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LONG-TERM DEBT (Block) | 9 Months Ended
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Sep. 30, 2011
Debt Disclosure Abstract |
Debt Disclosure Text Block | 7. LONG-TERM DEBT (A) Senior Debt Credit Agreement (the “Bank Facility”) T he Company has a $ 1,050 million senior secured credit facility with a syndicate of lenders that matures on June 30, 2012. The Bank Facility was originally comprised of $650 million in revolving credit (the “Revolver”) and a $400 million term loan (the “Term Loan”). The Term Loan amortizes in quarterly amounts, which payments increase d to $60 million on September 30, 2011 and thereafter. As of September 30, 2011, the Company had outstanding under the Bank Facility $483.5 million in drawn Revolver and $122.0 million in Term Loan. As of September 30, 2011, the Company had $4.9 million in cash and cash equivalents. As of September 30, 2011, the undrawn amount of the Revolver was $165.9 million. The amount of the Revolver available to the Company, however, is a function of covenant compliance at the time of borrowing. Based on the Company's financial covenant analysis as of September 30, 2011, the Company would be limited to borrowings significantly less than the undrawn limit unless such borrowings were used to repay indebtedness or for transactions that increase cash flow for purposes of covenant calculation. The Company's Bank Facility requires compliance with certain financial covenants including a maximum Consolidated Leverage Ratio. This financial covenant is a ratio of the Company's Consolidated Funded Indebtedness to Consolidated Operating Cash Flow for the four most recent fiscal quarters as of the date of determination (each as defined in our Bank Facility). This financial covenant is determined as of the last day of each fiscal quarter. For the quarter ended September 30, 2011 the Company's Consolidated Leverage Ratio was 5.86 times, while the maximum was 6.25 times. The maximum Consolidated Leverage Ratio decreases to 6.00 times for periods ending on and after December 31, 2011. Management believes that the Company can continue to maintain its compliance with the financial covenants until maturity of the Bank Facility on June 30, 2012. The Company's ability to maintain compliance with its financial covenants is highly dependent on the Company's results of operations. If management were to expect that the Company could not maintain compliance with its covenants, the Company would seek to enter into an agreement with its lenders for covenant compliance relief. If the Company was able to enter into an agreement for covenant compliance relief, such relief would likely result in significantly higher interest expense and fees paid to consenting lenders. There can be no assurance, however, that the Company's lenders would agree to such covenant compliance relief. The Company must refinance or replace its Bank Facility prior to its expiration on June 30, 2012. Specifically, on June 30, 2012 the Revolver balance then outstanding, together with the final $60 million Term Loan installment, will be due in full. In the event the Company is not successful in refinancing or replacing its Bank Facility prior to its maturity, the Company would not have the resources to fund these obligations. If the Company was not able to secure any required covenant compliance relief, or if the Company failed to refinance or replace its Bank Facility prior to its expiration on June 30, 2012, then an Event of Default would arise under the Company's Bank Facility. An Event of Default could have a material adverse effect on the Company's financial condition. If an Event of Default occurs, the lenders in the Company's Bank Facility could begin exercising various creditor rights which could threaten the Company's ability to continue to operate its business. The Company previously relied on the Revolver to fund the Company's quarterly Term Loan amortization payments. As of October 25, 2010, the Company has prepaid all Term Loan amortization payments other than the final $60 million installment due on June 30, 2012. The Company's operating cash flow remains positive and management believes that it is adequate to fund the Company's operating needs. As a result, the Company has not been required to rely upon, and the Company does not anticipate being required to rely upon, the Revolver to fund its operations. Amendment In 2010 To The Bank Facility”(Amendment”) The Amendment to the Bank Facility in March 2010 was treated as a modification to a debt instrument. As a result, in the first quarter of 2010, the Company recorded deferred financing costs of $5.2 million related to the Amendment which is amortized over the remaining life of the Bank Facility on: (1) a straight-line basis for the revolving credit facility; and (2) an effective interest rate method for the term loan. In addition, unamortized deferred financing costs of $3.1 million as of the Amendment date are amortized over the remaining life of the Bank Facility. Additional key terms of the Bank Facility, as amended, are as follows: Depending on the Consolidated Leverage Ratio (Consolidated Funded Indebtedness to Consolidated Operating Cash Flow), the Company can elect an interest rate equal to: (1) the Eurodollar Rate plus fees that range from 0.50% to 2.50%; or (2) the Base Rate plus fees that can range from 0.00% to 1.50%, where the Base Rate is the highest of: (a) the Federal Funds Rate plus 0.50%; (b) the Eurodollar Rate plus 1.00%; and (c) the Prime Rate; During periods when the Consolidated Leverage Ratio excee ds 6.0 times (defined in the Bank Facility as a “Restricted Period”), the Company is: (a) restricted in its ability to take certain actions including, but not limited to, the payment of dividends and the repurchase of its stock; and (b) subject to additional limitations on acquisitions and investments; and The Company pays a commitment fee that varies, depending on the Company's Consolidated Leverage Ratio and the amount of the unused commitment, to a maximum of 0.50% per year on the average unused balance of the revolving credit. The Bank Facility is secured by a pledge of 100% of the capital stock and other equity interest in all of the Company's wholly owned subsidiaries. In addition, the Bank Facility is secured by a lien on substantially all of the Company's assets, other than real property. Prior to the Amendment the interest rate was: (1) the Eurodollar rate plus a rate that ranges from 0.50% to 1.13%; or (2) the greater of prime rate plus a rate that ranges from 0.00% to 0.13% or the federal funds rate plus a rate that ranges from 0.50% to 0.63%. (B) Senior Subordinated Debt 7.625% Senior Subordinated Notes On March 8, 2010, the Company redeemed at par all of its remaining outstanding 7.625% senior subordinated notes that were due March 1, 2014 and recorded in the statement of operations a loss on the extinguishment of debt. (C) Debt Extinguishment The following table presents for the periods indicated the amount of gain or loss recorded on debt extinguishment:
|  | For the Nine
|  | Months Ended
|  | September 30,
|  | 2010
|  | (amounts in
|  | thousands)
Write-off of deferred financing costs |  | $ | 62
Gain on debt extinguishment |  |  | -
Net (gain) loss on debt extinguishment |  | $ | 62
Amount of debt retired |  | $ | 6,579

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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 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 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: 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 + Details
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