including reporting requirements.

The maximum line of credit under the credit facility, which includes the revolver and letters of credit, is $35 million.  The credit facility is asset-based and the available line of credit may be limited pursuant to certain borrowing base limitations, including (1) the amount of certain of our eligible accounts, (2) the amount of our eligible accounts with our largest customer, (3) the value of our eligible inventory, which is more specifically determined in part based on specific periods during our fiscal year, and (4) the amount of our borrowing base reserve.

On November 12, 2012, we obtained a waiver from our lender for violation of the fixed charge coverage covenant under our credit facility.  This violation was due to changes in the timing of customer orders, which ultimately impacted our ability to meet forecasts as established under the credit facility.  Excluding this lender waived covenant violation, we were in compliance with all covenants as of September 30, 2012.