Line Of Credit

9 Months Ended

Sep. 30, 2011

Line Of Credit [Abstract]

Line Of Credit

10. Line of Credit

Effective July 7, 2011, the Company executed a Second Amendment to its Loan and Security Agreement with its senior lender, Regions Bank. As a result, the Company filed a form 8-K on Monday, July 11, 2011 whereby it disclosed that its credit facility was increased immediately to $25,000, with the facility increasing to $27,500 for the months October thru December. In addition, the interest rate was reduced from libor plus a 3.00% margin, to libor plus a 2.50% margin.

By way of background, on July 23, 2010, the Company successfully re-financed its senior debt with Comerica Bank as a result of a newly issued $20,000 senior secured credit facility provided by Regions Bank. At closing, $11,200 from the new line of credit was used to pay-off the outstanding balance with Comerica Bank. The interest rates on outstanding loan balances were reduced from 6.5% from the previous lender, to libor plus a 3.00% margin, or 3.34% for the new line of credit. The advance rates on the credit facility are 80% for eligible accounts receivable and 50% for eligible inventory for January, February and March; 55% for eligible inventory for April and May; and 60% for eligible inventory for June through December. The new 3-year loan and security agreement is secured by all of the assets of the Company and its divisions. The Regions credit facility requires that certain performance financial covenants be met on a monthly and or quarterly and or yearly basis. These financial covenants consist of a Fixed Charge Coverage Ratio and a Funded Debt to EBITDA Ratio.

The F.C.C. Ratio is defined as EBITDA, plus Rent Expense, minus all unfinanced Capital Expenditures, plus taxes paid, and any restricted payments made (over a rolling 12 month period ending in the current quarter). This amount is then divided by Interest Expense, Rent expense, and the current maturities of funded debt (over a rolling 12 month period ending in the current quarter). For the quarter ended September 30, 2011, the minimum required ratio is 1.05 to 1.00. The actual ratio was 1.12 to 1.00.

The Funded Debt to EBITDA ratio includes: debt for borrowed funds, subordinated debts, the principal component of all capital leases, any deferred payment by one year or more , and all other debt instruments (other than checks drawn in the ordinary course of business), divided by EBITDA. For the quarter ended September 30, 2011, the required ratio needs to be less than 5.25 to 1.0. The actual ratio was 5.10 to 1.00.