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Term Loans Payable And Revolving Line Of Credit | 12 Months Ended
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Aug. 31, 2020
Term Loans Payable And Revolving Line Of Credit [Abstract] |
Term Loans Payable And Revolving Line Of Credit | ﻿ ﻿ 6.TERM LOANS PAYABLE AND REVOLVING LINE OF CREDIT ﻿ On August 7, 2019, we entered into a new credit agreement (the 2019 Credit Agreement) with our existing lender, which replaced the amended and restated credit agreement dated March 2011 (the Original Credit Agreement). The 2019 Credit Agreement provides up to $25.0 million in term loans and a $15.0 million revolving line of credit. Upon entering into the 2019 Credit Agreement, we borrowed $20.0 million of the available term loan and used the proceeds to repay all indebtedness under the Original Credit Agreement. During November 2019, we borrowed the remaining $5.0 million of available term loan capacity on the 2019 Credit Agreement. ﻿ The 2019 Credit Agreement is secured by substantially all of the assets of the Company and certain of our subsidiaries, and contains customary representations, warranties, and covenants. We incurred approximately $0.1 million of legal fees to obtain the 2019 Credit Agreement. ﻿ First Modification Agreement ﻿ To address potential covenant compliance issues associated with the uncertainties surrounding the economic recovery from the COVID-19 pandemic, on July 8, 2020, we entered into the First Modification Agreement to the 2019 Credit Agreement. The primary purpose of the First Modification Agreement is to provide temporary alternative borrowing covenants for the fiscal quarters ending August 31, 2020 through May 31, 2021. These new covenants consist of the following: ﻿
| 1. |  | Minimum Liquidity – We must maintain consolidated minimum liquidity of not less than $13.0 million from August 31, 2020 through February 28, 2021 and $8.0 million at May 31, 2021.
﻿
| 2. |  | Minimum Adjusted EBITDA – We must maintain rolling four-quarter adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA) not less than the amount set forth below at the end of the specified quarter (in thousands).
﻿
﻿ |  |  |
﻿ |  |  |
﻿Quarter Ending |  | Amount
﻿August 31, 2020 |  | $ | 11,000
﻿November 30, 2020 |  |  | 8,500
﻿February 28, 2021 |  |  | 5,000
﻿May 31, 2021 |  |  | 15,000
﻿ Adjusted EBITDA for purposes of this calculation may not be the same as reported by the Company in our earnings releases. The amounts in the table above exclude amortization of capitalized development costs which is classified in cost of sales. ﻿
| 3. |  | Capital Expenditures – We may not make capital expenditures, including capitalized development costs, in an amount exceeding $8.5 million in aggregate for any fiscal year.
﻿ In addition to the new financial covenants described above, we are prohibited from making certain restricted payments, including dividend payments on our common stock and open-market purchases of our common stock until we have been in compliance with the previously existing financial covenants for two consecutive quarters. The available credit on the revolving line of credit remains the same as under the 2019 Credit Agreement. ﻿ Interest on all borrowings under the 2019 Credit Agreement is due and payable on the first day of each month. Our interest rate under the First Modification Agreement increased to LIBOR plus 3.0 percent from LIBOR plus 1.85 percent under the original 2019 Credit Agreement. Our unused credit commitment fee under the First Modification Agreement increased from 0.2 percent to 0.5 percent. The effective interest rate on our term loan obligations was 3.5 percent at August 31, 2020 and 4.1 percent at August 31, 2019. ﻿ In the event of noncompliance with these financial covenants and other defined events of default, the lender is entitled to certain remedies, including acceleration of the repayment of any amounts outstanding on the 2019 Credit Agreement. At August 31, 2020, we believe that we were in compliance with the terms and covenants applicable to the 2019 Credit Agreement and the First Modification Agreement. ﻿ The previously existing financial covenants, which include (i) a Funded Indebtedness to Adjusted EBITDAR Ratio of less than 3.00 to 1.00; (ii) a Fixed Charge Coverage ratio not less than 1.15 to 1.00; (iii) an annual limit on capital expenditures (excluding capitalized curriculum development costs) of $8.0 million; and (iv) consolidated accounts receivable of not less than 150% of the aggregate amount of the outstanding borrowings on the revolving line of credit, the undrawn amount of outstanding letters of credit, and the amount of unreimbursed letter of credit disbursements remain in effect except for the quarterly periods covered by the First Modification Agreement. ﻿ Term Loans Payable ﻿ As previously described, we have borrowed the available $25.0 million of term loans on the 2019 Credit Agreement. Principal payments of $1.25 million are due and payable on the first day of each January, April, July, and October until the term loans obligation is repaid in 2024. At August 31, 2020, the principal payments due on our term loans are as follows (in thousands): ﻿ ﻿ ﻿
﻿ |  |
﻿YEAR ENDING |  |
﻿AUGUST 31, |  |
﻿2021 | $ | 5,000
﻿2022 |  | 5,000
﻿2023 |  | 5,000
﻿2024 |  | 5,000
﻿ | $ | 20,000
﻿ Revolving Line of Credit ﻿ The key terms and conditions of our revolving line of credit associated with the 2019 Credit Agreement are as follows: ﻿
| · |  | Available Credit – $15.0 million less outstanding standby letters of credit, which totaled $10,000 at August 31, 2020.
﻿
| · |  | Maturity Date – August 7, 2024.
﻿
| · |  | Interest Rate – The effective interest rate is LIBOR plus 3.0 percent per annum and the unused commitment fee on the line of credit is 0.5 percent per annum. The interest rate and commitment fee were modified by the First Modification Agreement as described above.
﻿ We did no t have any borrowings on the revolving line of credit at either August 31, 2020 or 2019.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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