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DEBT | 12 Months Ended
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Dec. 31, 2018
Debt Disclosure [Abstract] |
DEBT | DEBT Senior Notes—As of December 31, 2018, we had outstanding $50 million of senior notes (the "Notes") consisting of the following series:
• | $20 million of Senior Notes, Series A, due April 16, 2020
• | $15 million of Senior Notes, Series B, due April 14, 2023
• | $15 million of Senior Notes, Series C, due April 16, 2025
The agreement governing the Notes contains certain financial covenants, including those discussed below:
• | We are required to maintain a minimum fixed charge coverage ratio of 0.25 to 1.0 for the quarter ending December 31, 2018. Our fixed charge coverage ratio as of December 31, 2018, was 12.0 to 1.0, therefore we were in compliance with this covenant. Going forward we are required to maintain a minimum fixed charge coverage ratio of 0.75 to 1.0 for the quarter ending March 31, 2019, 1.0 to 1.0 for the quarter ending June 30, 2019, and 1.3 to 1.0 for each quarter ending on or after September 30, 2019.
• | For the quarter ended December 31, 2018, we were allowed a maximum leverage ratio of 7.0 to 1.0. Our leverage ratio was 0.9 to 1.0 as of December 31, 2018, therefore we were in compliance with this covenant. Going forward, we are allowed a maximum leverage ratio of 5.5 to 1.0 for the quarter ending March 31, 2019, 4.5 to 1.0 for the quarter ending June 30, 2019, and 3.5 to 1.0 for each quarter ending on or after September 30, 2019.
Fixed charge coverage ratio and leverage ratio are calculated in accordance with the agreement governing the Notes. For the year ended December 31, 2018, the interest rates on the Notes were 3.73% for the Series A Notes, 4.63% for the Series B Notes and 4.78% for the Series C Notes. These rates represent the lowest interest rates available under the Notes. The interest rates may adjust upward if we do not continue to meet certain financial covenants. For the ten months ended October 31, 2017, the interest rates on the Notes were 7.73% for the Series A Notes, 8.63% for the Series B Notes and 8.78% for the Series C Notes. Beginning November 1, 2017, the interest rates on the Notes were reduced to 3.73% for the Series A Notes, 4.63% for the Series B Notes and 4.78% for the Series C Notes. We have granted to the collateral agent for the noteholders a first lien on substantially all of our non-current assets and a second lien on substantially all of our current assets. We are required to offer to prepay the Notes with proceeds of dispositions of certain specified property and with the proceeds of certain equity issuances, as set forth in the agreement. The obligations under the Notes are unconditionally guaranteed by several of our subsidiaries. We were in compliance with the applicable covenants under the agreement governing the Notes as of December 31, 2018. Our outstanding long-term debt, net, was as follows (in thousands):
| December 31, 2018 |  | December 31, 2017
Notes, at carrying value | $ | 50,000 |  |  | $ | 60,000 |
Less current portion of Notes | — |  |  | (10,000 | )
Less deferred financing costs | (358 | ) |  | (563 | )
Long-term portion of Notes, net | $ | 49,642 |  |  | $ | 49,437 |
Credit Facility—We maintain an asset-based revolving credit facility with Bank of Montreal. In October 2018, we amended the credit facility to extend its maturity date from October 2019, to October 2023, to increase the amount available to be borrowed from $35 million to $50 million, and to make certain other changes. The credit facility now allows us to borrow up to $50 million subject to monthly limits based on our inventory and receivables. Borrowings under the credit facility bear interest at LIBOR (London Interbank Offered Rate) plus an applicable margin of 1.50% to 2.00% per annum, based on average availability under the credit facility. We have granted to Bank of Montreal a first lien on substantially all of our current assets and a second lien on substantially all of our non-current assets. The obligations under the credit facility are unconditionally guaranteed by several of our subsidiaries. We occasionally borrow and repay amounts under the facility for near-term working capital needs or other purposes and may do so in the future. For the years ended December 31, 2018, and 2017, we borrowed $13.5 million and $22.0 million, respectively, and repaid $17.4 million and $18.1 million, respectively, under the facility. As of December 31, 2018, we had no borrowings outstanding and $1.0 million in an outstanding letter of credit under the facility. As of December 31, 2017, we had $3.9 million of borrowings outstanding and $3.1 million in outstanding letters of credit under the facility. We have $49.0 million available under the facility as of December 31, 2018. We were in compliance with the applicable covenants under the facility as of December 31, 2018. Interest Expense—Interest expense is recorded net of any capitalized interest associated with investments in capital projects. We incurred gross interest expense of $4.0 million, $11.8 million, and $12.1 million for the years ended December 31, 2018, 2017, and 2016, respectively. Amounts included in interest expense for the years ended December 31, 2018, 2017, and 2016 (in thousands) are as follows:
|  | Year ended December 31,
|  | 2018 |  | 2017 | 2016 |
Interest on notes and credit facility |  | $ | 2,849 |  |  | $ | 7,043 |  | $ | 9,152 |  |
Make-whole payments |  | 402 |  |  | 3,001 |  | 806 |  |
Amortization of deferred financing costs |  | 732 |  |  | 1,778 |  | 2,113 |  |
Gross interest expense |  | 3,983 |  |  | 11,822 |  | 12,071 |  |
Less capitalized interest |  | 128 |  |  | 130 |  | 449 |  |
Interest expense, net |  | $ | 3,855 |  |  | $ | 11,692 |  | $ | 11,622 |  |

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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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