Quarterly report pursuant to Section 13 or 15(d)

Note 5 - Financing Arrangements

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Note 5 - Financing Arrangements
6 Months Ended
Sep. 29, 2019
Notes to Financial Statements  
Debt Disclosure [Text Block]
Note
5
– Financing Arrangements
 
Factoring Agreement
s:     
The Company assigns the majority of its trade accounts receivable to CIT pursuant to factoring agreements, which have expiration dates that are coterminous with that of the financing agreement described below. Under the terms of the factoring agreements, CIT remits customer payments to the Company as such payments are received by CIT. Credit losses are borne by CIT with respect to assigned accounts receivable from approved shipments, while the Company bears the responsibility for adjustments from customers related to returns, allowances, claims and discounts. CIT
may
at any time terminate or limit its approval of shipments to a particular customer. If such a termination or limitation occurs, then the Company either assumes (and
may
seek to mitigate) the credit risk for shipments to the customer after the date of such termination or limitation or discontinues shipments to the customer. Factoring fees, which are included in marketing and administrative expenses in the accompanying unaudited condensed consolidated statements of income, amounted to
$62,000
and
$72,000
for the
three
-month periods ended
September 29, 2019
and
September 30, 2018,
respectively, and amounted to
$113,000
and
$128,000
for the
six
-month periods ended
September 29, 2019
and
September 30, 2018,
respectively.
 
Credit Facility:
     
The Company’s credit facility at
September 29, 2019
consisted of a revolving line of credit under a financing agreement with CIT of up to
$26.0
million, which includes a
$1.5
million sub-limit for letters of credit, bearing interest at the rate of prime minus
0.5%
or LIBOR plus
1.75%.
The financing agreement matures on
July 11, 2022
and is secured by a
first
lien on all assets of the Company. As of
September 29, 2019,
the Company had elected to pay interest on balances owed under the revolving line of credit, if any, under the LIBOR option, which was
3.84%
as of
September 29, 2019.
The financing agreement also provides for the payment by CIT of interest at the rate of prime as of the beginning of the calendar month minus
2.0%,
which was
3.25%
as of
September 29, 2019,
on daily negative balances held at CIT. As of
September 29, 2019,
there was
no
balance owed on the revolving line of credit, there was
no
letter of credit outstanding and
$21.1
million was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory balances. As of
March 31, 2019,
there was a balance of
$4.5
million owed on the revolving line of credit, there was
no
letter of credit outstanding and
$19.4
million was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory balances.
 
The financing agreement contains usual and customary covenants for agreements of that type, including limitations on other indebtedness, liens, transfers of assets, investments and acquisitions, merger or consolidation transactions, transactions with affiliates, and changes in or amendments to the organizational documents for the Company and its subsidiaries. The Company believes it was in compliance with these covenants as of
September 29, 2019.