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LONG-TERM DEBT | 12 Months Ended
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Dec. 31, 2013
LONG-TERM DEBT [Abstract] |
LONG-TERM DEBT | NOTE 8 – LONG-TERM DEBT Long-term debt consisted of the following (in thousands):
| December 31,
| 2013 |  | 2012
Line of credit | $ 76,849 |  | $ 104,526
Term loan | 109,375 |  | 130,000
Promissory note payable in monthly installments at 2.9% through January 2021, collateralized by equipment | 6,000 |  | -
Unsecured subordinated notes payable in quarterly installments at 5% through November 2015 | 2,361 |  | 3,870
| 194,585 |  | 238,396
Less: Current portion | (26,213) |  | (22,057)
Total Long-term Debt | $ 168,372 |  | $ 216,339
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. On December 31, 2012 the Company amended the agreement which increased the Credit Facility by $75 million (the “Facility”). At December 31, 2013, the Facility consisted of a $109.4 million term loan and a revolving credit facility that provided a $262.5 million line of credit. The line of credit portion of the Facility provided 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 term loan component were 25 basis points higher than the line of credit borrowings. Commitment fees of 0.20% to 0.40% per annum were payable on the portion of the Facility capacity not in use at any given time on the line of credit. Commitment fees are included as interest in the consolidated statements of income. Primarily because the leverage ratio was higher after the acquisition of HSE that occurred on July 11, 2012, interest rates in effect on July 11, 2012 were approximately 70 basis points higher than they were immediately prior to the acquisition. Approximately $0.7 million of debt issuance costs associated with the prior credit facility were expensed in 2012. On December 31, 2013, the LIBOR based rate on the line of credit portion of the Facility was LIBOR plus 1.50%, the prime based rate of the Facility was prime plus 0.50%, the LIBOR based rate on the term loan portion of the Facility was LIBOR plus 1.75% and the commitment fee was 0.25%. At December 31, 2013, $186.2 million was borrowed under the Facility at a weighted average interest rate of approximately 1.8% under the LIBOR options. At December 31, 2013, the Company had $154.1 million available for borrowing under the Facility. 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. Substantially all of the Company’s assets are pledged as collateral to secure to the credit facility. At December 31, 2013, the Facility’s principal financial covenants included: Consolidated Leverage Ratio – The Facility required 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 December 31, 2013, the Company’s Leverage Ratio was 1.48 to 1.00. Consolidated Fixed Charge Coverage Ratio –The Facility required 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 December 31, 2013, the Company's Consolidated Fixed Charge Coverage Ratio was 2.84 to 1.00. Asset Coverage Ratio –The Facility required that the Asset Coverage Ratio 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 December 31, 2013, the Company's Asset Coverage Ratio was 2.99 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 December 31, 2013 (in thousands, except for ratios):
For the Twelve Months ended December 31, 2013 | Leverage Ratio
Income before taxes | $ 94,717
Interest expense | 6,282
Depreciation and amortization | 21,660
Stock compensation expense | 2,832
Pro forma acquisition EBITDA | 6,612
Other adjustments | (351)
(A) Defined EBITDA | $ 131,752
As of December 31, 2013 |
Total long-term debt, including current maturities | $ 194,585
(B) Defined indebtedness | $ 194,585
Leverage Ratio (B)/(A) | 1.48
As of December 31, 2013, the maturities of long-term debt under the Company’s term loan for the next five years and thereafter were as follows (in thousands):
2014 | $ 26,213
2015 | 32,672
2016 | 35,204
2017 | 97,701
2018 | 879
Thereafter | 1,916
Subsequent to year end, the Company entered into an Amended and Restated Credit Agreement, further discussed in Note 18.

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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 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: 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 3: 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. Reference 4: 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 + Details
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