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Note 6 - Debt

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Debt Disclosure [Text Block]

Note

6

- Debt

Credit Facilities

We are party to a Revolving Credit, Guaranty and Security Agreement (the “Credit Agreement”) and related security agreements with PNC Bank, National Association (“PNC”) that provides us a

$20

million secured asset-based revolving credit facility that includes a

$1

million letter of credit subfacility (the “Credit Facility”). The Credit Agreement expires on

May

 

24,

2017.

On

April

30,

2014,

the Company and PNC entered into an amendment (the “Amendment”) to the Credit Agreement. The Amendment permits the Company to commence the Share Repurchase Program described in Note

3,

provided that (a) the Company is not in default under the Credit Agreement, (b) the Company’s undrawn availability under the Credit Agreement is at least

$6

million both prior to and immediately following any repurchase, (c) the Company’s undrawn availability under the Credit Agreement plus domestic unrestricted cash is at least

$8

million both prior to and immediately following any repurchase, and (d) the Company uses its unrestricted cash for such repurchases and does not request advances against the Credit Agreement for such purposes. On

October

28,

2014,

the Company and PNC entered into a

second

amendment to the Credit Agreement which modifies the definition of EBITDA in the Credit Agreement to include non-cash stock-based compensation expense.

On

April

29,

2015,

the Company and PNC entered into a

third

amendment to the Credit agreement which permitted the Company to extend the Share Repurchase Program to

April

30,

2016.

On

June

15,

2015,

the Company and PNC entered into a

fourth

amendment to the Credit Agreement that permitted the expansion of the Share Repurchase Program described in Note

3

and the extension of this program to

June

2,

2016.

Finally, on

January

13,

2016,

Company and PNC entered into a

fifth

amendment to the Credit Agreement which permitted the Company’s acquisition of Accutronics Ltd. as described in Note

2

above.

Our available borrowing limit under the Credit Facility fluctuates from time to time based on a borrowing base formula equal to the sum of up to

85%

of eligible accounts receivable plus the least of (a) up to

65%

of the eligible inventory and eligible foreign in-transit inventory, (b) up to

85%

of the appraised net orderly liquidation value of eligible inventory and eligible foreign in-transit inventory, and (c)

$7.5

million, in each case subject to the definitions in the Credit Agreement and reserves required by PNC.

Interest is payable quarterly and will accrue on outstanding indebtedness under the Credit Agreement at the alternate base rate, as defined in the Credit Agreement, plus the applicable margin or at the

one,

two

or

three

month LIBOR rate plus the applicable margin as selected by us from time to time and listed below.

Quarterly Average Undrawn Borrowing Availability		Applicable Margin for Alternate Base Rate Loans				Applicable Margin for LIBOR Rate Loans
Greater than $8,000,000			1.00%				2.00%
$5,000,000 up to $8,000,000			1.25%				2.25%
Less than $5,000,000			1.50%				2.50%

We must pay a fee on the Credit Facility’s unused availability of

0.375%

per annum and customary letter of credit fees in addition to various collateral monitoring and related fees and expenses.

In addition to customary affirmative and negative covenants, we must maintain a fixed charge coverage ratio as defined in the Credit Agreement of

1.15

to

1.00,

tested quarterly for the

four

-quarters then ended. As of

December

31,

2016

we were in compliance with all covenants. The Credit Facility is secured by substantially all our assets.

Any outstanding advances must be repaid upon expiration of the term of the Credit Facility. Payments must be made during the term to the extent outstanding advances exceed the maximum amount then permitted to be drawn as advances under the Credit Facility and from the proceeds of certain transactions. Upon the occurrence of an event of default, the outstanding obligations

may

be accelerated and PNC will have other customary remedies.

As of

December

31,

2016,

we had

no

outstanding balance under the Credit Facility, an applicable interest rate of

4.5%,

borrowing capacity of

$9,549

in addition to our unrestricted cash on hand of

$10,629,

and

no

outstanding letters of credit related to the Credit Facility.

X

- 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://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.19,20,22)
-URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682

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- References

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