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Revolving Line of Credit
 12 Months Ended
Dec. 31, 2011
Revolving Line of Credit [Abstract]  
Revolving Line of Credit

Note 9 — Revolving Line of Credit

The Company has a credit agreement as amended (“Credit Agreement”) with The PrivateBank and Trust Company as agent and lender. The Credit Agreement provides for a total borrowing capacity of $55.0 million in the form of a revolving line of credit and letters of credit and expires on October 1, 2016. Additionally, the Company has a one-time option, subject to the agent’s consent, to increase the maximum borrowing capacity by an additional $20.0 million, thus increasing the maximum borrowing capacity to $75.0 million.

The applicable interest rate margins for borrowings are based on the Company’s debt to EBITDA ratio and range from Libor plus 1.25 to 1.85 or Prime minus 1.00 to 0.40 percent. The Credit Agreement is secured by cash, accounts receivable and inventory.

The Credit Agreement limits the annual dividend distribution to $10.0 million and, in addition to other customary representations, warranties and covenants, it requires the Company to comply with certain financial covenants. During 2011 the Credit Agreement was amended so that the previous Debt Service Coverage Ratio was replaced with a requirement to meet minimum Consolidated EBITDA levels (as defined) on a quarterly basis through the third quarter ended September 30, 2012. The Debt Service Coverage Ratio will be reinstituted for the trailing four quarters ended December 31, 2012 at a minimum of 1.10 to 1.00 and increases to 1.20 to 1.00 for the trailing four quarters ended March 31, 2013 and each quarter thereafter. Additionally, the Company must comply with a minimum cash plus accounts receivable and inventory to debt ratio and maintain a minimum tangible net worth. On December 31, 2011, the Company was in compliance with of all of the financial covenant levels as detailed below:

 

 

         

Covenant

  

Requirement

  

Actual

Minimum EBITDA (loss), as defined in the amended Credit Agreement

   $ (5.0) million   $ (3.7) million

Minimum cash plus accounts receivable and inventory to debt ratio

   1.75:1.00   55.35:1.00

Minimum tangible net worth

   $ 55.0 million   $ 80.9 million

At December 31, 2011, the Company had no outstanding balance under the revolving line and $1.8 million of outstanding letters of credit, leaving borrowing availability of $53.2 million. The Company paid interest of $0.1 million, $0.2 million and $0.3 million in 2011, 2010 and 2009, respectively. The weighted average interest rate charged on outstanding loans was 1.52% for the year ended December 31, 2011.