(

)

Indebtedness

February 1, 2018,

the Company, as the borrower, entered into an unsecured

$70

million Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) with the Company’s subsidiaries (the “Subsidiary Guarantors”) and Bank of America, N.A., in its capacity as the initial lender, Administrative Agent, Swingline Lender and L/C Issuer, and certain other lenders from time to time party thereto. The Amended and Restated Credit Agreement amends and restates the Company’s prior credit agreement.

The credit facilities under the Amended and Restated Credit Agreement (the “Amended and Restated Credit Facilities”) consist of a

$20

million unsecured term loan and an unsecured revolving credit facility, under which the Company

may

borrow up to

$50

million. The Amended and Restated Credit Agreement matures on

February 1, 2023.

The proceeds borrowed pursuant to the Amended and Restated Credit Agreement

may

be used for general corporate purposes, as well as permitted acquisitions. The Company’s obligations under the Amended and Restated Credit Agreement are guaranteed by the Subsidiary Guarantors.

The Amended and Restated Credit Agreement calls for interest of LIBOR plus a margin that ranges from

1.0%

1.5%

or, at the discretion of the Company, the bank’s prime rate less a margin that ranges from

.25%

to zero. In both cases the applicable margin is dependent upon Company performance. Under the Amended and Restated Credit Agreement, the Company is subject to a minimum fixed-charge coverage financial covenant as well as a maximum total funded debt to EBITDA financial covenant. The Amended and Restated Credit Agreement contains other covenants customary for transactions of this type, including restrictions on certain payments, permitted indebtedness and permitted investments. As of

December 31, 2019,

the applicable interest rate was approximately

2.8%

and the Company was in compliance with all covenants under the Amended and Restated Credit Agreement.

Included in the Amended and Restated Credit Facilities were approximately

$0.7

million in standby letters of credit as a financial guarantee on worker’s compensation insurance policies.

Long-term debt consists of the following (in thousands):

	December 31,
	2019		2018
Revolving credit facility	$	-	$	8,000
Term loan		-		17,143
Total long-term debt		-		25,143
Current portion		-		(2,857	)
Long-term debt, excluding current portion	$	-	$	22,286

Derivative Financial Instruments

The Company used interest-rate-related derivative instruments to manage its exposure related to changes in interest rates on certain of its variable-rate debt instruments. The Company does

not

enter into derivative instruments for any purpose other than cash flow hedging. Derivative financial instruments expose the Company to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, creating credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, in these circumstances the Company is

not

exposed to the counterparty’s credit risk. The Company minimizes counterparty credit risk in derivative instruments by entering into transactions with carefully selected major financial institutions based upon their credit profile. Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates.

The Company assesses interest rate risk by continually identifying and monitoring changes in interest rate exposures that

may

adversely impact expected future cash flows and by evaluating hedging opportunities. The Company’s debt obligations exposed the Company to variability in interest payments due to changes in interest rates. The Company believed that it was prudent to limit the variability of a portion of its interest payments. To meet this objective, in connection with the Amended and Restated Credit Agreement, the Company entered into a

$20

million,

-year interest rate swap agreement under which the Company receives

three

-month LIBOR plus the applicable margin and pays a

2.7%

fixed rate plus the applicable margin. The swap modified the Company’s interest rate exposure by converting the term loan from a variable rate to a fixed rate in order to hedge against the possibility of rising interest rates during the term of the loan. The notional amount was

$14,285,712

December 31, 2019.

The fair value of the swap as of

December 31, 2019

was approximately $(

325

) thousand and is included in other liabilities. Changes in the fair value of the swap are recorded in other income/expense and resulted in expense of approximately

$388

thousand and income of

$64

thousand during the years ended

December 31, 2019

and

2018,

respectively.

During the

fourth

quarter of

2019,

the Company paid the remaining balance of the term loan in its entirety. As a result, there is

longer underlying debt to hedge against with the swap. The changes in the fair value of the swap will continue to be accounted for as a financial instrument until the sooner of the time that the Company elects to cancel it or until its maturity.