|
Note 8 - Financing Arrangements
|
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Apr. 01, 2012
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Text Block] |
Note
8 - Financing Arrangements
Factoring
Agreements: The Company assigns the
majority of its trade accounts receivable to CIT pursuant
to factoring agreements which expire in July
2013. Under the terms of the factoring
agreements in effect as of April 1, 2012, CIT would remit
payments to the Company on the average due date of each
group of invoices assigned. If a customer failed
to pay CIT by the due date, the Company was charged
interest at prime plus 1.0%, which was 4.25% at April 1,
2012, until payment was received. The Company
incurred interest expense of $67,000 and $77,000 in fiscal
years 2012 and 2011, respectively, as a result of the
failure of the Company’s customers to pay CIT by the
due date. CIT bears credit losses 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
were to occur, the Company would either assume the credit
risks for shipments to the customer after the date of such
termination or limitation or cease shipments to the
customer. Factoring fees, which are included in
marketing and administrative expenses in the accompanying
consolidated statements of income, were $469,000 and
$539,000 during fiscal years 2012 and 2011,
respectively. There were no advances from the
factor at either April 1, 2012 or April 3, 2011.
The
factoring agreements were amended and restated effective as
of April 2, 2012 to provide that CIT will remit customer
payments to the Company as such payments are received by
CIT.
Notes Payable
and Other Credit Facilities: At April 1, 2012 and
April 3, 2011, long term debt of the Company consisted of
(in thousands):
The
Company’s credit facility as of April 1, 2012
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, with an
interest rate of prime plus 1.00%, which was 4.25% at April
1, 2012, or LIBOR plus 3.00%, which was 3.24% at April 1,
2012, maturing on July 11, 2013 and secured by a first lien
on all assets of the Company. As of April 1,
2012, the Company had elected to pay interest on the
revolving line of credit under the LIBOR
option. Also under the financing agreement, a
monthly fee is assessed based on 0.25% of the average
unused portion of the $26.0 million revolving line of
credit, less any outstanding letters of
credit. This unused line fee amounted to $61,000
and $47,000 during fiscal years 2012 and 2011,
respectively. At April 1, 2012, there was no
balance owed on the revolving line of credit, there was no
letter of credit outstanding and the Company had $24.5
million available under the revolving line of credit based
on its eligible accounts receivable and inventory
balances.
The
financing agreement was amended effective as of April 2,
2012 to provide for the payment by CIT to the Company of
interest at the rate of prime minus 1.00%, which was 2.25%
at April 2, 2012, on daily negative balances outstanding
under the revolving line of credit.
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.
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||