Note 8 - Debt

9 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

8

:   Debt

Debt is comprised of the following (in thousands):

	03/31/2018		6/30/2017
Short-term and current maturities
Loan and Security Agreement	$	1,669	$	11,514
Other Loans		3,012		-
Long-term debt
Loan and Security Agreement, net of current portion		17,736		6,095
	$	22,417	$	17,609

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

January 2018.  

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%,

and expires on

April 30, 2021. 

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

nine

months ended

March 31, 2018

and

2017

was

3.2%

and

2.5%,

respectively. As of

March 31, 2018,

$12.9

million was outstanding on the Line of Credit.

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

March 31, 2018,

the Company was in compliance with all the financial debt covenants related to its Loan and Security Agreement. The Company was

not

in compliance with

one

of its non-financial covenants related to additional borrowings made in

December,

but the waiver received in

January 2018

was granted until

June 30, 2018.

The Company expects to be in compliance with this covenant prior to the waiver expiration.

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

$6.5

million at

March 31, 2018.

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%.

As of

March 31, 2018,

the outstanding balance on these loans was

$3.0

million.