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Note 7 - Financing Agreements
 12 Months Ended
May 01, 2021
Notes to Financial Statements  
Debt Disclosure [Text Block]

Note 7. Financing Agreements

 

On March 11, 2021, we entered into an amendment to clarify the potential upcoming change from LIBOR (the London Interbank Offered Rate) to SOFR (the Secured Overnight Financing Rate) and to modify the expiration date of a specific letter of credit to up to seven years from the issuance date. On November 15, 2019, we entered into an amendment to extend the maturity date of our credit agreement and a related revolving bank note from November 15, 2019 to November 15, 2022 and to modify certain other terms and financial covenants. On August 28, 2020, we entered into the third amendment to our credit agreement and a security agreement creating a security interest on certain assets. The third amendment adds a liquidity covenant and revises other financial covenants. The revolving amount of the agreement and note remains at $35,000, including up to $20,000 for commercial and standby letters of credit. The credit agreement and amendments require us to be in compliance with certain financial ratios, including a covenant to maintain the ratio of interest-bearing debt to earnings before income taxes, depreciation, and amortization of less than 2.5, and other covenants and contain customary events of default, including the failure to comply with covenants, the failure to pay or discharge material judgments and taxes, bankruptcy, the failure to pay loans and fees, and experiencing a change of control. The occurrence of an event of default by us would permit the lenders to terminate their commitments and accelerate repayment of the loans, foreclose on the collateral for the loans, and require collateralization of outstanding letters of credit. As of May 1, 2021, there were no advances under the loan portion of the line of credit, and the balance of the letters of credit outstanding was approximately $3,811. As of May 1, 2021, $31,189 of the credit facility was available for borrowing.

 

We are sometimes required to obtain bank guarantees or other financial instruments for display installations. If we are unable to meet the terms of the arrangement, our customer would draw on the banking arrangement, and the bank would subrogate its loss to Daktronics. As of May 1, 2021, we had $2,561 of such instruments outstanding.

 

As of May 1, 2021, we were in compliance with all applicable bank loan covenants.