Short-term Borrowings, Long-Term Debt, and Interest Expense

Short-term borrowings and long-term debt consist of the following:



	June 30, 2015		December 31, 2014
Term loan due 2017	$	90,000	$	92,000
Revolver borrowings under the credit facility	154,000		44,000
Capital leases	3		5
Total borrowings	$	244,003	$	136,005
Less current portion	4,003		4,003
Long-term debt	$	240,000	$	132,002

The Company's credit facility includes a term loan of $100.0 million and a revolving line of credit from the Lenders of up to $225.0 million, including a $20.0 million letter of credit sub-facility, all maturing on December 21, 2017. Repayments of the term loan are required at the rate of 1% of original principal amount per quarter beginning on March 31, 2013.

As of June 30, 2015, $90.0 million was outstanding under the Term Loan and $154.0 million was outstanding under the revolving line of credit, both of which approximate fair value because they have a floating interest rate (determined using level 2 inputs within the fair value hierarchy) with total availability at $70.1 million, taking into account $0.9 million in face amount of letters of credit issued under the sub-facility. The current weighted average interest rate for all debt is 2.2%.

Among its affirmative covenants, the Credit Agreement requires the Companies to maintain the following consolidated

ratios (as defined and calculated according to the Credit Agreement) as of the end of each fiscal quarter:

(a) “Total Leverage Ratio” less than or equal to 3.00 to 1.00.

(b) “Senior Leverage Ratio” less than or equal to 2.50 to 1.00.

As of June 30, 2015, the Company was in full compliance with all debt covenant requirements.

As a result of lower than expected earnings for 2015 combined with the increased borrowings to fund the share repurchase program, the Company’s Senior Leverage Ratio has increased from 0.98 as of December 31, 2014 to 1.89 as of June 30, 2015. In order to make restricted payments such as share repurchases or dividends, the Company must pass an incurrence test of (a) the Total Leverage Ratio and Senior Leverage Ratio shall be 0.50 less than the applicable covenant level and (b) accessible borrowing availability of at least $25.0 million. The applicable Senior Leverage Ratio for the incurrence test is 2.00 to 1.00 which the Company is in compliance with at June 30, 2015. The Company is currently negotiating with the lenders to amend the Credit Agreement to adjust or remove the Senior Leverage Ratio. In the event of unsuccessful negotiations with the lenders, the Company may have to take other courses of action, including but not limited to decreasing the rate of share repurchases.

Simultaneous with the term of the credit facility, Innophos entered into an interest rate swap, swapping the LIBOR exposure on $100.0 million adjusting quarterly consistent with the Term Loan, with a fixed rate of 0.9475% plus the applicable margin on the debt expiring in December 2017. This interest rate swap has been designated as a cashflow hedge (Level 2) with the changes in value recorded through other comprehensive income. The fair value of this interest rate swap is a liability of approximately $0.1 million as of June 30, 2015.

We manage our interest rate risk by balancing the amount of fixed-rate and floating-rate debt to the extent practicable consistent with our credit status.

Total interest paid by the Company for all indebtedness for the six months ended June 30, 2015 and June 30, 2014 was $2,326 and $2,160, respectively.

Interest expense, net consists of the following:



	Three months ended						Six months ended
	June 30, 2015			June 30, 2014			June 30, 2015			June 30, 2014
Interest expense	$	1,306		$	1,022		$	2,332		1,607
Deferred financing cost	142			131			285			263
Interest income	(30		)	(9		)	(37		)	(14		)
Less: amount capitalized for capital projects	(15		)	(16		)	(26		)	(23		)
Total interest expense, net	$	1,403		$	1,128		$	2,554		$	1,833