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LONG-TERM DEBT | 9 Months Ended
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Sep. 30, 2012
LONG-TERM DEBT [Abstract] |
LONG-TERM DEBT [Text Block] | NOTE 7 – LONG-TERM DEBT On July 11, 2012 DXP entered into a credit facility with Wells Fargo Bank, National Association, as Issuing Lender, Swingline Lender and Administrative Agent for the lenders (the Facility). The new facility consists of a $100 million term loan and a revolving credit facility that provides a $225 million line of credit to the Company. This new facility replaced the Company's prior credit facility, which was last amended on December 30, 2011 and consisted of a $200 million revolving credit facility. The line of credit portion of the Facility provides the option of interest at LIBOR plus an applicable margin ranging from 1.25% to 2.25% or prime plus an applicable margin from 0.25% to 1.25% where the applicable margin is determined by the Company's leverage ratio as defined by the Facility at the date of borrowing. Rates for the $100 million term loan component are 25 basis points higher than the line of credit borrowings. Commitment fees of 0.20% to 0.40% per annum are payable on the portion of the Facility capacity not in use at any given time on the line of credit. Commitment fees are charged as interest in the consolidated statements of operations. Primarily because the leverage ratio is higher after the acquisition of HSE that occurred on July 11, 2012, interest rates in effect at September 30, 2012 are approximately 70 points higher than they were prior to the acquisition. Approximately $0.7 million of debt issuance costs associated with the prior credit facility were expensed in the third quarter of 2012. On September 30, 2012, the LIBOR based rate on the line of credit portion of the Facility was LIBOR plus 1.75%, the prime based rate of the Facility was prime plus 0.75% and the commitment fee was 0.30%. At September 30, 2012, $240.4 million was borrowed under the Facility at a weighted average interest rate of approximately 2.09% under the LIBOR options and $12.8 million was borrowed at 3.75% under the prime option. At September 30, 2012, the Company had $67.4 million available for borrowing under the Facility. The new facility expires on July 11, 2017. 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. The Facility's principal financial covenants include: Consolidated Leverage Ratio – The Facility requires that the Company's Consolidated Leverage Ratio, determined at the end of each fiscal quarter, not exceed 3.5 to 1.0 as of the last day of each quarter from the closing date through March 31, 2015 and not to exceed 3.25 to 1.00 from June 30, 2015 and thereafter. The Consolidated Leverage Ratio is defined as the outstanding indebtedness divided by Consolidated EBITDA for the period of four consecutive fiscal quarters ending on or immediately prior to such date. Indebtedness is defined under the Facility for financial covenant purposes as: (a) all obligations of DXP for borrowed money including but not limited to obligations evidenced by bonds, debentures, notes or other similar instruments; (b) obligations to pay deferred purchase price of property or services; (c) capital lease obligations; (d) obligations under conditional sale or other title retention agreements relating to property purchased; (e) issued and outstanding letters of credit; and (f) contingent obligations for funded indebtedness. At September 30, 2012, the Company's Leverage Ratio was 2.12 to 1.00. Consolidated Fixed Charge Coverage Ratio –The Facility requires that the Consolidated Fixed Charge Coverage Ratio on the last day of each quarter be not less than 1.25 to 1.0 with "Consolidated Fixed Charge Coverage Ratio" defined as the ratio of (a) Consolidated EBITDA for the period of 4 consecutive fiscal quarters ending on such date minus capital expenditures during such period (excluding acquisitions) minus income tax expense paid minus the aggregate amount of restricted payments defined in the agreement to (b) the interest expense paid in cash, scheduled principal payments in respect of long-term debt and the current portion of capital lease obligations for such 12-month period, determined in each case on a consolidated basis for DXP and its subsidiaries. At September 30, 2012, the Company's Consolidated Fixed Charge Coverage Ratio was 3.65 to 1.00. Asset Coverage Ratio –The credit facility requires that the Asset Coverage at any time be not less than 1.0 to 1.0 with "Asset Coverage Ratio" defined as the ratio of (a) the sum of 85% of net accounts receivable plus 65% of net inventory to (b) the aggregate outstanding amount of the revolving credit outstandings on such date. At September 30, 2012, the Company's Asset Coverage Ratio was 1.43 to 1.00. Consolidated EBITDA as defined under the Facility for financial covenant purposes means, without duplication, for any period the consolidated net income of DXP plus, to the extent deducted in calculating consolidated net income, depreciation, amortization (except to the extent that such non-cash charges are reserved for cash charges to be taken in the future), non-cash compensation including stock option or restricted stock expense, interest expense and income tax expense for taxes based on income, certain one-time costs associated with our acquisitions, integration costs, facility consolidation and closing costs, severance costs and expenses and one-time compensation costs in connection with the acquisition of HSE and any permitted acquisition, write-down of cash expenses incurred in connection with the existing credit agreement and extraordinary losses less interest income and extraordinary gains. Consolidated EBITDA shall be adjusted to give pro forma effect to disposals or business acquisitions assuming that such transaction(s) had occurred on the first day of the period excluding all income statement items attributable to the assets or equity interests that is subject to such disposition made during the period and including all income statement items attributable to property or equity interests of such acquisitions permitted under the Facility. The following table sets forth the computation of the Leverage Ratio as of September 30, 2012 (in thousands, except for ratios):
For the Twelve Months ended September 30, 2012 |  | Leverage Ratio |
Income before taxes |  | $ | 76,572 |
Interest expense |  |  | 4,591 |
Depreciation and amortization |  |  | 15,670 |
Stock compensation expense |  |  | 1,818 |
Pro forma acquisition EBITDA |  |  | 23,869 |
Other adjustments |  |  | (218 | )
(A) Defined EBITDA |  |  | 122,302 |
As of September 30, 2012 |  |  |  |
Total long-term debt |  |  | 259,031 |
Letters of credit outstanding |  |  | 460 |
(B) Defined indebtedness |  |  | 259,491 |
Leverage Ratio (B)/(A) |  |  | 2.12 |
Borrowings (in thousands):
|  | September 30, 2012 |  |  | December 31, 2011(4) |  |  | Increase (Decrease) |
Current portion of long-term debt |  | $ | 18,098 |  |  | $ | 694 |  |  | $ | 17,404 |
Long-term debt, less current portion |  |  | 240,933 |  |  |  | 114,205 |  |  |  | 126,728 |
Total long-term debt |  | $ | 259,031 |  |  | $ | 114,899 |  |  | $ | 144,132 | (2)
Amount available |  | $ | 67,376 | (1) |  | $ | 78,201 | (1) |  | $ | (10,825 | )(3)
(1) | Represents amount available to be borrowed at the indicated date under the Facility.
(2) | The funds obtained from the increase in debt were primarily used to fund acquisitions.
(3) | The $10.8 million decrease in the amount available is primarily a result of borrowing to fund acquisitions and working capital, partially offset by cash flow from operations.
(4) | Borrowings as of December 31, 2011 were primarily under the Company's previous credit facility which was terminated and replaced with the current credit facility on July 11, 2012.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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