Loan Agreement
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6 Months Ended | |||||||||||||||||||||||||||||||||
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Jun. 30, 2014
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||
Loan Agreement | In 2012, the Company entered into a Loan and Security Agreement (“Loan Agreement”) which expires in August 2017. Due to the lock box arrangement and a subjective acceleration clause contained in the borrowing agreement, the revolving line of credit is classified as a current liability. The Loan Agreement consists of a $40.0 million revolving line of credit facility, which includes a $10.0 million sub-facility for letters of credit. In December 2013, the Company entered into a Second Amendment to Loan and Security Agreement ("Second Amendment") which revised certain terms of the original Loan Agreement. Credit available under the Loan Agreement is based upon:
The applicable interest rates for borrowings are at the Prime rate or, if the Company elects, the LIBOR rate plus 1.50% to 1.85% based on the Company’s debt to EBITDA ratio. The Loan Agreement is secured by a first priority perfected security interest in substantially all existing assets of the Company. Dividends are restricted to amounts not to exceed $7.0 million annually. At June 30, 2014, the Company had an outstanding balance of $2.4 million under its revolving line of credit facility and $1.5 million outstanding letters of credit, leaving additional borrowing availability of $31.0 million. The Company paid interest of $0.5 million and $0.4 million for the six months ended June 30, 2014 and 2013, respectively. The weighted average interest rate was 2.94% for the six months ended June 30, 2014 and the outstanding balance approximates fair value. In addition to other customary representations, warranties and covenants, we are required to meet a minimum trailing twelve month EBITDA to fixed charges ratio, as defined in the Loan Agreement, and a minimum quarterly tangible net worth level as defined in the Second Amendment. On June 30, 2014, we were in compliance with all financial covenants as detailed below:
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