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Short-term and long-term debt | 12 Months Ended
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Dec. 31, 2014
Debt Disclosure [Abstract] |
Short-term and long-term debt | Note 6 - Short-term and long-term debt Elements of short-term and long-term debt are as follows:
December 31, |  | 2014 |  | 2013 |
(in thousands) |  |  |  |  |  |  |
Short-term & long-term debt |  |  |  |  |  |  |
Short-term debt: |  |  |  |  |  |  |
- Bank credit line |  | $ | 6,056 |  | $ | 15,080 |
- Long-term debt: current |  |  | 264 |  |  | 287 |
Subtotal |  |  | 6,320 |  |  | 15,367 |
Long-term debt: |  |  |  |  |  |  |
- Bank credit line |  |  | 4,000 |  |  | 4,000 |
- Building and land mortgage |  |  | 437 |  |  | 603 |
- Vehicle and equipment loans |  |  | 172 |  |  | 298 |
- Capital lease obligations |  |  | 44 |  |  | 57 |
- Less: current maturities |  |  | (264) |  |  | (287) |
Subtotal |  |  | 4,389 |  |  | 4,671 |
Total short-term & long-term debt |  | $ | 10,709 |  | $ | 20,038 |
Bank Credit Line On June 22, 2012, a subsidiary of Hudson entered into a Revolving Credit, Term Loan and Security Agreement (the “PNC Facility”) with PNC Bank, National Association, as agent (“Agent” or “PNC”), and such other lenders as may thereafter become a party to the PNC Facility. Under the terms of the PNC Facility, as amended by the First Amendment to the PNC Facility, dated February 15, 2013, Hudson may borrow up to a maximum of $40,000,000 consisting of a term loan in the principal amount of $4,000,000 and revolving loans in a maximum amount up to $36,000,000. Amounts borrowed under the PNC Facility may be used by Hudson for working capital needs and to reimburse drawings under letters of credit. Fees and expenses relating to the creation of the PNC Facility of approximately $112,000 are being amortized over the life of the loan. At December 31, 2014, total borrowings under the PNC Facility were $10,056,000, and there was $15,000,000 available to borrow under the revolving line of credit. The effective interest rate under the PNC Facility was 4.25% at December 31, 2014. Interest on loans under the PNC Facility is payable in arrears on the first day of each month with respect to loans bearing interest at the domestic rate (as set forth in the PNC Facility) and at the end of each interest period with respect to loans bearing interest at the Eurodollar Rate (as defined in the PNC Facility) or, for Eurodollar Rate Loans (as defined in the PNC Facility) with an interest period in excess of three months, at the earlier of (a) each three months from the commencement of such Eurodollar Rate Loan or (b) the end of the interest period. Interest charges with respect to loans are computed on the actual principal amount of loans outstanding during the month at a rate per annum equal to (A) with respect to Domestic Rate Loans (as defined in the PNC Facility), the sum of (i) a rate per annum equal to the higher of (1) the base commercial lending rate of PNC, (2) the federal funds open rate plus .5% and (3) the daily LIBOR plus 1%, plus (ii) .5% and (B) with respect to Eurodollar Rate Loans, the sum of the Eurodollar Rate plus 2.75%. Hudson granted to PNC, for itself, and as agent for such other lenders as may thereafter become a lender under the PNC Facility, a security interest in Hudson’s receivables, intellectual property, general intangibles, inventory and certain other assets. The PNC Facility contains certain financial and non-financial covenants relating to Hudson, including limitations on Hudson’s ability to pay dividends on common stock or preferred stock, and also includes certain events of default, including payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to other obligations, events of bankruptcy and insolvency, certain ERISA events, judgments in excess of specified amounts, impairments to guarantees and a change of control. The PNC Facility contains a financial covenant to maintain at all times a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00, tested quarterly on a rolling twelve month basis. Fixed Charge Coverage Ratio is defined in the PNC Facility, with respect to any fiscal period, as the ratio of (a) EBITDA of Hudson for such period, minus unfinanced capital expenditures (as defined in the PNC Facility) made by Hudson during such period, minus the aggregate amount of cash taxes paid by Hudson during such period, minus the aggregate amount of dividends and distributions made by Hudson during such period, minus the aggregate amount of payments made with cash by Hudson to satisfy soil sampling and reclamation related to environmental cleanup at the Company’s former Hillburn, NY facility during such period (to the extent not already included in the calculation of EBITDA as determined by the Agent) to (b) the aggregate amount of all principal payments due and/or made, except principal payments related to outstanding revolving advances with regard to all funded debt (as defined in the PNC Facility) of Hudson during such period, plus the aggregate interest expense of Hudson during such period. EBITDA as defined in the PNC Facility shall mean for any period the sum of (i) earnings before interest and taxes for such period plus (ii) depreciation expenses for such period, plus (iii) amortization expenses for such period, plus (iv) non-cash charges. On October 25, 2013, we entered into the Second Amendment to the PNC Facility (the “Second PNC Amendment”) which, among other things, waived our requirement to comply with the minimum fixed charge coverage ratio covenant of 1.10 to 1.00 for the fiscal quarter ended September 30, 2013 under the PNC Facility and suspended the minimum fixed charge ratio covenant until the quarterly period ending March 31, 2015. The Second PNC Amendment also redefined the “Revolving Interest Rate” as well as the “Term Loan Rate” (as defined in the PNC Facility) as follows: “Revolving Interest Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate (as defined in the PNC Facility) plus one percent (1.00%) with respect to Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and three quarters of one percent (2.75%) with respect to the Eurodollar Rate Loans. “Term Loan Rate” shall mean an interest rate per annum equal to (a) the sum of the Alternate Base Rate plus one percent (1.00%) with respect to the Domestic Rate Loans and (b) the sum of the Eurodollar Rate plus two and three quarters of one percent (2.75%) with respect to Eurodollar Rate Loans. On July 2, 2014, we entered into the Third Amendment to the PNC Facility (the “Third PNC Amendment”) which, among other things, extended the term of PNC Facility. Pursuant to the Third PNC Amendment, which was effective June 30, 2014, the Termination Date of the PNC Facility (as defined in the PNC Facility) has been extended to June 30, 2018. The Third PNC Amendment also amended the Minimum EBITDA covenant in the PNC Facility to require that the Company maintain, on a trailing 12 month basis, tested quarterly, minimum EBITDA for the quarters ending June 30, 2014 through December 31, 2014, as follows:
Period |  | Amount |
Six month period ending June 30, 2014 |  | $ | 1,123,000 |
Nine month period ending September 30, 2014 |  | $ | 1,330,000 |
Twelve month period ending December 31, 2014 |  | $ | 802,000 |
EBITDA, as defined by the PNC agreement, for the year ended December 31, 2014 was $1,116,000, which was in compliance with the EBITDA covenant, as amended by the Third PNC Amendment, for the period. The EBITDA was calculated as follows:
|  | For the year ended December 31, 2014 |
Net (loss) |  | $ | (720,000) |
less: income tax benefit |  |  | (906,000) |
Loss before income taxes |  |  | (1,626,000) |
add: interest expense |  |  | 641,000 |
add: depreciation and amortization |  |  | 979,000 |
add: value of share-based payment arrangements |  |  | 708,000 |
Add: other non-cash expense |  |  | 414,000 |
Earnings before interest, taxes, depreciation, and amortization |  | $ | 1,116,000 |
EBITDA, as defined by the PNC agreement, which represents a non-GAAP measurement of certain financial results, does not represent and should not be considered as an alternative to net income or cash provided by operating activities as determined by GAAP. We make no representation or assertion that EBITDA is indicative of our cash provided by operating activities or results of operations. We have provided a reconciliation of the net loss to EBITDA solely for the purpose of complying with SEC disclosure requirements and not as an indication that EBITDA is a substitute measure for income from operations. The Company was in compliance with all covenants, as amended, under the PNC Facility as of December 31, 2014. The Company’s ability to comply with these covenants in future quarters may be affected by events beyond the Company’s control, including general economic conditions, weather conditions, regulations and refrigerant pricing. Although we expect to remain in compliance with all covenants in the PNC Facility, as amended, depending on our future operating performance and general economic conditions, we cannot make any assurance that we will continue to be in compliance. The commitments under the PNC Facility will expire and the full outstanding principal amount of the loans, together with accrued and unpaid interest, are due and payable in full on June 30, 2018, unless the commitments are terminated for any reason or the outstanding principal amount of the loans are accelerated sooner following an event of default. Building and Land Mortgage On June 1, 2012, the Company entered into a mortgage note with Busey Bank for $855,000. The note bears interest at the fixed rate of 4% per annum, amortizing over 60 months and maturing on June 1, 2017. The mortgage note is secured by the Company’s land and building located in Champaign, Illinois. At December 31, 2014 the principal balance of this mortgage note was $437,000. Vehicle and Equipment Loans The Company had entered into various vehicle and equipment loans. These loans are payable in 60 monthly payments through March 2017 and bear interest ranging from 2.9% to 8.9%. Scheduled maturities of the Company's long-term debt and capital lease obligations are as follows:
Years ended December 31, |  | Amount |
(in thousands) |  |  |  |
-2016 |  |  | 277 |
-2017 |  |  | 112 |
-2018 |  |  | 4,000 |
Total |  | $ | 4,389 |
Capital Lease Obligations The Company rents certain equipment with a net book value of approximately $57,000 at December 31, 2014 under leases which have been classified as capital leases. Scheduled future minimum lease payments under capital leases net of interest are as follows:
Years ended December 31, |  | Amount |
(in thousands) |  |  |  |
-2015 |  | $ | 31 |
-2016 |  |  | 15 |
-2017 |  |  | 2 |
Subtotal |  |  | 48 |
Less interest expense |  |  | (4) |
Total |  | $ | 44 |

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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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