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Debt and Leases | 12 Months Ended
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Dec. 31, 2015
Debt Disclosure [Abstract] |
Debt and Leases | Debt and Leases Long-term debt consists of the following at:
| December 31, 2015 |  | December 31, 2014
Capex loan payable to a bank, interest at a variable rate (2.04% and 1.76% at December 31, 2015 and 2014, respectively) with monthly payments of interest and principal over a seven-year period through May 2016. | $ | 714,000 |  |  | $ | 2,428,000 |
Term loan payable to a bank, interest at a variable rate (2.24% at December 31, 2015) with monthly payments of interest and principal through March 2020. | 12,750,000 |  |  | — |
Revolving Line of Credit | — |  |  | 2,768,000 |
Total | 13,464,000 |  |  | 5,196,000 |
Less current portion | (3,714,000 | ) |  | (4,482,000 | )
Long-term debt | $ | 9,750,000 |  |  | $ | 714,000 |
Credit Agreement In 2008, the Company and its wholly owned subsidiary, Corecomposites de Mexico, S. de R.L. de C.V., entered into a credit agreement (the “Credit Agreement”) to refinance certain existing debt and borrow funds to finance the construction of the Company’s manufacturing facility in Mexico. Under this Credit Agreement, the Company received certain loans, subject to the terms and conditions stated in the agreement, which included (1) a $12,000,000 Capex loan; (2) an $8,000,000 Mexican loan; (3) an $8,000,000 variable rate revolving line of credit; and (4) a letter of credit in an undrawn face amount of $3,332,493 with respect to the Company’s existing Industrial Development Revenue Bond (“IDRB”) financing. The Credit Agreement is secured by a guarantee of each U.S. subsidiary of the Company, and by a lien on substantially all of the present and future assets of the Company and its U.S. subsidiaries, except that only 65% of the stock issued by Corecomposites de Mexico, S. de C.V. has been pledged. The $8,000,000 Mexican loan was also secured by substantially all of the present and future assets of the Company’s Mexican subsidiary. On March 27, 2013, the Company and its wholly owned subsidiary, Corecomposites de Mexico, S. de R.L. de C.V., entered into an eighth amendment (the "Eighth Amendment") to the Credit Agreement. Pursuant to the terms of the Eighth Amendment, the parties agreed to modify certain terms of the Credit Agreement. These modifications included (1) an increase to the borrowing limit on the revolving line of credit from $8,000,000 to $18,000,000; (2) modification to the fixed charge definition to exclude capital expenditures of up to $18,000,000 associated with the Company's compression molding capacity expansion and any sheet molding compound manufacturing capacity expansion; (3) to extend the commitment period for the revolving line of credit to May 31, 2015; and (4) to cancel, effective immediately, the unused $10,000,000 Mexican Expansion Revolving Loan. On October 31, 2013, the Company and its wholly owned subsidiary, Corecomposites de Mexico, S. de R.L. de C.V., entered into a ninth amendment (the "Ninth Amendment") to the Credit Agreement. Pursuant to the terms of the Ninth Amendment, the parties agreed to decrease the applicable margin for interest rates on Eurodollar Loans and Daily Libor Loans to 160 basis points from 175 basis points. On March 20, 2015, The Company and its wholly owned subsidiary, Corecomposites de Mexico, S. de R.L. de C.V., entered into a tenth amendment (the "Tenth Amendment") to the Credit Agreement that the parties originally entered into on December 9, 2008. Pursuant to the terms of the Tenth Amendment, the parties agreed to modify certain terms of the Credit Agreement. These modifications included (1) an extension of the commitment period for the revolving line of credit to May 31, 2017; (2) an agreement to make a term loan in an original amount of $15,500,000 with the proceeds to be used to finance the acquisition of CPI assets; and (3) modifications to the Credit Agreement's fixed charge definition to exclude (i) certain capital expenditures that are incurred on or before June 30, 2016, up to an aggregate amount not to exceed $4,400,000, and (ii) certain capital expenditures that were incurred on or before June 30, 2015, up to an aggregate amount not to exceed $18,000,000. On March 30, 2015, the Company repaid $500,000 of unused proceeds from the original term loan. Capex Loan The $12,000,000 Capex loan was a construction draw loan that converted to a seven-year term loan with fixed monthly principal payments. Borrowings made pursuant to this loan bear interest, payable monthly at 30 day LIBOR plus 160 basis points. Term Loan The $15,500,000 Term Loan has fixed monthly principal payments payable over a five-year period. Borrowings made pursuant to this loan bear interest, payable monthly at 30 day LIBOR plus 180 basis points. Mexican Loan The $8,000,000 Mexican loan was also a construction draw loan to finance the production facility in Matamoros, Mexico that was converted to a five-year term loan with annual payments commencing January 2010. This commitment bore interest at LIBOR plus 160 basis points and was paid in full in January 2014. Industrial Development Revenue Bond In May 1998, the Company borrowed $7,500,000 through the issuance of an Industrial Development Revenue Bond (“IDRB”). The IDRB bore interest at a weekly adjustable rate and was paid in full in April 2013. As security for the IDRB, the Company obtained a letter of credit from a commercial bank. The letter of credit expired in April 2013 upon final payment of the loan. Revolving Line of Credit At December 31, 2015, the Company had available an $18,000,000 variable rate revolving line of credit scheduled to mature on May 31, 2017. The revolving line of credit bears interest at daily LIBOR plus 160 basis points and is collateralized by all of the present and future assets of the Company and its U.S. subsidiaries (except that only 65% of the stock issued by Corecomposites de Mexico, S. de C.V. has been pledged). Annual maturities of long-term debt are as follows:
2016 | $ | 3,714,000 |
2017 | 3,000,000 |
2018 | 3,000,000 |
2019 | 3,000,000 |
2020 | 750,000 |
Thereafter | — |
Total | $ | 13,464,000 |
Interest Rate Swaps In conjunction with its variable rate IDRB, the Company entered into an interest rate swap agreement through April 2013, which was initially designated as a cash flow hedging instrument. The IDRB interest rate swap expired in April 2013 upon payment in full of the IDRB. Under this agreement, the Company paid a fixed rate of 4.89% to the counterparty and received 76% of the 30-day commercial paper rate (0.10% at December 31, 2012). During 2010, the Company determined this interest rate swap was no longer highly effective. As a result, the Company discontinued the use of hedge accounting effective January 1, 2010 related to this swap, and began recording mark-to-market adjustments within interest expense in the Company’s Consolidated Statements of Income. The pre-tax loss previously recognized in Accumulated Other Comprehensive Income (Loss), totaling $200,000 as of December 31, 2009, was amortized as an increase to interest expense of $5,000 per month, or $3,000 net of tax, over the remaining term of the interest rate swap agreement. The IDRB was paid in full in April 2013. On December 18, 2008, the Company entered into an interest rate swap agreement that became effective May 1, 2009 and continues through May 2016, which was designated as a cash flow hedge of the $12,000,000 Capex loan. Under this agreement, the Company pays a fixed rate of 2.295% to the counterparty and receives 30 day LIBOR (0.44% at December 31, 2015). Effective March 31, 2009, the interest terms in the Company’s Credit Agreement related to the $12,000,000 Capex loan were amended. The Company then determined this interest rate swap was no longer highly effective. As a result, the Company discontinued the use of hedge accounting effective March 31, 2009 related to this swap, and began recording mark-to-market adjustments within interest expense in the Company’s Consolidated Statements of Income. The pre-tax loss previously recognized in Accumulated Other Comprehensive Income (Loss), totaling $146,000 as of March 31, 2009, is being amortized as an increase to interest expense of $2,000 per month, or $1,000 net of tax, over the remaining term of the interest rate swap agreement. The fair value of the swap as of December 31, 2015 and December 31, 2014 was a liability of $2,000 and $37,000, respectively. The Company recorded interest income of $35,000, $66,000 and $102,000 for mark-to-market adjustments of fair value related to this swap for the years ended December 31, 2015, 2014 and 2013, respectively. The notional amount of the swap at December 31, 2015 and December 31, 2014 was $714,000 and $2,428,000, respectively. For the years ended December 31, 2015, 2014 and 2013, interest expense includes expense of $32,000, $70,000 and $110,000, respectively, for settlements related to the Company’s swaps. Bank Covenants The Company is required to meet certain financial covenants included in the Credit Agreement with respect to leverage ratios, fixed charge ratios, and capital expenditures, as well as other customary affirmative and negative covenants. As of December 31, 2015, the Company was in compliance with its financial covenants associated with the loans made under the Credit Agreement as described above. Leases The Company has entered into an operating lease agreement through July 2019 for the manufacturing facility located in Batavia, Ohio. Additionally, the Company leases a warehouse and distribution center in Brownsville, Texas under a 5-year operating lease agreement expiring in October 2017. Total rental expense was $696,000, $767,000 and $800,000 for 2015, 2014 and 2013, respectively. Included in rental expense are both operating lease payments and rental costs related to the use of equipment during the normal course of business under nonbinding terms. Future minimum operating lease payments are as follows:
2016 | $ | 539,000 |
2017 | 486,000 |
2018 | 328,000 |
2019 | 192,000 |
Thereafter | — |
Total minimum lease payments | $ | 1,545,000 |

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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 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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