Note 10 - Borrowing Arrangements

9 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Debt Disclosure [Text Block]

10.

Borrowing Arrangements

Revolving Credit Agreement

On 

November

20,

2015

,

we entered into a Revolving Credit Agreement with a syndicate of banks for a line of credit of

$125.0

million. The agent for the banks is Bank of the West, or BOTW.

The obligations are guaranteed by

four

of our subsidiaries.

The loan is collateralized pursuant to a Contingent Collateral Agreement, under which the assets of the parent company and the

four

subsidiaries could be subject to security interests for the benefit of the banks in the event of a loan default.

The credit agreement provides different interest rate alternatives under which we

may

borrow funds. We

may

elect to borrow based on LIBOR plus a margin or an alternative base rate plus a margin. The margin can range from

0.75%

to

2.5%,

depending on interest rate alternatives and on our leverage of liabilities to effective tangible net worth. The applicable interest rate as of

December

31,

2016

was

2.79%.

An unused commitment fee is also payable. It ranges from

0.25%

to

0.625%

annually, depending on leverage.

The terms of the facility impose restrictions on our ability to undertake certain transactions, to create liens on assets and to incur subsidiary indebtedness. In addition,

the credit agreement is subject to a set of financial covenants, including minimum effective tangible net worth, the ratio of cash, cash equivalents and accounts receivable to current liabilities, profitability, a leverage ratio and a minimum amount of U.S. domestic cash on hand.

In

December

2016,

we entered into an amendment to the Revolving Credit Agreement with the lenders under which the contractual term of the revolving loan was extended to

November

20,

2019

.

The leverage ratio was increased to

2.50

to

1.00

from

2.00

to

1.00.

No other terms of the Revolving Credit Agreement were affected by the amendment. At

December

31,

2016,

we complied with all of the financial covenants, including the leverage ratio.

In relation to the Revolving Credit Agreement and the amendment to the Revolving Credit Agreement, we incurred loan costs that were deferred and reduced our “Long term loans, net of current portion” on our unaudited consolidated balance sheets. Those costs are being amortized over the new life of the credit agreement. The unamortized balance at

December

31,

2016

and

March

31,

2016

was

$437,000

and

$304,000,

respectively.

At

December

31,

2016

and

March

31,

2016,

the outstanding principal balances under the credit agreement were

$73.0

million and

$80.0

million, respectively.

The Revolving Credit Agreement also includes a

$10.0

million letter of credit subfacility. See Note

17,

“Commitments and Contingencies” for further information regarding the terms of the subfacility.

IKB Deutsche Industriebank

In

April

2015,

we entered into a loan with IKB Deutsche Industriebank, or IKB. Under the agreement, we borrowed

€6.5

million, or about

$7.2

million at the time. The loan has a term ending

March

31,

2022

and bears a fixed annual interest rate of

1.75%.

Each fiscal quarter, a principal payment of

€232,000,

or about

$244,000,

and a payment of accrued interest are required. Financial covenants for a ratio of indebtedness to cash flow, a ratio of equity to total assets and a minimum stockholders’ equity for the German subsidiary must be satisfied for the loan to remain in good standing. Compliance with these covenants is required annually at

March

31.

We complied with all of these financial covenants at

March

31,

2016.

The loan

may

be prepaid in whole or in part with a modest penalty. The loan is also collateralized by a security interest in the facility in Lampertheim, Germany, and a security deposit of

€1.0

million. The security deposit will mature on

December

31,

2017

,

so long as compliance occurs through that date. At

December

31,

2016,

the outstanding principal balance was

€4.9

million, or about

$5.1

million. At

March

31,

2016,

the outstanding principal balance was

€5.6

million, or about

$6.3

million at that time.

Loans Assumed from Business Acquisitions

Our outstanding balances relating to loans assumed upon business acquisitions at

December

31,

2016

and

March

31,

2016

were

$283,000

and

$1.1

million, respectively. These loans consisted of certain short-term facilities from financial institutions and loans from government agencies to support research and development activities.