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LONG-TERM DEBT (Block) | 3 Months Ended
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Mar. 31, 2012
Debt Disclosure Abstract |
Debt Disclosure Text Block | 4. LONG-TERM DEBT (A) Senior Debt The Credit Facility On November 23, 2011, the Company entered into a new credit agreement with a syndicate of lenders for a $425 million senior secured credit facility (the “Credit Facility”), that is comprised of: (a) a $50 million revolving credit facility (the “Revolver”) that matures on November 23, 2016; and (b) a $375 million term loan (the “Term B Loan”) that matures on November 23, 2018. The undrawn amount of the Revolver was $39.4 million as of March 31, 2012. T he amount of the Revolver available to the Company is a function of covenant compliance at the time of borrowing. Based on the Company's financial covenant analysis as of March 31, 2012, the Company would not be limited in these borrowings. The Credit Facility requires the Company to maintain compliance with specific financial covenants. Specifically, the Credit Facility requires the Company to comply with certain financial covenants which are defined terms within the agreement, including: a maximum Consolidated Leverage Ratio that cannot exceed 7.25 times through June 30, 2012, which decreases over time to 4.50 times as of March 31, 2016 and thereafter; and a minimum Consolidated Interest Coverage R atio of 1.5 times through December 31, 2012, which increases over time to 2.0 times as of September 30, 2015 and thereafter. The Term B Loan requires mandatory prepayments equal to 50% of Excess Cash Flow, as defined within the agreement, subject to incremental step-downs to 0%, de pending on the Consolidated Leverage Ratio. Under the Term B Loan, the first Excess Cash Flow payment is due in the first quarter of 2013 based on the Excess Cash Flow and Leverage Ratio for calendar year 2012. The Company estimates that the Excess Cash Flow payment due in the first quarter of 2013, which is recorded under the current portion of long-term debt, will be approximately $16 million, net of prepayments through March 31, 2012. The amount of the Excess Cash Flow prepayment required is subject to change based on actual results, which could differ materially from the Company's f inancial projections as of March 31, 2012. Management believes that the Company is in compliance with all financial covenants and all other terms of the Credit Facility as of March 31, 2012. The Company's ability to maintain compliance with its covenants will be highly dependent on its results of operations. A default under the Company's Credit Facility or the indenture governing the Company's Senior Notes could cause a cross default. Any event of default, therefore, could have a material adverse effect on our business and financial condition. Management believe s that over the next 12 months the Company can continue to maintain its compliance with these covenants. Management believe s that cash on hand and cash from operating activities, together with available borrowings under the Revolver, will be sufficient to permit the Company to meet its liquidity requirements over the next 12 m onths, including its debt repayments. The Company's operating cash flow is positive, and management believe s that it is adequate to fund the Company's operating needs. As a result, the Company ha s not been required to rely upon, and the Company do es not anticipate being required to rely upon, the Revolver to fund its operations. Failure to comply with the Company's financial covenants or other terms of its Credit Facility and any subsequent failure to negotiate and obtain any required relief from its lenders could result in the acceleration of the maturity of all outstanding debt. Under these circumstances, the acceleration of the Company's debt could have a material adverse effect on its business. T he Company may seek from time to time to amend its Credit Facility or obtain other funding or additional funding, which may result in higher interest rates. As of March 31, 2012, the Company's Consolidated Leverage Ratio was 5.8 times and the Consolidated Interest Coverage Ratio was 3.6 times. (B) Senior Unsecured Debt The Senior Notes Simultaneous ly with entering into the Credit Facility on November 23, 2011, the Company issued 10.5% unsecured senior notes, or the Senior Notes, that mature on December 1, 2019 in the amount of $220 million. The Company received net proceeds of $212.7 million, which includes a discount of $2.9 million, and incurred deferred financing costs of $6.1 million. These amounts will be amortized over the term under the effective interest rate method. Interest on the Senior Notes accrues at the rate of 10.5% per annum and is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2012. A default under the Company's Senior Notes could cause a default under the Company's Credit Facility. Any event of default, therefore, could have a material adverse effect on the Company's business and financial condition. (C) Net Interest Expense The components of net interest expense are as follows:
|  | Net Interest Expense
|  | Three Months Ended
|  | March 31,
|  | 2012 |  | 2011
|  | (amounts in thousands)
Interest expense |  | $ | 12,052 |  | $ | 2,731
Amortization of deferred financing costs |  |  | 1,118 |  |  | 963
Amortization of original issue discount of senior notes |  |  | 59 |  |  | -
Interest expense on interest rate hedging agreements |  |  | 847 |  |  | 2,282
Interest income and other investment income |  |  | (3) |  |  | (4)
Total net interest expense |  | $ | 14,073 |  | $ | 5,972
The Company's interest expense was materially higher in 2012 primarily due to the higher borrowing costs under the Credit Facility and Senior Notes as compared to the Company's former credit agreement (the “Former Facility”). Under these facilities, the Company could elect to borrow under the LIBOR Rate or the Base Rate, however, the Company's borrowings have historically been primarily under the LIBOR Rate. Specifically, under the Company's Former Facility, the Company could elect an interest rate equal to the LIBOR Rate plus fees that ranged from 0.5% to 2.5%. By contra st, under the Credit Facility, depending on the Consolidated Leverage Ratio, the Company may elect an interest rate per annum equal to the LIBOR Rate plus fees that can range from 4.5% to 5.0% for the Revolver and from 4.75% to 5.0% for the Term B Loan. T he Term B Loan includes a LIBOR Rate floor of 1.25%. In addition, t he Senior Notes accrue interest at 10.5% annually.

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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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