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 March 31, 2013 and December 31, 2012. These are summarized in the following table:


Indebtedness	March 31, 2013						December 31, 2012
$000’s	Long- term		Short- term		Total		Long- term		Short- term		Total
Term Loan	$	39,700	$	10,000	$	49,700	$	36,000	$	10,000	$	46,000
Notes payable on product acquisitions and asset purchase		178		70		248		196		6,247		6,443

Total Indebtedness	$	39,878	$	10,070	$	49,948	$	36,196	$	16,247	$	52,443

At March 31. 2013, the Company had in place one interest rate swap contract with a notional amount of $42,375 that is accounted for under FASB ASC 815 as a cash flow hedge. The effective portion of the gains or losses on the interest rate swap are 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. Amounts in other comprehensive income expected to be reclassified to earnings in the coming 12 months are $(649). Amounts recorded in earnings for hedge ineffectiveness for the period ending March 2013 were immaterial.

The following tables illustrate the impact of derivatives on the Company’s income statement for the quarter ended March 31, 2013.

The Effect of Derivative Instruments on the Statement of Financial Performance

For the Period Ended March 31


Derivatives in ASC 815 Cash Flow Hedging Relationships	Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)						Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)		Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)				Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)		Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion)
	2013			2012					2013		2012				2013		2012
Interest rate contracts	$	(7	)	$	(163	)		Interest Expense	$	185	$	185		Interest Expense	$	—	$	(1	)

Total	$	(7	)	$	(163	)			$	185	$	185			$	—	$	(1	)


Derivatives Not Designated as Hedging Instruments under ASC 815	Location of Gain or (Loss) Recognized in Income on Derivative	Amount of Gain or (Loss) Recognized in Income on Derivative
		2013		2012
Foreign Exchange contracts	Other income/(expense)	$	—	$	120

Total		$	—	$	120

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 March 31, 2013 the Company met all covenants in that credit facility.

At March 31, 2013, 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.