Note 3—Long-term Debt and Other Credit Arrangements

On May 6, 2013, the Company entered into a credit and security agreement (the “Loan Agreement”) with a new lender consisting of (1) a $20 million revolving credit facility (“Line of Credit”) which matured on May 1, 2018 and was extended to March 1, 2021 on March 12, 2018, (2) a term loan in the amount of $3,450,000 which matures on May 1, 2020 (“Term Loan A”) and (3) a term loan in the amount of $1,550,000 which matures on May 1, 2020 (Term Loan B and together with Term Loan A, the “Term Loans”). The Loan Agreement provided funds to refinance all existing indebtedness to the Company’s previous lender and for working capital and other general corporate purposes. In addition, the credit facility provided a sub-line for the issuance of up to $6.5 million of letters of credit at April 30, 2018 and April 30, 2017.

At April 30, 2018, there were advances of $3.8 million and $5.2 million in letters of credit outstanding, leaving $11.0 million available under the Line of Credit. The borrowing rate under the Line of Credit at that date was 3.50%. Monthly interest payments under the Line of Credit were payable at the Daily One Month LIBOR interest rate plus 1.50% per annum. Payments are due under Term Loan A in consecutive equal monthly principal payments in the amount of $79,000 until May 1, 2020, and at that time, all principal, accrued unpaid interest and other charges outstanding under Term Loan A shall be due and payable in full. The interest rate on Term Loan A, after consideration of related interest rate swap agreements, is a fixed rate per annum equal to 4.37%. Payments are due under Term Loan B in consecutive equal monthly principal payments in the amount of $18,000 until May 1, 2020, and at that time, all principal, accrued unpaid interest and other charges outstanding under Term Loan B shall be due and payable in full. The interest rate on Term Loan B, after consideration of the related interest rate swap agreement, effective November 3, 2014, converted to a fixed rate per annum of 3.07%. The fair value of the interest rate swap derivatives were $5,000 and $62,000 at April 30, 2018 and 2017, respectively. Scheduled annual principal payments for the term loans are $1,167,000, $1,167,000 and $97,000 for fiscal years 2019, 2020, and 2021, respectively. Term Loan A and Term Loan B are secured by liens against certain machinery and equipment.

At April 30, 2018, there were bank guarantees issued by foreign banks outstanding to customers in the amount of $1,625,000, $21,000, $1,000, and $63,000 with expiration dates in fiscal years 2019, 2020, 2021 and 2023, respectively, collateralized by a $5.0 million letter of credit under the Line of Credit and certain assets of the Company’s subsidiaries in India. The Loan Agreement includes financial covenants with respect to certain ratios, including (a) senior funded debt to EBITDA, (b) fixed charge coverage, and (c) asset coverage. At April 30, 2018, the Company was in compliance with all of the financial covenants.

At April 30, 2017, there were advances of $3.5 million and $4.2 million in letters of credit outstanding under the Line of Credit. The borrowing rate at that date was 2.50%. At April 30, 2017, there were foreign bank guarantees outstanding to customers in the amount of $1,403,000, $112,000 and $117,000 with expiration dates in fiscal years 2018, 2019, and 2020, respectively. At April 30, 2017, the Company was in compliance with all of the financial covenants.

Amounts outstanding under the term loans were as follows as of April 30:


$ in thousands	2018			2017
Term Loan A payable	$	1,970		$	2,667
Term Loan B payable		461			682
Less: current portion		(1,167	)		(918	)

Long-term debt	$	1,264		$	2,431