Financing Agreements

12 Months Ended

Apr. 30, 2016

Note 10. Financing Agreements

We have a credit agreement with a U.S. bank for a $35,000 line of credit, which includes up to $15,000 for standby letters of credit. The line of credit, which was amended on November 15, 2013, is due on November 15, 2016. The interest rate ranges from LIBOR plus 145 basis points to LIBOR plus 195 basis points depending on the ratio of our interest-bearing debt to EBITDA. EBITDA is defined as net income before deductions for income taxes, interest expense, depreciation and amortization, all as determined in accordance with U.S. GAAP. The effective interest rate was 2.4 percent at April 30, 2016. We are assessed a loan fee equal to 0.125 percent per annum of any unused portion of the loan. As of April 30, 2016, there were no advances to us under the loan portion of the line of credit, and the balance of letters of credit outstanding was approximately $3,872.

The credit agreement is unsecured and requires us to be in compliance with the following financial ratios:


•	A minimum fixed charge coverage ratio of at least 2 to 1 at the end of any fiscal year. The ratio is equal to (a) EBITDA less dividends or other distributions, a capital expenditure reserve of $6,000, and income tax expenses, over (b) all principal and interest payments with respect to debt, excluding principal payments on the line of credit; and


•	A ratio of interest-bearing debt, excluding any marketing obligations, to EBITDA of less than 1 to 1 at the end of any fiscal quarter.

We have an additional credit agreement with another U.S. bank which supports our credit needs outside of the United States. It was also amended on November 15, 2013 and becomes due on November 15, 2016. The facility provides for a $40,000 line of credit and includes facilities for letters of credit and bank guarantees and to secure foreign loans for our international subsidiaries. This credit agreement is unsecured. It contains the same covenants as the credit agreement noted above and contains an inter creditor agreement whereby the debt has a cross default provision with the primary credit agreement. Total credit allowed between the two credit agreements is limited to $40,000. The interest rate is equal to LIBOR plus 1.5 percent. We are assessed a loan fee equal to 0.15 percent per annum of any unused portion of the loan. As of April 30, 2016, there were no advances outstanding and approximately $3,482 in bank guarantees under this line of credit.

During the fourth quarter of fiscal 2016, we violated one of our bank covenants, but received a waiver from our banking institutions for the year ended April 30, 2016. While we are not using our credit line, other than letters of credit, any future covenant violations could impact our ability to obtain financing. We were in compliance with all applicable covenants as of May 2, 2015. The minimum fixed charge coverage ratio as of April 30, 2016 was (15)-to-1, and the ratio of interest-bearing debt to EBITDA as of April 30, 2016 was 0.07-to-1.