Note 7 - Debt

9 Months Ended

Mar. 31, 2013

Debt Disclosure [Text Block]

Note 7:   Debt

Debt, including capitalized lease obligations, is comprised of the following (in thousands):

	3/31/2013		6/30/2012
Notes payable and current maturities
Loan and Security Agreement	$	1,333	$	1,289
Short-term foreign credit facility		43		231
Capitalized leases		219		280
	$	1,595	$	1,800
Long-term debt
Loan and Security Agreement		25,178	$	28,985
Capitalized leases		253		402
		25,431		29,387
	$	27,026	$	31,187

The Company completed the negotiations for an amended Loan and Security Agreement (Line of Credit) and executed the agreement as of April 25, 2012. The Line of Credit is effective for three years commencing April 25, 2012 and expires on April 30, 2015. The agreement continues the previous line of $23.0 million and interest rate of LIBOR plus 1.5%. On September 7, 2012, the Company completed another amendment to change the financial covenants. The material financial covenants of the amended Loan and Security Agreement are: 1) funded debt to EBITDA, excluding non-cash and retirement benefit expenses (“maximum leverage”), cannot exceed 1.45 to 1, 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.

The effective interest rate on the Line of Credit under the Loan and Security Agreement for the nine months ended March 31, 2013 and 2012 was 1.80% and 1.91%, respectively.

On November 22, 2011, in conjunction with the Bytewise acquisition, the Company entered into a $15.5 million term loan (the “Term Loan”) under the existing Loan and Security Agreement with TD Bank N.A.  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 term loan, which had a balance of $13.8 million at March 31, 2013, is subject to the same financial covenants as the Loan and Security Agreement.

As of March 31, 2013, the Company was in compliance with three of the four financial covenants.  However, the Company was not in compliance with the maximum leverage covenant.  The Company received a waiver of default of this covenant as of March 31, 2013.  On May 9, 2013, the Company executed a new amendment to the Loan and Security Agreement.  The new amendment changes the current funded debt to EBITDA ratio from 1.45 to 1, to 2.25 to 1 for the fourth quarter of fiscal 2013 and the first quarter of fiscal 2014.  Thereafter, and through the end of the agreement on April 30 of 2015, the funded debt to EBITDA covenant reverts to 1.45 to 1.  The Company expects to be able to meet this covenant in future periods.