Note 7 - Long-term Debt

12 Months Ended

Dec. 31, 2012

Notes

Note 7 - Long-term Debt

Note 7 – Long-term Debt

In March, 2011, the Company obtained a $14,000 loan from JPMorgan Chase Bank, N.A. (Chase), to help finance the purchase of Femcare. The terms and conditions of the loan require UTMD to a) repay the loan in equal monthly payments over 5 years, b) pay interest based on the 30-day LIBOR rate plus a margin starting at 2.80% and ranging from 2.00% to 3.75%, depending on the ratio of its funded debt to EBITDA (Leverage Ratio), c) pledge 65% of all foreign subsidiaries’ stock, d) provide first priority liens on all domestic business assets, e) maintain its Interest Coverage Ratio at 1.05 to 1.00 or better, f) maintain its Tangible Net Worth (TNW) above a minimum threshold 20% below UTMD’s TNW at closing on March 18, and g) maintain its Leverage Ratio at 2.75 to 1.00 or less.  UTMD is in compliance with all of the loan financial covenants at December 31, 2012.  Based on UTMD’s financial position, the bank’s margin was 2.00% at December 31, 2012.  The principal balance on this note at December 31, 2012 was $4,550.

In March 2011, the Company also obtained a $12,934 loan from JP Morgan Chase, London Branch, to help finance UTMD’s purchase of Femcare. Terms and conditions of the loan are the same as those listed above for the $14,000 U.S. loan.  The principal balance on this note at December 31, 2012 was $8,455.

In December 2005, the Company borrowed $5,336 from the Bank of Ireland to finance repatriation of profits achieved from 1996 through 2005 under The American Jobs Creation Act of 2004.  The loan term is 10-years at an interest rate of 1.10% plus the bank’s money market rate, which is a total of the bank’s cost of funds and cost of liquidity.  The note principal was paid off in December 2012.

The following table shows estimated minimum required principal reduction of the notes during the next five years using the December 31, 2012 interest and currency exchange rates and starting with the December 31, 2012 balance of $13,005:

Year		Payments		Interest		Principal		Ending Balance
2013	$	4,456	$	454	$	4,002	$	9,003
2014		4,293		291		4,001		5,002
2015		4,130		129		4,002		1,000
2016		1,007		7		1,000		-
2017		-		-		-		-
Total	$	13,886	$	881	$	13,005