Quarterly report pursuant to Section 13 or 15(d)

Note 6 - Borrowings

v3.5.0.2
Note 6 - Borrowings
3 Months Ended
Sep. 30, 2016
Notes to Financial Statements  
Debt Disclosure [Text Block]
(6)
Borrowings
 
Total debt obligations at September 30, 2016 and June 30, 2016 consist of the following (in thousands):
 
   
September 30,
2016
   
June 30,
2016
 
                 
Revolving Credit Facility due 10/21/2019
  $ 25,000     $ 25,000  
Term Loan due 10/21/2019
    15,583       16,167  
Capital leases and other
    505       671  
Total debt
    41,088       41,838  
Less current maturities
    2,941       3,001  
Total long-term
  $ 38,147     $ 38,837  
 
 
The Company entered into a five year, $150 million senior secured revolving credit and term loan facility on October 21, 2014, as amended (the “Facility”). The Facility, which expires on October 21, 2019, provides a term loan of up to $35 million and a revolving credit line of up to $115 million, subject to borrowing base availability. We incurred financing costs of $1.5 million under the Facility, which are being amortized by the interest method, over the remaining life of the Facility.
 
At the Company’s option, revolving loans under the Facility bear interest, based on the average availability, at an annual rate of either (a) the London Interbank Offered rate (“LIBOR”) plus 1.5% to 1.75%, or (b) the higher of (i) the prime rate, (ii) the federal funds effective rate plus 0.50%, or (iii) LIBOR plus 1.0% plus in each case 0.5% to 0.75%. At September 30, 2016 the annual interest rate in effect on the revolving loan was 2.0625%.
 
At the Company’s option, term loans under the Facility bear interest, based on the Company’s rent adjusted leverage ratio, at an annual rate of either (a) LIBOR plus 1.75% to 2.25%, or (b) the higher of (i) the prime rate, (ii) the federal funds effective rate plus 0.50%, or (iii) LIBOR plus 1.0% plus in each case 0.75% to 1.25%. At September 30, 2016 the annual interest rate in effect on the term loan was 2.3125%.
 
The Company pays a commitment fee of 0.15% to 0.25% per annum on the unused portion of the Facility, and fees on issued letters of credit at an annual rate of 1.5% to 1.75% based on the average availability. Certain payments are restricted if the availability under the revolving credit line falls below 20% of the total revolving credit line, and the Company is subject to pro forma compliance with the fixed charge coverage ratio if applicable.
 
Quarterly installments of principal on the term loan are payable based on a straight line 15-year amortization period, with the balance due at maturity. The Company does not expect to repay the revolving credit line portion of the Facility within the next year.
 
The Facility is secured by all property owned, leased or operated by the Company in the United States and includes certain real property owned by the Company and contains customary covenants which may limit the Company’s ability to incur debt; engage in mergers and consolidations; make restricted payments (including dividends and share repurchases); sell certain assets; and make investments.
 
The Company must maintain a minimum fixed charge coverage ratio of 1.1 to 1.0 at all times. If the outstanding term loans are less than $17.5 million and the fixed charge coverage ratio equals or exceeds 1.25 to 1.0, the fixed charge coverage ratio ceases to apply and thereafter is only triggered if average monthly availability is less than 15% of the amount of the revolving credit line.
During November 2015, we made a $16.5 million prepayment on the term loan, bringing the outstanding term loan to $17.3 million, and the fixed charge coverage ratio ceased to apply.
Our average subsequent availability exceeded 65.0%, such that the fixed charge coverage ratio did not apply.
 
The Company intends to use the Facility for working capital and general corporate purposes, including dividend payments and share repurchases. At September 30, 2016 and June 30, 2016, there was $0.1 million and $0.2 million respectively, of standby letters of credit outstanding under the Facility. Total availability under the Facility was $89.9 million at September 30, 2016 and $89.8 million at June 30, 2016.
 
At both September 30, 2016 and June 30, 2016, we were in compliance with all of the covenants under the Facility.
 
The following table summarizes, as of September 30, 2016, the timing of cash payments related to our outstanding long-term debt obligations for the remaining nine months of fiscal 2017, and each of the five fiscal years subsequent to June 30, 2017, and thereafter (in thousands).
 
 
Periods ending June 30,
       
2017
  $ 2,474  
2018
    2,815  
2019
    2,396  
2020
    34,213  
2021
    -  
2022 and thereafter
    -  
Total scheduled debt payments
  $ 41,898