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Long-Term Debt

12 Months Ended

Dec. 31, 2012

(16)

Long-Term Debt

On May 12, 2011, the Company entered into its new Credit Facility providing total availability up to $50,000,000 that supports short-term funding needs and letters of credit, which replaced the Company’s Revolving Credit Agreement and Senior Notes, which were scheduled to mature in January 2012. Loans made under the Credit Facility will mature and the commitments thereunder will terminate in May 2016. The Credit Facility provides for an option, subject to certain conditions, to increase total availability to $60,000,000 in the future. Borrowing availability under the Credit Facility is determined by a monthly borrowing base collateral calculation that is based on specified percentages of the value of eligible accounts receivable, inventory and machinery and equipment, less certain reserves and subject to certain other adjustments.

At December 31, 2012, the Company had total availability for borrowings and letters of credit under the Credit Facility of $13,173,000 along with an unrestricted cash balance of $18,664,000 which provides for total cash and borrowing capacity of $31,837,000. Approximately $11,748,000 of the unrestricted cash balance relates to the Company’s Mexican subsidiaries. Standby letters of credit up to a maximum of $5,000,000 may be issued under the Credit Facility of which $999,000 and $990,000 were issued at December 31, 2012 and 2011, respectively.

Obligations under the Credit Facility are guaranteed by all of our U.S. subsidiaries and are secured by a first priority lien on substantially all domestic assets of the Company.

The Credit Facility contains a number of covenants that, among other things, limit or restrict our ability to dispose of assets, incur additional indebtedness, incur guarantee obligations, engage in sale and leaseback transactions, prepay other indebtedness, modify organizational documents and certain other agreements, create restrictions affecting subsidiaries, make dividends and other restricted payments without bank approval, create liens, make investments, make acquisitions, engage in mergers, change the nature of our business and engage in certain transactions with affiliates. In addition, if the Company’s availability under the Credit Facility falls below $6,000,000 (or $8,000,000 for a period of five or more consecutive days), the Company must maintain a fixed charge coverage ratio of at least 1.15 to 1.00.

The weighted average interest rate for outstanding borrowings at December 31, 2012 was 2.6%. The weighted average interest rates for borrowings during the years ended December 31, 2012 and 2011 were 2.4% and 5.6%, respectively. Interest incurred during the years ended December 31, 2012 and 2011 totaled approximately $514,000 and $1,881,000, respectively. The Company had no capitalized interest in 2012 or 2011. Interest paid during the years ended December 31, 2012 and 2011 totaled approximately $250,000 and $1,100,000, respectively.