8. BANK BORROWINGS AND CAPITAL LEASE OBLIGATIONS

Bank borrowings and capital lease obligations as of December 31, 2012 and 2011 consist of the following:


	December 31,
($ thousands)	2012		2011
Bank borrowings	$	6,582	$	-
Revolving credit facility		-		422
Capital lease obligations for capitalized software bearing interest rates ranging from 8.7% to 12.4% and maturities through 2011		-		640
Capital lease obligations for equipment bearing interest rates of 5.3% and maturities through 2017		53		81
Total bank borrowings and capital lease obligations	$	6,635	$	1,143

Long-term Debt Agreement

On December 10, 2012, Crocs, Inc. (“the Company”) entered into a Master Installment Payment Agreement (“Master IPA”) with PNC Bank National Association (“PNC”) in which PNC will finance the Company’s purchase of software and services, which may include but are not limited to third party costs to design, install and implement software systems, and associated hardware described in the schedules defined within the Master IPA. This agreement was entered into to finance the recent implementation of a new enterprise resource planning (“ERP”) system which began in October 2012 and is estimated to continue through early 2014. The terms of the agreement consist of variable interest rates and payment terms based on amounts borrowed and timing of activity throughout the implementation of the ERP. As of December 31, 2012, we had $6.6 million of long-term debt outstanding, of which $2.0 million represent current installments, under the agreement payable over the next four years bearing interest at rate of 2.63%. Interest rates and payment terms are subject to changes as further financing occurs under the Master IPA.

Revolving Credit Facility

On December 10, 2012, Crocs, Inc. (the “Company”) and its subsidiaries, Crocs Retail, Inc., Ocean Minded, Inc., Jibbitz, LLC and Bite, Inc. (collectively with the Company, the “Borrowers”) entered into the First Amendment to Amended and Restated Credit Agreement (the “First Amendment”) with the lenders named therein and PNC Bank, National Association (“PNC”), as a lender and administrative agent for the lenders, pursuant to which certain terms of the Amended and Restated Credit Agreement (the “Credit Agreement”), dated December 16, 2011, were amended. The First Amendment, among other things, (i) extends the maturity date from December 16, 2016 to December 16, 2017, (ii) increases the total commitments under the revolving credit facility from $70 million to $100 million, with the ability to increase commitments to up to $125 million subject to certain conditions, (iii) decreases the revolving interest rate by 50 basis points for both domestic and LIBOR rate loans, (iv) increases the ability of the Company to make stock repurchases from up to $25 million per year to up to $150 million per year, subject to certain conditions, (v) increases the limit for permitted acquisitions from up to $40 million per year to up to $100 million per year, subject to certain conditions, (vi) adds a covenant to maintain unrestricted cash of at least $100 million at all times, subject to limitations, and (vii) amends certain restrictive covenants to be more favorable to the Borrowers.

The Credit Agreement is available for working capital, capital expenditures, permitted acquisitions, reimbursement of drawings under letters of credit, and permitted dividends, distributions, purchases, redemptions and retirements of equity interests. Borrowings under the Credit Agreement are secured by all of our assets including all receivables, equipment, general intangibles, inventory, investment property, subsidiary stock and intellectual property. Borrowings under the Credit Agreement bear interest at a variable rate. For domestic rate loans, the interest rate is equal to the highest of (i) the daily federal funds open rate as quoted by ICAP North America, Inc. plus 0.5%, (ii) PNC’s prime rate and (iii) a daily LIBOR rate plus 1.0%, in each case there is an additional margin ranging from 0.25% to 1.00% based on certain conditions. For LIBOR rate loans, the interest rate is equal to a LIBOR rate plus a margin ranging from 1.25% to 2.00% based on certain conditions. The Credit Agreement requires monthly interest payments with respect to domestic rate loans and at the end of each interest period with respect to LIBOR rate loans and contains certain customary restrictive and financial covenants. We were in compliance with these restrictive financial covenants as of December 31, 2012.

As of December 31, 2012 and 2011, we had no outstanding borrowings and $0.4 million of outstanding borrowings, respectively, under the Credit Agreement. As of December 31, 2012 and 2011, we had issued and outstanding letters of credit of $6.4 million and $6.0 million, respectively, which were reserved against the borrowing base under the terms of our revolving credit facility. During the years ended December 31, 2012 and 2011, we capitalized $0.5 million and $0.4 million, respectively, in fees and third party costs which were incurred in connection with the Credit Agreement, as deferred financing costs.

Maturities of Debt and Capital Lease Obligations

Minimum future annual debt obligations for each of the five succeeding years as of December 31, 2012, are as follows (in thousands):


Fiscal years ending December 31,
2013	$	2,013
2014		1,623
2015		1,666
2016		1,280
2017		-
Thereafter		-
Total principal debt maturities	$	6,582

Minimum future annual rental commitments under capital leases for each of the five succeeding years as of December 31, 2012, are as follows (in thousands):


Fiscal years ending December 31,
2013	$	27
2014		14
2015		7
2016		7
2017		2
Thereafter		-
Total mimimum lease payments, including interest		57
Amounts representing interest		(4)
Total mimimum lease payments, net of interest	$	53
Current portion	$	26
Noncurrent portion	$	27