Credit Facilities

9 Months Ended

Sep. 30, 2011

Credit Facilities [Abstract]

Credit Facilities

6. Credit Facilities

The Company has a line of credit with Bank of America in the amount of $5.0 million, which is generally used to secure letters of credit. The Company was compliant with the debt covenants as of September 30, 2011. The Company had no outstanding borrowings under this facility as of September 30, 2011 and had letters of credit outstanding of $2.6 million.

In April 2008, the Company entered into a loan agreement (subsequently amended and restated on August 7, 2009) with Bank of America for a term loan in the amount of $30.0 million related to the acquisition of certain assets of Emeril Lagasse. The loan is secured by substantially all of the assets of the Emeril business that the Company acquired. The loan agreement requires equal quarterly principal payments of $1.5 million and accrued interest to be paid for the duration of the loan term, approximately 5 years. As of September 30, 2011, the Company had paid $24 million in principal, including prepayment of $3.0 million due through March 31, 2012, such that $6.0 million was outstanding at September 30, 2011. Two principal payments of $1.5 million each are due as of June 30, 2012 and September 30, 2012, which are reflected as a current liability in the consolidated balance sheet as of September 30, 2011. The interest rate on all outstanding amounts is equal to a floating rate of 1-month London Interbank Offered Rate ("LIBOR") plus 2.85%.

The loan terms have required the Company to be in compliance with certain financial and other covenants, failure with which to comply would result in an event of default and would permit Bank of America to accelerate and demand repayment of the loan in full. On June 29, 2011, the Company and Bank of America executed an amendment to the loan agreement, which eliminated the financial covenants that had previously required the Company to maintain a Funded Debt to EBITDA Ratio equal to or less than 2.0 and a Parent Guarantor Basic Fixed Charge Ratio equal to or greater than 2.75. The amendment also reduced the minimum level of consolidated Tangible Net Worth required to be maintained by the Company from $40 million to $30 million. Additionally, the amendment added a requirement that the Company maintain at all times cash and certain cash equivalents with an aggregate market value of not less than an amount equal to 200% of the outstanding loan principal. This cash and cash equivalents balance cannot be subject to any lien, security interest or other encumbrance, nor can it be held by the Company in order to comply with any other liquidity or other similar covenant under any agreement in respect of indebtedness or other obligations of the Company.

As of September 30, 2011, the Company was compliant with all debt covenants and expects to be compliant with all debt covenants through 2011. A current summary of the most significant financial covenants is as follows:

Financial Covenant
Tangible Net Worth	At least $30.0 million
Quick Ratio	Equal to or greater than 1.0
Unencumbered Cash and Designated Cash Equivalents	Equal to or greater than 200% of the loan balances

While the maintenance of a minimum level of cash balances has now become a financial covenant, the fact that the Company had cash balances that were well in excess of the loan principal at September 30, 2011 currently gives the Company the ability to repay the outstanding principal in full in the event of default or to prevent default.