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Debt | 9 Months Ended
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Sep. 30, 2014
Debt Disclosure [Abstract] |
Debt | Debt On July 13, 2011, we entered into an amended and restated $265.0 million secured five year credit agreement. This credit agreement (“Amended Credit Agreement”) is with (i) JPMorgan Chase Bank, N.A., as administrative agent; (ii) HSBC Bank USA, National Association; (iii) RBS Citizens, National Association; (iv) Fifth Third Bank; and (v) Citibank, N.A. JPMorgan Securities LLC and HSBC Bank USA, National Association acted as joint bookrunners and joint lead arrangers; HSBC Bank USA, National Association and RBS Citizens, National Association acted as co-syndication agents; and Fifth Third Bank and Citibank, N.A. acted as co-documentation agents. The Amended Credit Agreement amends and restates the credit agreement signed between the Company and the same banks on November 23, 2010 and increased our borrowing capacity from $165.0 million under the original agreement to $265.0 million under the Amended Credit Agreement. Key features of the Amended Credit Agreement, as compared to the November 23, 2010 credit agreement, include an increase in credit from $165.0 million to $265.0 million with the addition of a $100.0 million term loan; the extension of maturity from November 23, 2014 to July 13, 2016; a 25 basis point reduction in interest costs; an increase in the size of permitted acquisitions from $25.0 million to $100.0 million; and an increase in permitted additional indebtedness from $20.0 million to $120.0 million. The Amended Credit Agreement provided for the extension of credit in the form of a $100.0 million term loan (which refinanced outstanding borrowings in the amount of $100.0 million from the existing revolving credit line), as further described below; and up to $165.0 million of revolving loans, in multiple currencies, at any time and from time to time until the maturity of the Amended Credit Agreement on July 13, 2016. We may borrow, pre-pay and re-borrow amounts under the $165.0 million revolving portion of the Amended Credit Agreement; however, with respect to the $100.0 million term loan portion, any principal amounts re-paid may not be re-borrowed. Borrowings may be used to finance working capital needs, for letters of credit and for general corporate purposes in the ordinary course of business, including the financing of permitted acquisitions (as defined in the Amended Credit Agreement). Borrowings under the Amended Credit Agreement bear interest based on one of two options. Alternate base rate loans bear interest that includes a base reference rate plus a spread of 75 - 150 basis points, depending on our leverage ratio. The base reference rate is the greater of the prime rate; federal funds effective rate plus 50 basis points; and adjusted London interbank offered (“LIBO”) rate plus 100 basis points. Euro-currency loans bear interest based on the adjusted LIBO rate plus a spread of 175 - 250 basis points, depending on our leverage ratio. Our current borrowings are Euro-currency based. In addition to interest payable on the principal amount of indebtedness outstanding from time to time under the Amended Credit Agreement, the Company is required to pay a quarterly fee of 0.20% to 0.35% (based upon its leverage ratio) of the unused amount of the lenders’ commitments under the Amended Credit Agreement. In connection with the Amended Credit Agreement, we transferred borrowings in the amount of $100.0 million from the revolving credit line under the November 23, 2010 credit agreement to the term loan under the Amended Credit Agreement. The Amended Credit Agreement requires the mandatory quarterly repayment of principal on amounts borrowed under such term loan. Payments commenced on September 30, 2011, and are scheduled to be completed on June 30, 2016. The aggregate mandatory principal payments due were as follows:
2011 |  | $2.5 | million
2012 |  | $7.5 | million
2013 |  | $12.5 | million
2014 |  | $17.5 | million
2015 |  | $35.0 | million
2016 |  | $25.0 | million
The Amended Credit Agreement is secured by many of the assets of Rogers and our World Properties, Inc., subsidiary, including but not limited to, receivables, equipment, intellectual property, inventory, stock in certain subsidiaries and real property. As part of the Amended Credit Agreement, we are restricted in our ability to perform certain actions, including, but not limited to, our ability to pay dividends, incur additional debt, sell certain assets, and make capital expenditures, with certain exceptions. Further, we are required to maintain certain financial covenant ratios, including (i) a leverage ratio of no more than 3.0 to 1.0 and (ii) a minimum fixed charge coverage ratio (FCCR) as defined in the following table:
Period |  | Ratio
March 31, 2012 to December 31, 2012 |  | 1.25 : 1.00
March 31, 2013 to December 31, 2013 |  | 1.50 : 1.00
March 31, 2014 and thereafter |  | 1.75 : 1.00
The FCCR is the ratio between Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and Consolidated Fixed Charges as defined in the Amended Credit Agreement, which measures our ability to cover the fixed charge obligations. The key components of Consolidated Fixed Charges are capital expenditures, scheduled debt payments, capital lease payments, rent and interest expenses. Several factors in the first quarter of 2012, including the status of the global economy and the fact that there were no mandatory term loan payments when the original ratio was established, led to an amendment to the covenant which temporarily reduced the FCCR. Relevant Fixed Charge metrics are detailed in the table below.
Periods |  |  | Q3 2013 | Q4 2013 | Q1 2014 | Q2 2014 | Q3 2014
Covenant Limit |  |  | 1.50 | 1.50 | 1.75 | 1.75 | 1.75
Actual FCCR |  |  | 2.23 | 2.39 | 2.69 | 2.65 | 2.70
As of September 30, 2014, we were in compliance with all of our covenants, as we achieved actual ratios of approximately 0.63 on the leverage ratio and 2.70 on the fixed charge coverage ratio. If an event of default occurs, the lenders may, among other things, terminate their commitments and declare all outstanding borrowings to be immediately due and payable together with accrued interest and fees. In connection with the establishment of the initial credit agreement in 2010, we capitalized approximately $1.6 million of debt issuance costs. We capitalized an additional $0.7 million of debt issuance costs in 2011 related to the Amended Credit Agreement, as amended. Also in connection with the Amended Credit Agreement, as amended, we capitalized an additional $0.1 million of debt issuance costs in the first quarter of 2012. These costs will be amortized over the life of the Amended Credit Agreement, as amended, which will terminate in June 2016. We incurred amortization expense of $0.1 million in each of the third quarters of 2014 and 2013, respectively, and amortization expense of $0.4 million in each of the nine months ended September 30, 2014 and 2013, respectively. At September 30, 2014, we have approximately $0.9 million of credit facility costs remaining to be amortized. In the first quarter of 2011, we made an initial draw on the line of credit under the November 23, 2011 credit agreement of $145.0 million to fund the acquisition of Curamik. During the nine months ended September 30, 2014 and 2013, we made principal payments of $12.5 million and $16.8 million, respectively, on the outstanding debt. We are obligated to pay $27.5 million on this debt obligation in the next 12 months. As of September 30, 2014, the outstanding debt related to the Amended Credit Agreement, as amended, consists of $65.0 million of term loan debt. We have the option to pay part of or the entire amount at any time over the remaining life of the Amended Credit Agreement, as amended, with any balance due and payable at the agreement's expiration. In addition, as of September 30, 2014, we had a $1.4 million standby letter of credit (LOC) to guarantee Rogers workers compensation plans that was backed by the Amended Credit Agreement, as amended. No amounts were owed on the LOC as of September 30, 2014 or December 31, 2013. We also guarantee an interest rate swap related to the lease of the manufacturing facility in Eschenbach, Germany. The swap agreement is between the Company and a third party bank. We guarantee any liability related to the swap agreement in case of default by the lessor through the term of the swap until expiration in July 2016, or if we exercised the option to buyout the lease at June 30, 2013 as specified within the lease agreement. We did not exercise our option to buy out the lease at June 30, 2013. The swap is in a liability position with the bank at September 30, 2014, and has a fair value of $0.5 million. We have concluded that the probability of default by the lessor is not probable during the term of the swap, and we chose not to exercise the option to buyout the lease during the leasing period; therefore, the guarantee has no value and no amount has been recorded on our condensed consolidated statements of financial position. Capital Lease During the first quarter of 2011, we recorded a capital lease obligation related to the acquisition of Curamik for its primary manufacturing facility in Eschenbach, Germany. Under the terms of the lease agreement, we had an option to purchase the property in either 2013 or upon the expiration of the lease in 2021 at a price which is the greater of (i) the then-current market value or (ii) the residual book value of the land including the buildings and installations thereon. We chose not to exercise the option to purchase the property that was available to us on June 30, 2013. The total obligation recorded for the lease as of September 30, 2014, is $7.1 million. Depreciation expense related to the capital lease was $0.1 million in each of the three month periods ended September 30, 2014 and 2013, and $0.3 million in each of the nine month periods ending September 30, 2014 and 2013. Accumulated depreciation at September 30, 2014 and December 31, 2013 was $1.5 million and $1.2 million, respectively. These expenses are included as depreciation expense in Cost of Sales on our condensed consolidated statements of income (loss). Interest expense related to the debt recorded on the capital lease is included in interest expense on the condensed consolidated statements of income (loss). See “Interest” section below for further discussion. Interest We incurred interest expense on our outstanding debt of $0.5 million and $1.4 million for the three and nine month periods ended September 30, 2014, respectively, and $0.5 million and $1.7 million for the three and nine month periods ended September 30, 2013, respectively. We incurred an unused commitment fee of approximately $0.1 million and $0.3 million in the three and nine month periods ended September 30, 2014, respectively, and $0.1 million and $0.3 million in the three and nine month periods ended September 30, 2013, respectively. In July 2012, we entered into an interest rate swap to hedge the variable interest rate on 65% of the term loan debt, then outstanding, effective July 2013. At September 30, 2014, our outstanding debt balance comprised of a term loan of $65.0 million. At September 30, 2014, the rate charged on this debt is the 1 month LIBOR at 0.1875% plus a spread of 2.00%. We also incurred interest expense on the capital lease of $0.1 million and $0.4 million in the three and nine month periods ended September 30, 2014, respectively, and of $0.1 million and $0.4 million in each of the three and nine month periods ended September 30, 2013, respectively. Restriction on Payment of Dividends Pursuant to the Amended Credit Agreement, as amended, we cannot make a cash dividend payment if a default or event of default has occurred and is continuing or shall result from the cash dividend payment.

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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 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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