Debt and Financing Arrangements

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Debt and Financing Arrangements

Debt and Financing Arrangements

On October 15, 2018, the Company entered into a Credit Agreement (“Credit Agreement”) with PNC as the administrative agent and sole lender.

Pursuant to this Credit Agreement, the Company has access to a $150 million senior revolving credit facility (“Revolver”). Under the terms of the Credit Agreement, the Company is entitled to further request an additional aggregate principal amount of up to $100 million, subject to the satisfaction of certain conditions. In addition, the Company is entitled to the benefit of swing loans from amounts otherwise available under the Revolver in the aggregate principal amount of up to $20 million and to request Letters of Credit from amounts otherwise available under the Revolver in the aggregate principle amount up to $20 million, both subject to certain conditions. The obligations of the Company under the Credit Agreement are not secured, but are subject to certain covenants.

During the three months ended September 30, 2020, the Company made principal repayments of $50 million, plus accrued interest, on the Revolver. The Company used cash and cash equivalents to fund the payments. As of September 30, 2020, there was an outstanding balance of $25 million on the Revolver. The Company has the ability and intent to repay the full outstanding balance using cash, and anticipates paying the remaining balance during the fourth quarter of 2020; therefore, this balance has been classified as a current liability. The Revolver expires on October 15, 2023.

As of September 30, 2020, the borrowing rate on its Revolver is derived from the one month LIBOR, and based on the Company's leverage ratio as of September 30, 2020, the interest rate on its borrowings is equal to 1.03%. During the three and nine months ended September 30, 2020, interest expense was $0.2 million and $0.6 million, respectively, which was recorded with the "Other income (loss), net" section of the Unaudited Consolidated Statements of Income. Based on the loan balance as of September 30, 2020, a one percent increase in the Company's borrowing rate would increase net interest expense paid by the Company on its borrowings by approximately $0.1 million on an annual basis.

The Credit Agreement contains customary representations and warranties and certain covenants that place certain limitations on the Company.

As of September 30, 2020, the Company is in compliance with its covenants under the Credit Agreement.