6. Credit Agreements

The revolving credit facility and credit agreement discussed below were outstanding for all periods presented. The Company refinanced this debt on February 9, 2012. Please refer to Note 16 for further details.

Long-term debt is included in the balance sheets as follows (dollars in thousands):

	December 31,
	2011		2010
First lien term loan	$	604,372	$	664,372
Less treasury debt – first lien		6,498		7,143
Less current portion		22,874		-
	$	575,000	$	657,229

Maturities of long-term debt outstanding at December 31, 2011, are as follows (dollars in thousands):

Year
2011	$	--
2012		--
2013		575,000
Total	$	575,000

In connection with our debt refinancing on February 9, 2012, the Company paid off $22,874,000 of debt with available cash on hand. The Company classified this portion of debt as a current liability in the consolidated balance sheet at December 31, 2011.

For all years presented, the Company had credit agreements which provided for borrowings under a revolving credit facility (the Revolving Credit Facility) and two term loans (collectively, the Credit Agreements), which are described further below. The Credit Agreements of the Company were secured by the associated collateral agreements which pledged virtually all assets of the Subsidiary.

Borrowings available under the Revolving Credit Facility were limited to a maximum of $150,000,000. Availability under the Revolving Credit Facility was reduced by the amount of outstanding undrawn letters of credit. Interest on the Revolving Credit Facility was payable at LIBOR plus 2.5%, or ABR plus 1.5%, as selected by the Company. ABR is the greater of the prime rate or the federal funds rate plus 0.5%. The spreads on these rates would have been reduced as a result of the Company meeting certain financial ratios. As of December 31, 2011, the Company's interest rate on the Revolving Credit Facility was 2.27%. As of December 31, 2011, the Company had $144,191,000 available under its Revolving Credit Facility and no outstanding borrowings. The Company was required to pay a Revolving Credit Facility commitment fee of 0.375% on the average available unused commitment. The Revolving Credit Facility was scheduled to mature on November 10, 2012, unless terminated earlier under certain conditions contained in the Credit Agreements.

The Credit Agreements provided the Company the ability to issue letters of credit. Outstanding undrawn letters of credit reduced availability under the Company's Revolving Credit Facility. The letters of credit accrued interest at a rate of 2.13%, paid quarterly on the undrawn daily aggregate exposure of the preceding quarter. This rate would have been reduced as a result of the Company meeting certain financial ratios. At December 31, 2011 and 2010, letters of credit outstanding were $5,809,000 and $4,334,000, and interest rates were 2.13% and 2.63% respectively.

The principal amount of and the outstanding balance under the First Lien Term Loan (the First Lien) was $597,874,000 and $657,229,000 (net of loans held in treasury by the Company) at December 31, 2011 and 2010, respectively. Prior to the 2010 debt repayments, principal payments were due in quarterly installments of $2,375,000. Interest on the First Lien was payable at LIBOR plus 2.5%, or ABR plus 1.5%, as selected by the Company. At December 31, 2011 and 2010 the Company's interest rate on the First Lien was 2.80% and 2.76%, respectively. The outstanding principal balance was payable on the earlier of November 10, 2013, or the date of termination of the First Lien, whether by its terms, by prepayment, or by acceleration. In addition to scheduled principal payments, the First Lien required an excess cash flow payment each year. The required excess cash flow payment was the amount by which 50% of the excess cash flow (as defined in the credit agreement) generated by the Company in any given year exceeded the principal payments made during that year. The excess cash flow payment was scheduled to be due 125 days after year-end. For the year ending December 31, 2011, as a result of refinancing the Credit Agreement on February 9, 2012, the Company was not required to make an excess cash flow payment. For the year ending December 31, 2010, based on the calculation, the Company was not required to make an excess cash flow payment. For the year ending December 31, 2009, the required excess cash flow payment was $29,576,000, which was paid in 2010.

In 2010, the Company used net proceeds from its initial public offering and a substantial portion of its cash and cash equivalents to pay down debt. In February 2010, the Company used $221.6 million in net proceeds from the initial public offering to pay down the second lien term loan in full and to pay down a portion of the first lien term loan. In addition, in March 2010, December 2010, April 2011 and December 2011, the Company used $138.5 million, $74.2 million, $24.7 million and $34.6 million respectively, of cash and cash equivalents on hand to further pay down the first lien term loan principal. As a result of these debt repayments, the outstanding balance on the first lien credit facility was reduced to $597.9 million as of December 31, 2011, and the second lien credit facility had been repaid in full and terminated. Also, quarterly installments for principal payments of $2,375,000 were paid in full for the remainder of the first lien term loan.

The Credit Agreements required the Company, among other things, to meet certain financial and nonfinancial covenants and maintain financial ratios in such amounts and for such periods as set forth therein. The Company was required to maintain a leverage ratio (net debt divided by EBITDA, as defined within the Credit Agreements) of 4.75 as of December 31, 2011. The Company was in compliance with all requirements as of December 31, 2011 and 2010.

The Credit Agreements restricted the circumstances in which distributions and dividends were permitted be paid by its' Subsidiary. Payments could have been made to the Company for certain expenses, and dividends could have been used to repurchase equity interests, subject to an annual limitation. Additionally, the Credit Agreements restricted the aggregate amount of dividends and distributions that could have been paid and required the maintenance of certain leverage ratios.

During 2009, CCMP acquired $9,898,000 par value of First Lien term loans and $20,000,000 par value of Second Lien term loans for approximately $6,459,000 and $8,296,000 respectively. CCMP exchanged this debt for additional shares of Series A Preferred stock issued by the Company. The Company subsequently contributed all but $2,000,000 of the Second Lien term loan debt to its Subsidiary. The fair value of the shares exchanged was $6,459,000 and $8,296,000 for the First Lien term loan and Second Lien term loan, respectively. These shares have beneficial conversion features which are contingent upon a future event (see Note 6). The Company recorded this transaction as Series A Preferred stock of $14,754,000 based on the fair value of the debt contributed by CCMP which approximated the fair value of shares exchanged. The debt was held in treasury at face value. Consequently, the Company recorded a gain on extinguishment of debt of $14,745,000, which included the write-off of deferred financing fees and other closing costs, in the consolidated statement of operations for the year ended December 31, 2009.

Effective January 3, 2009, the Company, within the terms of the Credit Agreements, changed the interest rate election from three-month LIBOR to one-month LIBOR. The Company concluded that as of January 3, 2009, the Swaps no longer met hedge effectiveness tests and were therefore no longer highly effective as a hedge against the impact on interest payments of changes in the LIBOR interest rate. The effective portion of the Swaps prior to the change remained in accumulated other comprehensive income (loss) and was amortized as interest expense over the period of the originally designated hedged transactions through January 3, 2010. Changes in the fair value of the Swaps were immediately recognized in the consolidated statements of operations as interest expense. The Company determined its Swaps met hedge effectiveness tests and were deemed highly effective for hedge accounting under ASC 815 as of December 31, 2008. Accordingly, at December 31, 2008 the change in fair value was recorded in accumulated other comprehensive income (loss) net of tax for the effective portion of the hedges.