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Long-Term Debt and Short-Term Debt

9 Months Ended

Sep. 30, 2011

Long-Term Debt and Short-Term Debt [Abstract]

Long-Term Debt and Short-Term Debt

Note 9. Long-Term Debt and Short-Term Debt

Long-term debt and short-term debt at September 30, 2011 and December 31, 2010 consisted of the following:


		September 30, 2011				December 31, 2010
Borrowings under our $100,000 revolving credit facility bearing interest at a floating rate equal to LIBOR (0.26% at September 30, 2011) plus an applicable margin of 3.00%, expiring December 21, 2014.		$	73,229			$	50,500

Borrowings under our $40,000 aggregate principal amount of senior notes bearing interest at a fixed rate of 6.70% maturing on April 26, 2014. Annual principal payments of $5,714 began on April 26, 2008 and extend through the date of maturity.			17,143				22,857


Total debt			90,372				73,357

Less current maturities of long-term debt			9,243				5,714


Long-term debt, excluding current maturities of long-term debt		$	81,129			$	67,643

On September 30, 2011, NN amended its $100 million revolving credit agreement agented by KeyBank and its long-term loan agreement with Prudential Capital in order to adjust the fixed charge coverage ratio covenant to better correlate current and expected levels of capital spending and other fixed charges with earnings before taxes, interest and depreciation (EBITDA). The fixed charge coverage ratio was reduced from not less than 1.10 to 1.00 and not less than 1.25 to 1.00 (for quarters ending after September 30, 2011) to not less than 1.00 to 1.00 as of the last day of any fiscal quarter for the quarters ending September 30, 2011 through September 30, 2012. The amendments also provide that the company will assure that the total outstanding under the revolving credit agreement shall be at least $10 million less than the total committed amount of $100 million during the period commencing September 30, 2011 and ending on September 30, 2012.

On December 21, 2010, we entered into an amended and restated revolving credit facility expiring December 21, 2014 with Key Bank as administrative agent with an initial size of $75 million. The amended agreement was entered into to adjust our financial and non-financial covenants to more normalized measures and to provide greater ability to fund our capital investment plans. The interest rate was amended to LIBOR plus a margin of 1.5% to 3.5% (depending on the level of the ratio of debt to EBITDA) from LIBOR plus a margin of 4.75%. The facility may be expanded upon our request with approval of the lenders by up to $60 million, under the same terms and conditions. On March 9, 2011, we exercised an option to increase the size of the facility from $75 million to $100 million to allow additional flexibility and to fund potential growth projects.

The loan agreement contains customary restrictions on, among other things, additional indebtedness, liens on our assets, sales or transfers of assets, investments, restricted payments (including payment of dividends and stock repurchases), issuance of equity securities, and merger, acquisition and other fundamental changes in our business including a “material adverse change” clause, which if triggered would accelerate the maturity of the debt. The facility has a $10 million swing line feature to meet short term cash flow needs. Any borrowings under this swing line are considered short term. Costs associated with entering into the revolving credit facility were capitalized and will be amortized into interest expense over the life of the facility. As of September 30, 2011, $1,877 of net capitalized loan origination costs related to the revolving credit facility were recorded on the balance sheet within other non-current assets.

On December 21, 2010, our senior note agreement with Prudential Capital was also amended. The amended agreement was entered into to adjust our financial and non-financial covenants to more normalized measures and to provide greater ability to fund our capital investment plans. There were no changes to the terms or availability of credit but the interest rate was reduced from 8.50% to 6.70%. The agreement contains customary restrictions on, among other things, additional indebtedness, liens on our assets, sales or transfers of assets, investments, restricted payments (including payment of dividends and stock repurchases), issuance of equity securities, and mergers, acquisitions and other fundamental changes in our business including a “material adverse change” clause, which if triggered would accelerate the maturity of the debt. Interest is paid semi-annually and the note matures on April 26, 2014. Annual principal payments of approximately $5,714 began on April 26, 2008 and extend through the date of maturity. We incurred costs as a result of issuing these notes which have been recorded on the balance sheet within other non-current assets and are being amortized over the term of the notes. The unamortized balance at September 30, 2011 was $311.

The specific covenants to which we are subject and the actual results achieved for the nine month period ended September 30, 2011 are stated below.


Financial Covenants		Required Covenant Level		Actual Level Achieved
Interest coverage ratio		Not to be less than 3.00 to 1.00 as of the last day of any fiscal quarter		5.80 to 1.00
Fixed charge coverage		Not to be less 1.00 to 1.00 as of the last day of any fiscal quarter		1.21 to 1.00
Leverage ratio		Not to exceed 2.75 to 1.00 for the most recently completed four fiscal quarters		2.00 to 1.00
Capital expenditures		Not to exceed 150% of Consolidated Depreciation charges for the immediate previous fiscal year		53%