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Indebtedness
 6 Months Ended
Jun. 30, 2011
Indebtedness  
Indebtedness

7. Substantially all of the Company's assets are pledged as collateral with its banks.

The Company has various different loans in place that together constitute the short-term and long-term loan balances shown in the balance sheet at June 30, 2011 and December 31, 2010. These are summarized in the following table:

 

Indebtedness

    June 30, 2011      December 31, 2010  

$000's

    Long-term      Short-term      Total      Long-term      Short-term      Total  

Term loan

    $ 50,000       $ 8,000       $ 58,000       $ 32,000       $ 8,000       $ 40,000   

Real estate

      —           —           —           1,937         4         1,941   

Working capital revolver

      —           —           —           7,300         —           7,300   

Notes payable on product acquisitions and asset purchase

      6,213         6,827         13,040         12,473         425         12,898   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total indebtedness

    $ 56,213       $ 14,827       $ 71,040       $ 53,710       $ 8,429       $ 62,139   
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

On January 10, 2011, the Company entered into a new $137,000 senior secured credit facility with a syndicate of banks led by Bank of the West. The facility consists of a revolving commitment of $75,000, and an initial term commitment of $62,000. Both the revolving line of credit and the term loan mature on January 10, 2016. The facility replaces the Company's previous $135,000 facility, which the Company has retired through borrowing from the new facility. As part of concluding this new credit agreement, the real estate loan was repaid in full. Finally, the Company took a one-time non-cash charge in the amount of $546 related to extinguishment of the term loan.

 

On March 31, 2011, as required under the terms of the amended and restated credit agreement, the Company entered into a fixed interest rate swap covering 75% or $45,000 of term loan debt. The termination date for the interest rate swap is December 14, 2014. The interest rate swap has been designated and qualifies as a cash flow hedge. The effective portion of the gains or losses on the interest rate swap will be reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings.

As of December 31, 2010, the Company had one perfectly effective interest rate swap contract outstanding that was settled in 2011. As noted above, at June 30, 2011, the Company has in place one perfectly effective interest rate swap contract. The fair value of the swap outstanding at June 30, 2011 was a loss of $963. At December 31, 2010, the fair value was a loss $17. These amounts were recorded in accrued expenses and other liabilities.

The Company has four key covenants to its senior, secured credit facility with its banking syndicate. The covenants are as follows: (1) the Company must maintain its borrowings below a certain consolidated funded debt ratio, (2) the Company has a limitation on its annual spending on the acquisition of fixed asset capital additions, (3) the Company must maintain a certain consolidated fixed charge coverage ratio, and (4) the Company must maintain a certain modified current ratio which compares the on hand value of receivables plus inventory with the level of its working capital revolver debt. As of June 30, 2011 the Company met all covenants in that credit facility.

At June 30, 2011, based on its performance against the most restrictive covenants listed above, the Company had the capacity to increase its borrowings by up to $75,000 under the credit facility agreement.