Quarterly report pursuant to sections 13 or 15(d)

Debt

v2.4.0.6
Debt
 3 Months Ended
Mar. 31, 2013
Debt [Abstract]  
Debt
5.   Debt

The availability of funds under the Wells Fargo revolving credit facility (the “Credit Facility”) is based upon the Company’s eligible accounts receivable and eligible inventory. As of March 31, 2013 and December 31, 2012, the Company had revolving loan gross availability of $6.4 million and $6.5 million, respectively, and outstanding amounts totaling ($0.6) million and $1.8 million, leaving approximately $7.0 million and $4.7 million available under the Credit Facility.

The Credit Facility is collateralized by substantially all of the Company’s assets and requires the Company to comply with covenants, including but not limited to, financial covenants relating to the satisfaction, on a quarterly and annual basis for the duration of the Credit Facility, of a total leverage ratio, a fixed charge coverage ratio and an annual limit on capital expenditures, including capital leases. As of March 31, 2013, the Company was in compliance with all such covenants and expects to be in compliance over the next 12 months.

In connection with the Credit Facility, the Company has the following covenant obligations for the duration of the facility:

 

  a) The fixed charge coverage ratio is calculated in accordance with the agreement governing the Credit Facility. This covenant is first required to be reported as of March 31, 2013 and has a minimum ratio at that time of 1.25:1. The required ratio varies quarterly for the remainder of the facility duration, from 1.25:1 to 2.00:1.

 

  b) The leverage ratio is calculated in accordance with the agreement governing the Credit Facility. This covenant is first required to be reported as of March 31, 2013 and has a maximum ratio at that time of 2.50:1. The required ratio varies quarterly for the remainder of the facility duration, from 2.50:1 to 1.00:1.

 

  c) The Credit Facility includes an annual limitation on capital expenditures in accordance with the agreement governing the Credit Facility that is $5.5 million for each year ending December 31, 2013 through 2016.