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FINANCING ARRANGEMENTS

The following is a summary of long-term debt at December 31, 2011 and January 1, 2011:

	2011		2010
	(dollars in thousands)

Senior secured revolving credit line	$	309,400	$	207,250
Foreign loans		7,935		6,767
Total debt	$	317,335	$	214,017

Less current maturities of long-term debt		315,831		5,097

Long-term debt	$	1,504	$	208,920

During the second quarter of 2011, the company exercised a provision under its current credit facility that allowed the company to increase the amount of availability under the revolving credit line by approximately $102.0 million. Terms of the company’s senior credit agreement provide for $600.0 million of availability under a revolving credit line which matures on December 28, 2012. As of December 31, 2011, the company had $309.4 million of borrowings outstanding under this facility. The company also has $10.0 million in outstanding letters of credit, which reduces the borrowing availability under the revolving credit line. Remaining borrowing availability under this facility, which is also reduced by the company’s foreign borrowings, was $272.7 million at December 31, 2011.

At December 31, 2011, borrowings under the senior secured credit facility were assessed at an interest rate at 1.00% above LIBOR for long-term borrowings or at the higher of the Prime rate and the Federal Funds Rate. At December 31, 2011, the average interest rate on the senior debt amounted to 1.56%. The interest rates on borrowings under the senior bank facility may be adjusted quarterly based on the company’s defined indebtedness ratio on a rolling four-quarter basis. Additionally, a commitment fee, based upon the indebtedness ratio is charged on the unused portion of the revolving credit line. This variable commitment fee amounted to 0.20% as of December 31, 2011.

In August 2006, the company completed its acquisition of Houno A/S in Denmark. This acquisition was funded in part with locally established debt facilities with borrowings in Danish Krone. On December 31, 2011, these facilities amounted to $3.3 million in U.S. dollars, including $1.7 million outstanding under a revolving credit facility and $1.6 million of a term loan. The interest rate on the revolving credit facility is assessed at 1.25% above Euro LIBOR, which amounted to 3.05% on December 31, 2011. The term loan matures in 2013 and the interest rate is assessed at 4.55%.

In April 2008, the company completed its acquisition of Giga Grandi Cucine S.r.l. in Italy. This acquisition was funded in part with locally established debt facilities with borrowings denominated in Euro. On December 31, 2011, these facilities amounted to $4.1 million in U.S. dollars. The interest rate on the credit facilities is tied to six-month Euro LIBOR. The facilities mature in April of 2015. At December 31, 2011, the average interest rate on these facilities was approximately 4.11%.

In December 2011, the company completed its acquisition of Armor Inox in France. This acquisition was funded in part with locally established debt facilities with borrowings denominated in Euro. On December 31, 2011, these facilities amounted to $0.5 million in U.S. dollars. The interest rate on the credit facilities is tied to six-month Euro LIBOR. The facilities mature in April of 2015. At December 31, 2011, the average interest rate on these facilities was approximately 3.15%.

The company’s debt is reflected on the balance sheet at cost. Based on current market conditions, the company believes its interest rate margins under its senior secured revolving credit line are below the rate available in the market, which causes the fair value of debt to fall below the carrying value. The company believes the current interest rate margin is approximately 0.5% below current market rates. However, as the interest rate margin is based upon numerous factors, including but not limited to the credit rating of the borrower, the duration of the loan, the structure and restrictions under the debt agreement, current lending policies of the counterparty, and the company’s relationships with its lenders, there is no readily available market data to ascertain the current market rate for an equivalent debt instrument. As a result, the current interest rate margin is based upon the company’s best estimate.

The company estimated the fair value of its loans by calculating the upfront cash payment a market participant would require to assume the company’s obligations. The upfront cash payment is the amount that a market participant would be able to lend at December 31, 2011 to achieve sufficient cash inflows to cover the cash outflows under the company’s senior revolving credit facility assuming the facility was outstanding in its entirety until maturity. Since the company maintains the majority of its borrowings under a revolving credit facility and there is no predetermined borrowing or repayment schedule, for purposes of this calculation the company calculated the fair value of its obligations assuming the current amount of debt at the end of the period was outstanding until the maturity of the company’s senior revolving credit facility in December 2012. Although borrowings could be materially greater or less than the current amount of borrowings outstanding at the end of the period, it is not practical to estimate the amounts that may be outstanding during future periods. The carrying value and estimated aggregate fair value, based primarily on market prices, of debt is as follows (dollars in thousands):

	December 31, 2011				January 1, 2011
	Carrying Value		Fair Value		Carrying Value		Fair Value
Total debt	$	317,335	$	315,749	$	214,017	$	209,808

The company believes that its current capital resources, including cash and cash equivalents, cash generated from operations, funds available from its current lenders and access to the credit and capital markets will be sufficient to finance its operations, debt service obligations, capital expenditures, product development and expenditures for the foreseeable future.

The company has historically entered into interest rate swap agreements to effectively fix the interest rate on a portion of its outstanding debt. The agreements swap one-month LIBOR for fixed rates. As of December 31, 2011, the company had the following interest rate swaps in effect:

		Fixed
Notional		Interest			Effective		Maturity
Amount		Rate			Date		Date

$	20,000,000		1.800	%		11/23/09		11/23/12
	20,000,000		1.560	%		03/11/10		12/11/12
	10,000,000		1.120	%		03/11/10		03/11/12
	15,000,000		0.950	%		08/06/10		12/06/12
	25,000,000		1.610	%		02/23/11		02/24/14
	25,000,000		2.520	%		02/23/11		02/23/16
	25,000,000		0.975	%		07/18/11		07/18/14
	15,000,000		1.185	%		09/12/11		09/12/16
	15,000,000		0.620	%		09/12/11		09/11/14

The senior revolving facility matures on December 28, 2012, and accordingly has been classified as a current liability on the consolidated balance sheet. The company anticipates it will enter into a new and similarly structured senior revolving credit facility during first half of 2012 and is in discussions with its current lenders in this regard. The company does not foresee any difficulty in renewing the facility given the financial position and performance of the company and its long standing relationships with its lending partners.

The terms of the senior secured credit facility limit the paying of dividends, capital expenditures and leases, and require, among other things, a maximum ratio of indebtedness to earnings before interest, taxes, depreciation and amortization (“EBITDA”) of 3.5 and a minimum EBITDA to fixed charges ratio of 1.25. The credit agreement also provides that if a material adverse change in the company’s business operations or conditions occurs, the lender could declare an event of default. Under terms of the agreement, a material adverse effect is defined as (a) a material adverse change in, or a material adverse effect upon, the operations, business properties, condition (financial and otherwise) or prospects of the company and its subsidiaries taken as a whole; (b) a material impairment of the ability of the company to perform under the loan agreements and to avoid any event of default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against the company of any loan document. A material adverse effect is determined on a subjective basis by the company's creditors. The credit facility is secured by the capital stock of the company’s domestic subsidiaries, 65% of the capital stock of the company’s foreign subsidiaries and substantially all other assets of the company. At December 31, 2011, the company was in compliance with all covenants pursuant to its borrowing agreements.

The aggregate amount of debt payable during each of the next five years is as follows:

	(in thousands)
2012	$	315,831
2013		115
2014		119
2015		125
2016 and thereafter		1,145

	$	317,335