Annual report pursuant to Section 13 and 15(d)

Long-term Debt and Note Payable

v2.4.0.6
Long-term Debt and Note Payable
12 Months Ended
Dec. 31, 2012
Long-Term Debt and Note Payable [Abstract]  
LONG-TERM DEBT AND NOTE PAYABLE

NOTE 6 — LONG-TERM DEBT AND NOTE PAYABLE

Long-term debt consists of the following:

 

                 
(In thousands)   2012     2011  

Revolving Credit Line, payable August 31, 2016. Interest is at LIBOR plus between 1.50% and 2.50% (1.7% at December 31, 2012).

  $ 7,000     $ —    

Senior Term Note, payable $2.0 million quarterly in 2013 with a balloon payment of $5.0 million in January 2014. Interest is at LIBOR plus between 1.50% and 2.50% (1.7% at December 31, 2012).

    13,000       17,000  

Subordinated promissory note with interest fixed at 6.0%.

    —         5,000  

Series 2007 Industrial Revenue Bonds issued through the Erie County, New York Industrial Development Agency payable $340 annually through 2027 with interest reset weekly (1.9% at December 31, 2012).

    5,060       5,400  

Series 1999 Industrial Revenue Bonds issued through the Erie County, New York Industrial Development Agency payable $350 annually through 2019 with interest reset weekly (1.9% at December 31, 2012).

    1,895       2,245  

Series 1998 Industrial Revenue Bonds issued through the Business Finance Authority of the State of New Hampshire payable $400 annually through 2018 with interest reset weekly (1.9% at December 31, 2012).

    2,450       2,850  

Note Payable at Canadian Prime payable $14 monthly through 2016 plus interest (3.0% at December 31, 2012).

    566       733  

Capital Lease Obligations and Other

    12       35  
   

 

 

   

 

 

 
      29,983       33,263  

Less Current Maturities

    9,268       5,290  
   

 

 

   

 

 

 
    $ 20,715     $ 27,973  
   

 

 

   

 

 

 

Principal maturities of long-term debt are approximately:

 

         
(In thousands)      

2013

  $ 9,268  

2014

    6,262  

2015

    1,263  

2016

    8,145  

2017

    1,090  

Thereafter

    3,955  
   

 

 

 
    $ 29,983  
   

 

 

 

The Company extended and modified its existing credit facility by entering into a Second Amended and Restated Credit Agreement (the “Credit Agreement”), effective August 31, 2011. The Credit Agreement provides for the continuation of the Company’s revolving credit line in the amount of $35 million, less outstanding letters of credit, for an additional five years through August 31, 2016 and for the continuation of the Company’s existing $13 million senior term note maturing January 30, 2014, with interest on both loans at a rate of LIBOR plus between 1.50% and 2.50% based on the Company’s Leverage Ratio, as defined in the Credit Agreement. The credit facility allocates up to $20 million of the $35 million revolving credit line for the issuance of letters of credit, including certain existing letters of credit. The credit facility is secured by substantially all of the Company’s assets.

The Credit Agreement contains various financial covenants. The covenant for minimum fixed charge coverage, defined as the ratio of the sum of net income, interest expense, provision for taxes based on income, total depreciation expense, total amortization expense, other non-cash items reducing net income minus other non-cash items increasing net income minus capital expenditures, minus cash taxes paid and dividends paid to interest expense plus scheduled principal payments on long-term debt calculated on a rolling four-quarter basis to be not less than 1.25 to 1 for each fiscal quarter ending on or after September 30, 2011. The Company’s minimum fixed charge coverage was 2.37 to 1 at December 31, 2012. The covenant for maximum leverage, defined as the ratio of the sum of net income, interest expense, provision for taxes based on income, total depreciation expense, total amortization expense, other non-cash items reducing net income minus other non-cash items increasing net income to funded debt calculated on a rolling four-quarter basis is not to exceed 3.25 to 1 for each fiscal quarter ending on or after September 30, 2011. The Company’s maximum leverage was 0.71 to 1 at December 31, 2012. The covenant for maximum capital expenditures is $15 million annually, excluding $18.3 million relating to the acquisition and completion of the Ft. Lauderdale and Kirkland properties. The Company’s capital expenditures in 2012, excluding the acquisition and completion to date of the Ft. Lauderdale and Kirkland properties, were $4.7 million.

 

There was $7.0 million outstanding on our revolving credit facility at December 31, 2012, which is reported as long term. The Company had $17.9 million available on its credit facility. The credit facility allocates up to $20 million of the revolving credit line for the issuance of letters of credit. At December 31, 2012, outstanding letters of credit totaled $10.1 million. In addition, the Company is required to pay a commitment fee quarterly at a rate of between 0.25% and 0.35% per annum on the unused portion of the total revolving credit commitment, also based on the Company’s Leverage Ratio.

Prior to the August 31, 2011 amendment of the credit facility, the Company’s Credit Agreement provided for a revolving credit line of $35 million for working capital requirements which was committed through January 2012, with interest at LIBOR plus between 2.75% and 4.50%. In addition, the Company was required to pay a commitment fee of between 0.30% and 0.50% on the unused portion of the total credit commitment for the preceding quarter, based on the Company’s leverage ratio under the Credit Agreement.

The $5.0 million subordinated promissory note with interest fixed at 6.0% was paid in its entirety in January, 2012.

In the event of voluntary or involuntary bankruptcy of the Company or any subsidiary, all unpaid principal and other amounts owing under the Credit Agreement automatically become due and payable. Other events of default, such as failure to make payments as they become due and breach of financial and other covenants, give the Agent the option to declare all such amounts immediately due and payable.

The Industrial Revenue Bonds are held by institutional investors and are guaranteed by a bank letter of credit, which is collateralized by certain property, plant and equipment assets, the carrying value of which approximates the principal balance on the bonds. The Company has a standby unsecured bank letter of credit guaranteeing the note payable in Canada, the amount of which approximates the principal balance on the note.