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Leases

12 Months Ended

Dec. 31, 2012

7.	LEASES:

Capital Leases

The Company leases certain equipment used in the manufacturing process. The future minimum payments under the Company’s capital leases are as follows (in thousands):


2013	$	4,129
2014		4,052
2015		2,697
2016		2,145
2017		1,315
Thereafter		—

Total minimum lease payments		14,338
Amount representing interest		(1,864	)

Present value of minimum lease payments with average interest rates of 7.68%		12,474
Current portion of capital lease obligation		3,295

Capital lease obligation, less current portion	$	9,179

We had a total of $12.5 million in capital lease obligations outstanding at December 31, 2012. The weighted average interest rate on all of the Company’s capital leases is 7.68%. The Company’s capital leases are for certain equipment used in the manufacturing process. Of the total capital lease balance, $6.6 million of the Company’s capital leases outstanding as of December 31, 2012 consists of a Financing Arrangement entered into as of September 2009 to finance the Company’s Bossier City, Louisiana facility under which certain equipment used in the manufacturing process at the facility is leased. As part of the Financing Arrangement, a $10 million escrow account was provided for the Company by a local government entity through a financial institution and funds are released upon qualifying purchase requisitions. As we purchase equipment for the facility, we enter into a sale-leaseback transaction with the governmental entity as part of the Financing Arrangement. As of December 31, 2012, $0.9 million was held in the escrow account, which is included in Other Assets, as a result of proceeds from the Financing Arrangement. The Financing Arrangement requires the Company to meet certain loan covenants, measured at the end of each fiscal quarter. These loan covenants follow the covenants required by the Company’s Amended Credit Agreement.

Operating Leases

The Company has entered into various equipment and property leases with terms of ten years or less. Total rental expense for 2012, 2011, and 2010 was $3.2 million, $3.3 million, and $3.2 million, respectively. Certain of the Company’s operating lease agreements include renewals and/or purchase options set to expire at various dates. Future minimum payments as of December 31, 2012 for operating leases with initial or remaining terms in excess of one year are (in thousands):


2013	$	2,421
2014		2,021
2015		1,751
2016		1,465
2017		1,077
Thereafter		699

	$	9,434

- Definition

The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing.

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