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LONG-TERM DEBT | 12 Months Ended
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Dec. 31, 2011
LONG-TERM DEBT [Abstract] |
LONG-TERM DEBT | 7. LONG-TERM DEBT: Long-term debt consisted of the following:
| December 31,
| 2010 |  | 2011
| (in Thousands)
Line of credit | $ 83,664 |  | $110,828
Term loan, payable in quarterly installments of $2.5 million through August 2013 | 25,500 |  | -
Unsecured notes payable to individuals, at variable rates (1.0% to 1.75% at December 31, 2010) payable in monthly and quarterly installments through November 2011 | 630 |  | -
Unsecured subordinated notes payable in quarterly installments at 5% through November 2015 | 2,900 |  | 2,320
Mortgage loan payable to financial institution, 6.25% collateralized by real estate, payable in monthly installments through January 2013 | 1,857 |  | 1,751
| 114,551 |  | 114,899
Less: Current portion | (10,930) |  | (694)
Total Long-term Debt | $ 103,621 |  | $114,205
On August 28, 2008, DXP entered into a credit agreement with Wells Fargo Bank, National Association, as lead arranger and administrative agent for the lenders (the “Facility"). The Facility was amended on March 15, 2010. The March 15, 2010 amendment to the Facility significantly increased the interest rates and commitment fees applicable at various leverage ratios from levels in effect before March 15, 2010. Effective July 25, 2011 DXP entered into a Second Amendment to the Credit Facility with Wells Fargo Bank, National Association. The Second Amendment reduced interest rates; deleted the Senior Leverage Ratio; increased the maximum leverage ratio to not greater than 4.00 to 1.00 as of the last day of each quarter; allows DXP to purchase, redeem and retire equity for aggregate consideration not exceeding $5.0 million; and modified covenants to increase DXP's ability to complete future acquisitions. The term loan was repaid using funds from the $150 million line of credit. Effective December 30, 2011 DXP entered into a Third Amendment to the Facility. The Third Amendment increased the maximum amount of the Facility from $150 million to $200 million. The Facility provides the option of interest at LIBOR plus a margin ranging from 1.25% to 2.75%, or prime plus a margin of minus 0.25% to 1.25%. Commitment fees of 0.15% to 0.40% per annum are payable on the portion of the Facility capacity not in use for borrowings or letters of credit at any given time. The Facility expires on July 25, 2016. The Facility consists of a revolving credit facility that provides a $200 million line of credit to the Company. The Facility contains financial covenants defining various financial measures and levels of these measures with which the Company must comply. Covenant compliance is assessed as of each quarter end and certain month ends for the asset test. The asset test is defined under the Facility as the sum of 90% of the Company's net accounts receivable, 65% of net inventory, and 50% of the net book value of non real estate property and equipment. The Company's borrowing and letter of credit capacity under the revolving credit portion of the Facility at any given time is $200 million less borrowings under the revolving credit portion of the facility and letters of credit outstanding, subject to the asset test described above. On December 31, 2011, the LIBOR based rate of the Facility was LIBOR plus 1.5%, the prime based rate of the Facility was prime plus 0.0% and the commitment fee was 0.2%. At December 31, 2011, $110.5 million was borrowed under the Facility at a weighted average interest rate of approximately 1.78% under the LIBOR options and $0.3 million was borrowed at 3.25% under the prime option. Borrowings under the Facility are secured by all of the Company's accounts receivable, inventory, general intangibles and non real estate property and equipment. At December 31, 2011, we had $78.2 million available for borrowing under the Facility. The Facility's principal financial covenants include: Fixed Charge Coverage Ratio –The Facility requires that the Fixed Charge Coverage Ratio for the 12 month period ending on the last day of each quarter be not less than 1.50 to 1.0 with “Fixed Charge Coverage Ratio” defined as the ratio of (a) EBITDA for the 12 months ending on such date minus cash taxes, minus Capital Expenditures for such period (excluding acquisitions) to (b) the aggregate of interest expense paid in cash, scheduled principal payments in respect of long-term debt and current portion of capital leases for such 12-month period, determined in each case on a consolidated basis for DXP and its subsidiaries. At December 31, 2011, the Company's Fixed Charge Coverage Ratio was 14.2. Leverage Ratio – The Facility requires that the Company's Leverage Ratio, determined at the end of each fiscal quarter, not exceed 4.0 to 1.0 as of the last day of each quarter. The Leverage Ratio is defined as the outstanding Indebtedness divided by EBITDA for the 12 months then ended. At December 31, 2011, the Company's Leverage Ratio was 1.49 to 1.00. Indebtedness is defined under the Facility for financial covenant purposes as: (a) all obligations of DXP for borrowed money including but not limited to senior bank debt, senior notes and subordinated debt; (b) capital leases; (c) issued and outstanding letters of credit; and (d) contingent obligations for funded indebtedness. The following is the computation of the Leverage Ratio as of December 31, 2011 (in thousands, except for ratios):
For the Year ended December 31, 2011 | Leverage Ratio
Income before taxes | $ 51,995
Interest expense | 3,518
Depreciation and amortization | 10,082
Stock compensation expense | 1,256
Pro forma acquisition EBITDA | 10,871
Reduction of closed location accrual | (123)
(A) Defined EBITDA | $ 77,599
As of December 31, 2011 |
Total long-term debt | $114,899
Letters of credit outstanding | 951
(B) Defined indebtedness | $115,850
Leverage Ratio (B)/(A) | 1.49
EBITDA as defined under the Facility for financial covenant purposes means, without duplication, for any period the consolidated net income (excluding any extraordinary gains or losses) of DXP plus, to the extent deducted in calculating consolidated net income, depreciation, amortization, other non-cash items and non-recurring items (including, without limitation, impairment charges, asset write-offs and accruals in respect of closed locations), interest expense and tax expense for taxes based on income and minus, to the extent added in calculating consolidated net income, any non-cash items and non-recurring items; provided that, if DXP acquires the equity interests or assets of any person during such period under circumstances permitted under the Facility, EBITDA shall be adjusted to give pro forma effect to such acquisition assuming that such transaction had occurred on the first day of such period and provided further that, if DXP divests the equity interests or assets of any person during such period under circumstances permitted under the Facility, EBITDA shall be adjusted to give pro forma effect to such divestiture assuming that such transaction had occurred on the first day of such period. Add-backs allowed pursuant to Article 11, Regulation S-X, of the Securities Act of 1933, as amended, will also be included in the calculation of EBITDA. The Facility prohibits the payment of cash dividends on the Company's common stock. The maturities of long-term debt for the next five years and thereafter are as follows (in thousands):
2012 | 694
2013 | 2,216
2014 | 580
2015 | 580
2016 | 110,829
Thereafter | -

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 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 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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