DEBT AND FINANCING ARRANGEMENTS

On September 27, 2013, the Company entered into a Credit Agreement (the “Credit Agreement”) with certain banks and agents.

Pursuant to the Credit Agreement, the Company is borrower under a $150 million senior revolving credit facility ("Revolver") and a $150 million term loan facility ("Term Loan"). Under the terms of the Credit Agreement, the Company is entitled to further request an additional aggregate principal amount of up to $75 million, subject to the satisfaction of certain conditions. In addition, the Company is entitled to the benefit of swing loans from amounts otherwise available under the Revolver in the aggregate principal amount of up to $20 million and to request Letters of Credit from amounts otherwise available under the Revolver in the aggregate principal amount of up to $20 million, both subject to certain conditions. The obligations of the Company under the Credit agreement are not secured, but are subject to certain covenants. The Revolver expires and the Term Loan matures on September 27, 2018.

During the years ended December 31, 2016 and 2015, the Company made repayments of $47.5 million and $32.5 million respectively, plus accrued interest. The aforementioned payments include additional payments made by the Company of $40.0 million and $25.0 million respectively, on the Revolver, which were in addition to the scheduled amounts due. The Company used cash and cash equivalents to fund the payments. As of December 31, 2016, $60.7 million was outstanding under the Revolver and the Company had availability of $89.3 million on the Revolver. Under current terms of the Term Loan, the Company will make principal repayments of at least $7.5 million annually through the maturity date of the Term Loan. As of December 31, 2016, $125.6 million was outstanding under the Term Loan.

The borrowing rate on both its Term Loan and Revolver are derived from the one month LIBOR, and based on the Company's leverage ratio as of December 31, 2016, the interest rate on its borrowings is equal to 1.77%. Interest expense for the years ended December 31, 2016 and 2015 are presented within the "Other, net" section of the Consolidated Statements of Income and expenses associated with the Term Loan and Revolver were $3.5 million and $3.3 million, respectively.

The Credit Agreement contains customary representations and warranties and certain covenants that place certain limitations on the Company.

As of December 31, 2016, the Company was in compliance with its covenants under the Credit Agreement.

Interest Rate Swap

On October 1, 2014, the Company entered into an interest rate swap transaction with a bank (the “Counterparty”). The Counterparty is among the syndicate of lenders under the existing Credit Agreement entered into on September 27, 2013. The Company entered into the interest rate swap transaction to mitigate the Company’s floating rate interest risk on an aggregate of $150 million of the Company’s debt that is currently outstanding under the Credit Agreement. The interest rate swap had an effective date of July 31, 2015 and a termination date of September 27, 2018 (which is the expiration date of the Credit Agreement). The Company is required to make certain monthly fixed rate payments to the Counterparty calculated on a notional amount of $150 million for the rate swap, while the Counterparty is obligated to make monthly floating rate payments to the Company referencing the same notional amount. The interest rate swap transaction has the effect of fixing the annual interest rate payable on $150 million of the Company’s outstanding debt under its existing credit facility to 1.89%, as of the effective date. The notional amounts of the interest rate swap agreement are used to measure interest to be paid or received and do not represent the amount of exposure to credit loss. This derivative instrument has been designated as a cash flow hedge of the variable interest payments on the related debt.

Interest expenses are netted within the “Other, net” section of the Condensed Consolidated Statements of Income, and expenses associated with the interest rate swap were $2.1 million and $1.1 million for the years ended December 31, 2016 and 2015, respectively.

Notwithstanding the terms of the interest rate swap transaction, the Company is ultimately obligated for all amounts due and payable under its existing Credit Agreement.

The notional amount of the Company's derivative instruments are as follows:



	December 31, 2016		December 31, 2015		December 31, 2014
Interest Rate swap	$	150,000,000	$	150,000,000	$	150,000,000

The following table sets forth financial assets and liabilities measured at fair value in the consolidated balance sheets and the respective pricing levels to which the fair value measurements are classified within the fair value hierarchy. The Company uses the market approach to derive the value of its level 2 fair value measurements. Interest rate swaps are valued using publicized swap curves.



Fair Value Measurements
Quoted Prices with Other Observable Inputs (Level 2)
	December 31, 2016		December 31, 2015		December 31, 2014
Financial assets:
Interest Rate Swap Asset	$	—	$	—	$	—
Financial Liabilities:
Interest Rate Swap Liability (Other Accrued Liabilities)	$	1,841,970	$	2,947,438	$	1,475,702

Based on loan balances as of December 31, 2016 and the effective date of July 31, 2015 of the interest rate swap, a one percent increase in the Company's borrowing rate would increase net interest expense paid by the Company on its borrowings by approximately $0.3 million on an annual basis.