Note 2 - Financing Arrangements |
6 Months Ended |
|---|---|
Oct. 02, 2016 | |
| Notes to Financial Statements | |
| Debt Disclosure [Text Block] |
Note
2
– Financing Arrangements
Factoring Agreement
s: The Company assigns the majority of its trade accounts receivable to CIT under factoring agreements whose expiration dates 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.CIT bears credit losses with respect to assigned accounts receivable from approved customers that are within approved credit limits, 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 were to occur, the Company must either assume the credit risk for shipments after the date of such termination or limitation or cease shipments to such customer. Factoring fees, which are included in marketing and administrative expenses in the accompanying statements of income, amounted to $112,000 and $156,000 for the three-month periods ended October 2, 2016 and September 27, 2015, respectively, and $206,000 and $272,000 for the six-month periods ended October 2, 2016 and September 27, 2015, respectively. There were no advances from the factor at October 2, 2016 and April 3, 2016. Credit Facility: The Company’s credit facility at October 2, 2016 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 minus 0.50% or LIBOR plus 2.00%. The financing agreement is scheduled to mature on July 11, 2019 and is secured by a first lien on all assets of the Company. As of October 2, 2016, the Company had elected to pay interest on balances owed under the revolving line of credit, if any, under the LIBOR option. The financing agreement also provides for the payment by CIT to the Company of interest at the rate of prime as of the beginning of the calendar month minus 2.00%, which was 1.25% at October 2, 2016, on daily cash balances held at CIT.The financing agreement as in effect prior to December 28, 2015 provided for a monthly fee, which was assessed based on 0.125% of the average unused portion of the $26.0 million revolving line of credit, less any outstanding letters of credit (the “Commitment Fee”). The Commitment Fee amounted to $8,000 and $16,000 for the three and six-month periods ended September 27, 2015, respectively. The financing agreement was amended on December 28, 2015 to eliminate the Commitment Fee. At October 2, 2016 and April 3, 2016, there was no balance owed on the revolving line of credit and there was no letter of credit outstanding. As of October 2, 2016 and April 3, 2016, $21.9 million and $25.6 million, respectively, was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory balances. The financing agreement for the revolving line of credit 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 was in compliance with these covenants as of October 2, 2016. |