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Debt
12 Months Ended
Dec. 31, 2017
Debt Disclosure [Abstract]  
Debt

4.Debt

In December 2017, the Company entered into a new credit and security agreement with its bank, which provides for a three-year revolving credit facility in an aggregate principal amount of $45.0 million, including a sublimit of $10.0 million for letters of credit and a $10.0 million sublimit for swing line loans. In connection with execution of the credit and security agreement, the Company concurrently repaid in full and terminated the credit agreement dated October 30, 2015.

The new agreement expires in December 2020, and has interest rates ranging from 150 to 200 basis points over LIBOR or the greater of (i) the prime rate, (ii) the federal fund effective rate plus 50 basis points, and (iii) adjusted LIBOR plus 100 basis points plus a spread ranging from 50 to 100 basis points based on the amounts outstanding under the Credit and Security Agreement. The Company can borrow under the agreement with either rate at its discretion.  At December 31, 2017 and 2016, there was $4.4 million and $4.7 million outstanding under the respective revolving credit agreements. The Company borrows or repays its debt as needed based upon its working capital obligations, including the timing of the U.S. bi-weekly payroll.    

The maximum amount outstanding under its credit agreements in 2017 and 2016 was $6.0 million and $4.7 million, respectively. In 2017 and 2016, the average amounts outstanding were $2.2 million and $1.9 million, respectively, and carried weighted-average interest rates of 3.0% and 2.9%, respectively. Total commitment fees incurred in 2017 and 2016 totaled approximately $0.1  million in each year, while interest paid in 2017 and 2016 totaled less than $0.1 million in each year.

 

Under the new agreement, the Company is required to meet certain financial covenants in order to maintain borrowings under its revolving credit line, pay dividends, and make acquisitions. The covenants are measured quarterly, and at December 31, 2017, included a fixed charge coverage ratio, which must be less than 1.10 to 1.00, consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) must be no less than $5.0 million for the trailing twelve months, and capital expenditures for property, plant, equipment, and capitalized software must be no more than

$5.0 million in any annual period. The fixed charge coverage ratio is only tested if availability on a measurement date is less than $5.625 million. Actual borrowings by CTG under the Credit Agreement are subject to a borrowing base, which is a formula based on certain eligible receivables and reserves. Total availability as of December 31, 2017 was approximately $28.9 million. The Company was in compliance with these covenants at December 31, 2017 as EBITDA was $6.8 million and capital expenditures for property, equipment and capitalized software were $2.5 million in 2017. The Company was also in compliance with its covenants at December 31, 2016 and December 31, 2015.