Note 8 - Debt

6 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

8

:   Debt

Debt is comprised of the following (in thousands):

	12 /31/2017		6/30/201 7
Short-term and current maturities
Loan and Security Agreement	$	17,051	$	11,514
Long-term debt
Loan and Security Agreement , net of current portion		5,261		6,095
	$	22,312	$	17,609

The Company amended its Loan and Security Agreement, which includes a Line of Credit and a Term Loan, in

January 2015.

  Borrowings under the Line of Credit

may

not

exceed

$23.0

million.  The Line of Credit has an interest rate of LIBOR plus

1.5%.

  The effective interest rate on the Line of Credit under the Loan and Security Agreement for the

six

months ended

December 31, 2017

and

2016

was

3.1%

and

2.4%,

respectively. Since the expiration date of the loan agreement on

December 31, 2017

was within the current fiscal year, the Line of Credit has been classified as short term. As of

December 31, 2017,

$11.9

million was outstanding on the Line of Credit.

Availability under the Line of Credit is subject to a borrowing base comprised of accounts receivab

le and inventory.  The Company believes that the borrowing base will consistently produce availability under the Line of Credit in excess of

$23.0

million. A

0.25%

commitment fee is charged on the unused portion of the Line of Credit.

The obligations und

er the Credit Facility are unsecured. In the event of certain triggering events, such obligations would become secured by the assets of the Company’s domestic subsidiaries. A triggering event occurs when the Company fails to achieve any of the financial covenants noted below in consecutive quarters.

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”),

not

to exceed

2.25

to

1.00,

2

) annual capital expenditures

not

to exceed

$15.0

million,

3

) maintain a Debt Service Coverage Rate of a minimum of

1.25

to

1.00,

and

4

) maintain consolidated cash plus liquid investments of

not

less than

$10.0

million at any time.  As of

December 31, 2017,

the Company was

not

in compliance with the funded debt to EBITDA ratio, as the Company’s ratio rose to

2.58

to

1.00.

This event of noncompliance was the result of the combination of lower than anticipated

second

quarter operating profits and the addition of the new short-term loans in Brazil.  Additionally, the Company was also

not

in compliance with

one

of its non-financial covenants related to these additional borrowings. The Company has received a waiver for both of these non-compliances, and expects to be able to meet these covenants in future periods.

On

January 30, 2018,

the Company executed an amendment to its Loan and Security Agreement to extend the Line of Credit through

April 30, 2021.

The agreement was scheduled to expire on

April 30, 2018.

  The amended agreement maintains the previous line of

$23.0

million and the same loan covenants.

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

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 Term Loan had a balance of

$6.9

million at

December 31, 2017.

In

December 2017,

the Company’s Brazilian subsidiary entered into

two

short-term loans with local banks in order to support the Company’s strategic initiatives. The loans backed by the entity’s US dollar denominated export receivables were made with Santander Bank and Bradesco Bank and totaled

$3.5

million. The Santander loan of

$1.5

million has a term of

180

days and a rate of

4.19%

and the Bradesco loan of

$2.0

million has a term of

360

days and a rate of

4.75%.