Long-term Debt and Line of Credit

3 Months Ended

Mar. 31, 2012

Long-term Debt and Line of Credit [Abstract]

Long-term Debt and Line of Credit

Long-term Debt and Line of Credit

In 2010, the Company entered into a credit agreement with Wells Fargo Bank, National Association, as administrative agent, and Wells Fargo Securities, LLC as sole lead arranger and bookrunner; and the Lenders (as defined) from time to time as party thereto.

The Credit Agreement provides for borrowings of up to $75 million under revolving and swingline loans (as defined in the Credit Agreement) with a $20 million sublimit for the issuance of letters of credit.  An additional $25 million is available under the facility subject to the lenders’ discretion (together, the “Credit Facility”).  The Credit Facility matures on June 30, 2013, and is guaranteed by the subsidiaries of the Company.  The Credit Facility may be used to finance working capital, repay indebtedness, fund acquisitions, and for other general corporate purposes. The Credit Facility is secured by the assets of the Company, including stock held in its subsidiaries.

Revolving loans may be designated as prime rate based loans (“ABR Loans”) or Eurodollar Loans, at the Company’s request, and may be made in an integral multiple of $500,000, in the case of an ABR Loan, or $1 million in the case of a Eurodollar Loan.   Swingline loans may only be designated as ABR Loans, and may be made in amounts equal to integral multiples of $100,000.  The Company may convert, change or modify such designations from time to time.  Interest is computed based on the designation of the Loans, and bear interest at either a prime-based interest rate or a LIBOR-based interest rate.  Principal balances drawn under the Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty.  Amounts repaid under the Credit Facility may be re-borrowed.

The Credit Facility contains certain restrictive financial covenants that are usual and customary for similar transactions, including;

• A Fixed Charge Coverage Ratio of not less than 1.50 to 1.00 at all times;

• A Leverage Ratio of not greater than 2.5 to 1.00 at all times;

• Minimum Net Worth of not less than a base amount of $180 million, plus the sum of 50% of each prior period consolidated net income plus 50% of the Borrower’s and its subsidiaries consolidated net income for that quarter, plus 75% of all issuances of equity interests by Borrower during that quarter.

In addition, the Credit Facility contains events of default that are usual and customary for similar transactions, including non-payment of principal, interest or fees; inaccuracy of representations and warranties; violation of covenants; bankruptcy and insolvency events; and events constituting a change of control.

The Company is subject to a commitment fee, payable quarterly in arrears on the unused portion of the Credit Facility at a current rate of 0.25% of the unused balance.  

In January, 2012, the Company drew $13 million on its revolving line of credit to purchase approximately 18 acres of land including buildings and improvements, in Tampa, Florida from Lazarra Leasing, LLC. Interest at March 31, 2012, was based on a LIBOR-option interest rate of 1.99% and is paid in arrears. At March 31, 2012, the Company had letters of credit outstanding of approximately $952,000.

At March 31, 2012, the Company was in compliance with one of its financial covenants. The Company's net worth, at $228.1 million, exceeded its minimum requirement of $189.3 million. However, the Leverage Ratio, calculated at (1.48) to 1.00, was not within the not greater than 2.50 to 1.00 maximum parameter, and the Fixed Charge Coverage Ratio was less than the minimum of 1.50 to 1.00, and the Company was not in compliance with these covenants. The Company's lenders waived compliance with these ratios as of March 31, 2012. In accordance with the terms of the Credit Facility, the Company set aside cash of $13.95 million . This sum represents the balance of the amount drawn in January 2012 to purchase land and buildings in Tampa, Florida, and the outstanding letters of credit. The Company is working with its lenders on an alternative arrangement in lieu of a cash set aside, and expects to have this arrangement in place prior to the end of the second fiscal quarter of 2012. Additionally, the Company is working with its lenders to modify its Credit Facility to provide covenant relief given the Company's current near term outlook.