XML 26 R13.htm IDEA: XBRL DOCUMENT v2.4.0.6
Line of credit
3 Months Ended
Mar. 31, 2012
Line of credit [Abstract]  
Line of credit

8. Line of credit

We have a revolving line of credit with a domestic bank with total availability of $10.0 million. The line is secured by the Company’s accounts receivable and inventory, and bears interest at varying rates, currently LIBOR plus 1.5% to prime. The line of credit matures on June 30, 2013, and requires monthly payments of interest only. At March 31, 2012 and December 31, 2011, there were no borrowings under the line. Our agreement with the bank requires us to comply with certain financial and other covenants including maintenance of minimum tangible net worth and a fixed charge coverage ratio. The ratio of total liabilities to tangible net worth can be no greater than 1:1, and the fixed charge coverage ratio can be no less than 1.25:1, based upon a trailing twelve month period. During 2011, the Company violated these covenants as a result of a $5.7 million non-cash charge. As of December 31, 2011 the violation was resolved by a waiver that provided relief to effectively exclude the $5.7 million charge discussed above when calculating the fixed charge coverage ratio covenant in the future. At March 31, 2012, the Company’s tangible net worth ratio was 0.25:1 and its fixed charge coverage ratio was 6.77:1. Accordingly, the Company was in compliance with those covenants.