Debt

9 Months Ended

Sep. 30, 2011

Debt [Abstract]

DEBT

3. DEBT

Debt consisted of the following (in millions):

	September 30, 2011		December 31, 2010		September 30, 2010
Revolving credit facility	$	65.3	$	41.7	$	50.9
Other obligations		0.2		0.4		0.4
Total debt		65.5		42.1		51.3
Less current portion		0.1		0.2		0.2
Long-term debt	$	65.4	$	41.9	$	51.1

Credit Agreement — The Company has a $120.0 million asset based senior secured revolving credit facility (“credit facility”). In October 2011, the Company amended its credit facility to, among other things, amend the cash dominion threshold. Borrowing availability under the credit facility is based on eligible accounts receivable, inventory and real estate. The real estate component of the borrowing base amortizes monthly over ten years on a straight-line basis. Borrowings under the credit facility are collateralized by substantially all of the Company’s assets and are subject to certain operating limitations applicable to a loan of this type, which, among other things, place limitations on indebtedness, liens, investments, mergers and acquisitions, dispositions of assets, cash dividends and transactions with affiliates. The entire unpaid balance under the credit facility is due and payable on September 3, 2014, the maturity date of the credit agreement.

At September 30, 2011, under the credit facility, the Company had revolving credit borrowings of $65.3 million outstanding at a weighted average interest rate of 3.07%, letters of credit outstanding totaling $5.2 million, primarily for health and workers’ compensation insurance, and $29.6 million of additional committed borrowing capacity. The Company pays an unused commitment fee in the range of 0.30% to 0.375% per annum. In addition, the Company had $0.2 million of capital lease and other obligations outstanding at September 30, 2011.

The sole financial covenant in the credit facility is the fixed charge coverage ratio (“FCCR”) that must be tested by the Company if the excess borrowing availability falls below a range of $10.0 million to $15.0 million depending on the Company’s borrowing base and must also be tested on a pro forma basis prior to consummation of certain significant business transactions outside the Company’s ordinary course of business, as defined in the agreement. The FCCR is 1.25:1.00. At September 30, 2011, the FCCR testing threshold was $11.9 million and the Company had $29.6 million of excess availability. In addition to the sole financial covenant, the credit facility, as amended, gives the lenders the right to dominion of the Company’s bank accounts should excess borrowing availability fall below $5.0 million over the FCCR testing threshold, or $16.9 million at September 30, 2011. This right does not change the Company’s ability to borrow on the credit facility in any manner nor does it make the underlying debt callable by the lender, however, under ASC 470, “Debt”, if the excess availability were to fall below the dominion threshold, the Company would be required to reclassify long-term debt to current debt on its balance sheet.

The Company believes that cash generated from its operations and funds available under the credit facility will provide sufficient funds to meet its currently anticipated short-term and long-term liquidity and capital expenditure requirements. In the first nine months of 2011, the minimum FCCR was not required to be tested as excess borrowing availability was greater than the minimum threshold. However, if availability would have fallen below that threshold, the Company would not have met the minimum FCCR. If the Company was unable to maintain excess borrowing availability of more than the applicable amount in the range of $10.0 million to $15.0 million and was also unable to comply with this financial covenant, its lenders would have the right, but not the obligation, to terminate the loan commitments and accelerate the repayment of the entire amount outstanding under the credit facility. The lenders could also foreclose on the Company’s assets that secure the credit facility. In that event, the Company would be forced to seek alternative sources of financing, which may not be available on terms acceptable to it, or at all.