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Short-Term and Long-Term Debt, Including Finance Leases | 12 Months Ended
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Dec. 31, 2020
Debt Disclosure [Abstract] |
Short-Term and Long-Term Debt, Including Finance Leases |
5. | Short-Term and Long-Term Debt, Including Finance Leases
Long-term debt consisted of the following at December 31, 2020 and 2019:
December 31, |  | 2020 |  |  | 2019 |
|  | (In thousands) |
Credit Facility |  | $ | 112,855 |  |  | $ | 176,877 |
Finance lease and other obligations |  |  | 740 |  |  |  | 77 |
Total long-term debt and finance leases |  |  | 113,595 |  |  |  | 176,954 |
Less: portion of Credit Facility classified as short-term |  |  | (1,570 | ) |  |  | (28,531 | )
Less: current installments of finance leases and other obligations |  |  | (267 | ) |  |  | (15 | )
Total long-term debt and finance leases, less current installments |  | $ | 111,758 |  |  | $ | 148,408 |
On October 11, 2017, the Company, its subsidiaries Crawford & Company Risk Services Investments Limited (the "UK Borrower"), Crawford & Company (Canada) Inc. (the "Canadian Borrower") and Crawford & Company (Australia) Pty. Ltd. (the "Australian Borrower") (the Company, together with such subsidiaries, as borrowers (the "Borrowers")), Wells Fargo Bank, National Association, as administrative agent and a lender ("Wells Fargo"), Bank of America, N.A., as syndication agent and a lender, Citizens Bank, N.A., as documentation agent and a lender, and the other lenders party thereto, entered into an Amended and Restated Credit Agreement (the "Amended and Restated Credit Agreement"), which amended and restated that certain Credit Agreement, dated as of December 8, 2011, by and among, inter alia, the Borrowers, Wells Fargo and the other lenders from time to time party thereto (as previously amended, the "Original Credit Agreement"). In connection with the Amended and Restated Credit Agreement, the Company, the Company’s guarantor subsidiaries party thereto and Wells Fargo entered into an Amended and Restated Pledge and Security Agreement (the "Amended and Restated Pledge and Security Agreement") and an Amended and Restated Guaranty Agreement (the "Amended and Restated Guaranty Agreement"), each dated as of the date of the Amended and Restated Credit Agreement. On September 18, 2020, the Company amended the Credit Facility. Pursuant to this amendment, (a) the Company is permitted to make, in addition to the other investments permitted under the Credit Facility prior to the amendment, investments of an unrestricted nature up to the aggregate outstanding amount not to exceed $5,000,000 at any time and (b) the terms of LIBOR replacement when that benchmark is no longer available have been modified. The Credit Facility under the Amended and Restated Credit Agreement consists of a $450,000,000 revolving credit facility, with a letter of credit subcommitment of $100,000,000. The Credit Facility contains sublimits of $185,000,000 for borrowings by the UK Borrower, $75,000,000 for borrowings by the Canadian Borrower, and $32,500,000 for borrowings by the Australian Borrower. The Credit Facility matures, and all amounts outstanding thereunder, will be due and payable on November 23, 2022. Borrowings under the Credit Facility may be made in U.S. dollars, Euros, the currencies of Canada, Japan, Australia or the United Kingdom and, subject to the terms of the Credit Facility, other currencies. Borrowings under the Credit Facility bear interest, at the option of the applicable Borrower, based on the Base Rate (as defined below) or the London Interbank Offered Rate ("LIBOR"), in each case plus an applicable interest margin based on the Company's leverage ratio (as defined below), provided that borrowings in foreign currencies may bear interest based on LIBOR only. The Credit Facility defines LIBOR to encompass accepted alternative reference rates for certain currencies where a LIBOR rate is no longer quoted. The interest margin for LIBOR loans ranges from 1.30% to 2.10% and for Base Rate loans ranges from 0.30% to 1.10%. Base Rate is defined as the highest of (i) the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 1/2 of 1%, (ii) the prime commercial lending rate of Wells Fargo and (iii) LIBOR for a one month interest period plus 1.0%. At December 31, 2020, a total of $112,855,000 was outstanding and there was an undrawn amount of $11,512,000 under the letters of credit subcommitment of the Credit Facility. These letter of credit commitments were for the Company's own obligations. Including the amounts committed under the letters of credit subcommitment, the available borrowing capacity under the Credit Facility totaled $325,653,000 at December 31, 2020. The obligations of the Borrowers under the Amended and Restated Credit Agreement are guaranteed by each existing material domestic subsidiary of the Company, certain other domestic subsidiaries of the Company and certain existing material foreign subsidiaries of the Company that are disregarded entities for U.S. income tax purposes (each such foreign subsidiary, a "Disregarded Foreign Subsidiary"), and such obligations are required to be guaranteed by each subsequently acquired or formed material domestic subsidiary and Disregarded Foreign Subsidiary (each, a "Guarantor"), and the obligations of the Borrowers other than the Company ("Foreign Borrowers") for which the Company is not the primary obligor are also guaranteed by the Company. In addition, (i) the Borrowers’ obligations under the Amended and Restated Credit Agreement are secured by a first priority lien (subject to liens permitted by the Amended and Restated Credit Agreement) on substantially all of the personal property of the Company and the Guarantors as set forth in the Amended and Restated Pledge and Security Agreement and (ii) the obligations of the Foreign Borrowers are secured by a first priority lien on 100% of the capital stock of the Foreign Borrowers. The representations, covenants and events of default in the Credit Facility are customary for financing transactions of this nature, including required compliance with a minimum fixed charge coverage ratio and a maximum leverage ratio (each as defined below). Under the Credit Facility as amended, the senior secured leverage ratio, defined as the ratio of (i) consolidated total funded debt (excluding unsecured or subordinated debt) minus unrestricted cash to (ii) consolidated EBITDA, must not be greater than 3.25 to 1.00 at the end of each fiscal quarter. In addition, the maximum permitted total leverage ratio allowable at the end of each quarter, which includes any unsecured or subordinated debt, must not be greater than 4.25 to 1.00. Also under the Credit Facility as amended, the fixed charge coverage ratio, defined as the ratio of (i)(A) consolidated earnings before interest expense, income taxes, depreciation, amortization, stock-based compensation expense, and certain other charges and expenses ("EBITDA") minus (B) aggregate income taxes to the extent paid in cash minus (C) unfinanced capital expenditures to (ii) the sum of: (A) consolidated interest expense to the extent paid (or required to be paid) in cash, plus (B) the aggregate of all scheduled payments of principal on funded debt (including the principal component of payments made in respect of finance lease obligations) required to have been made (whether or not such payments are actually made), plus (C) the aggregate of all restricted payments (as defined) paid, plus (D) the aggregate of all earnouts paid or required to be paid, must not be less than 1.10 to 1.00 for the four-quarter period ending at the end of each fiscal quarter. At December 31, 2020, the Company was in compliance with the financial covenants under the Credit Facility. If the Company does not meet the covenant requirements in the future, it would be in default under the Credit Facility. Upon the occurrence of an event of default, the lenders may terminate the loan commitments, accelerate all loans and exercise any of their rights under the Credit Facility and ancillary loan documents. Short-term borrowings under the Credit Facility totaled $1,570,000 and $28,531,000 at December 31, 2020 and 2019, respectively. The Company expects, but is not required, to repay all of such short-term borrowings at December 31, 2020 in 2021. The Company's finance leases are primarily comprised of equipment leases with terms ranging from 24 to 60 months. Interest expense, including amortization of capitalized loan costs, on the Company's short-term and long-term borrowings was $8,187,000, $11,519,000, and $11,399,000 for the years ended December 31, 2020, 2019, and 2018, respectively. Interest paid on the Company's short-term and long-term borrowings was $7,152,000, $10,470,000, and $10,381,000 for the years ended December 31, 2020, 2019, and 2018, respectively. Principal repayments of long-term debt, including current portions, finance leases and other obligations, as of December 31, 2020 are expected to be as follows, assuming no prepayments or extensions beyond the stated maturity:
|  | Long-term Debt |  |  | Finance Lease and Other Obligations |  |  | Total |
Year Ending December 31, |  | (In thousands) |
2021 |  | $ | 1,570 |  |  | $ | 267 |  |  | $ | 1,837 |
2022 |  |  | 111,285 |  |  |  | 239 |  |  |  | 111,524 |
2023 |  |  | — |  |  |  | 164 |  |  |  | 164 |
2024 |  |  | — |  |  |  | 47 |  |  |  | 47 |
2025 |  |  | — |  |  |  | 23 |  |  |  | 23 |
Total |  | $ | 112,855 |  |  | $ | 740 |  |  | $ | 113,595 |

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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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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