Debt

Debt consists of the following at:



	September 30, 2015			December 31, 2014
Term loan payable to a bank, interest at a variable rate (2.05% at September 30, 2015) with monthly payments of interest and principal through March 2020.	$	13,500,000		$	—
Capex loan payable to a bank, interest at a variable rate (1.80% at September 30, 2015 and 1.76% at December 31, 2014) with monthly payments of interest and principal through May 2016.	1,143,000			2,428,000
Revolving line of credit (1.73% at December 31, 2014)	—			2,768,000
Total	14,643,000			5,196,000
Less current portion	(4,143,000		)	(4,482,000		)
Long-term debt	$	10,500,000		$	714,000

Credit Agreement

In 2008, the Company and its wholly owned subsidiary, CoreComposites de Mexico, S. de R.L. de C.V., entered into a credit agreement (the “Credit Agreement”) to refinance certain existing debt and borrow funds to finance the construction of the Company’s manufacturing facility in Mexico.

Under this Credit Agreement, as amended, the Company received certain loans, subject to the terms and conditions stated in the agreement, which included (1) a $12,000,000 Capex loan; (2) a $8,000,000 Mexican loan, which was paid in full in January 2014; and (3) a $18,000,000 variable rate revolving line of credit. The Credit Agreement is secured by a guarantee of each U.S. subsidiary of the Company and by a lien on substantially all of the present and future assets of the Company and its U.S. subsidiaries, except that only 65% of the stock issued by CoreComposites de Mexico, S. de C.V. has been pledged.

On March 20, 2015, the Company and its wholly owned subsidiary, CoreComposites de Mexico, S. de R.L. de C.V., entered into a tenth amendment (the “Tenth Amendment”) to the Credit Agreement. Pursuant to the terms of the Tenth Amendment, the parties agreed to modify certain terms of the Credit Agreement. These modifications included an extension of the commitment period for the revolving line of credit to May 31, 2017 and an agreement to make a term loan in an original amount of $15,500,000 to finance the acquisition of CPI assets. On March 30, 2015, the Company repaid $500,000 of unused proceeds from the original term loan.

Revolving Line of Credit

The $18,000,000 revolving line of credit is collateralized by all of the present and future assets of the Company and its U.S. subsidiaries (except that only 65% of the stock issued by CoreComposites de Mexico, S. de C.V. has been pledged). The revolving line of credit, as amended, is scheduled to mature on May 31, 2017.

Bank Covenants

The Company is required to meet certain financial covenants included in the Credit Agreement with respect to leverage ratios, fixed charge ratios, capital expenditures as well as other customary affirmative and negative covenants. As of September 30, 2015, the Company was in compliance with its financial covenants associated with the loans made under the Credit Agreement as described above.

Interest Rate Swap

On December 18, 2008, the Company entered into an interest rate swap agreement that became effective May 1, 2009 and continues through May 2016, which was designated as a cash flow hedge of the $12,000,000 Capex loan. Under this agreement, the Company pays a fixed rate of 2.295% to the counterparty and receives LIBOR (0.19% at September 30, 2015). Effective March 31, 2009, the interest terms in the Company’s Credit Agreement related to the $12,000,000 Capex loan were amended. The Company then determined that this interest rate swap was no longer highly effective. As a result, the Company discontinued the use of hedge accounting effective March 31, 2009 related to this swap, and began recording mark-to-market adjustments within interest expense in the Company’s Consolidated Statements of Income. The pre-tax loss previously recognized in Accumulated Other Comprehensive Income, totaling $146,000 as of March 31, 2009, is being amortized as an increase to interest expense of approximately $2,000 per month, or $1,000 net of tax, over the remaining term of the interest rate swap agreement. The fair value of the swap as of September 30, 2015 and December 31, 2014 was a liability of $7,000 and $37,000, respectively. The Company recorded interest income of $9,000 and $17,000 for a mark-to-market adjustment of swap fair value for the three months ended September 30, 2015 and 2014, respectively, related to this swap. The Company recorded interest income for the nine months ended September 30, 2015 and 2014, of $30,000 and $53,000, respectively, for mark-to-market adjustments of this swap. The notional amount of the swap at September 30, 2015 and December 31, 2014 was $1,143,000 and $2,428,000, respectively.

Interest expense included $7,000 and $16,000 of expense for settlements related to the Company's swaps for the three months ended September 30, 2015 and 2014, respectively.