Credit Facilities

3 Months Ended

Mar. 31, 2012

4. Credit Facilities

During February 2012, the Company increased its line of credit with Bank of America to $25.0 million, incorporating the previous $5.0 million line. Borrowings under this line of credit are available for investment opportunities, working capital, and the issuance of letters of credit. The annual interest rate on outstanding amounts is equal to a floating rate of 1-month LIBOR Daily Floating Rate plus 1.85%. The unused commitment fee is equal to 0.25%. The terms of the line of credit require the Company to be in compliance with certain financial and other covenants, with which the Company was compliant as of March 31, 2012. A summary of the most significant financial covenants is as follows:


Financial Covenants
Tangible Net Worth		At least $40.0 million
Current Ratio		At least 1.75 to 1.0
Unencumbered liquid assets		Equal to or greater than outstanding principal balance plus accrued interest

The loan agreement also contains a variety of other customary affirmative and negative covenants. The loan agreement expires February 14, 2013 at which time any outstanding amounts borrowed under the agreement are then due and payable. The Company had no outstanding borrowings under this line of credit or its predecessor as of March 31, 2012 or December 31, 2011, but had outstanding letters of credit of $2.6 million on both dates.

- 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.

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