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Note F - Debt Facilities
 12 Months Ended
Apr. 30, 2012
Debt Disclosure [Text Block]
F – Debt Facilities

A summary of revolving credit facilities is as follows:

(In thousands)
                       
   
Aggregate
 
Interest
      Balance at
   
Amount
 
Rate
 
Maturity
 
April 30, 2012
 
April 30, 2011
                         
Revolving credit facilities
 
$125.0 million
 
LIBOR + 2.5%
 
March 2015
 
$
77,900
 
$
                     -
Revolving credit facilities
 
$90.0 million
 
Prime +/-
 
November 2013
 
$
                     -
 
$
47,539
       
(2.74% at April 30, 2012 and 3.0% at April 30, 2011)
     

On March 9, 2012, the Company entered into an Amended and Restated Loan and Security Agreement (“Credit Facilities”) with a group of lenders providing revolving credit facilities totaling $125 million.  The Credit Facilities expire in March 2015.  The revolving credit facilities are collateralized primarily by finance receivables and inventory of Car-Mart, are cross collateralized and contain a guarantee by the Company.  Interest is payable monthly under the revolving credit facilities. The Credit Facilities provide for three pricing tiers for determining the applicable interest rate, based on the Company’s consolidated leverage ratio for the preceding fiscal quarter. The current applicable interest rate under the Agreement is generally LIBOR plus 2.5%.  The Credit Facilities contains various reporting and performance covenants including (i) maintenance of certain financial ratios and tests, (ii) limitations on borrowings from other sources, (iii) restrictions on certain operating activities and (iv) limitations on the payment of dividends or distributions. The distribution limitations under the Credit Facilities allow the Company to repurchase the Company’s stock so long as: either (a) the aggregate amount of such repurchases does not exceed $40 million and the sum of borrowing bases combined minus the principal balances of all revolver loans after giving effect to such repurchases is equal to or greater than 25% of the sum of the borrowing bases, or (b) the aggregate amount of such repurchases does not exceed 75% of the consolidated net income of the Company measured on a trailing twelve month basis; provided that immediately before and after giving effect to the stock repurchases, at least 12.5% of the aggregate funds committed under the credit facilities remain available.   The Company was in compliance with the covenants at April 30, 2012.  The amount available to be drawn under the credit facilities is a function of eligible finance receivables and inventory. Based upon eligible finance receivables and inventory at April 30, 2012, the Company had additional availability of $47 million under the new revolving credit facilities.

In connection with the amendment to the credit facilities in March, 2012 the Company incurred debt issuance costs of $306,000 and in connection with the refinancing of the revolving credit facilities in November, 2010, the Company incurred debt issuance costs of $530,000.  The debt issuance costs were deferred and will be amortized over the life of the new agreements.  The Company recognized $182,000 and $88,000 of amortization in fiscal 2012 and 2011, respectively, related to the debt issuance costs.  The amortization is reflected as interest expense in the Company’s Consolidated Statement of Operations.

The Company incurred a yield maintenance fee of $507,000 associated with the early payoff of the term loan in November 2010.  This amount is reflected in the fiscal 2011 operating results in loss on prepayment of debt.

Interest Rate Swap Agreement

In fiscal 2011 and 2010, the Company had an interest rate swap agreement (“Agreement”) with its primary lender for a notional principal amount of $20 million.  The effective date of the Agreement was May 20, 2008.  The Agreement was set to mature on May 31, 2013 and provided that the Company would pay monthly interest on the notional amount at a fixed rate of 6.68% and receive monthly interest on the notional amount at a floating rate based on the bank’s prime lending rate, an initial rate of 5.00%.  The Company entered into this Agreement to manage a portion of its interest rate exposure by effectively converting a portion of its variable rate debt into fixed rate debt; however, due to unfavorable interest rate movements, the Company terminated the interest rate swap agreement in April 2011 for $1.3 million.  The interest rate swap agreement was not designated as a hedge by Company management; therefore, the gain (loss) of the Agreement is reported in earnings. The net income for the Agreement reported in earnings as interest expense was $72,000 and $155,000 for the years ended April 30, 2011 and 2010, respectively.  The interest on the credit facilities, the net settlements under the interest rate swap and the changes in the fair value of the agreement, were all reflected in interest expense in the Company’s Consolidated Statement of Operations.