Note 5. INDEBTEDNESS

12 Months Ended

Dec. 31, 2011

Debt Disclosure [Text Block]

Note 5.    INDEBTEDNESS

Long-term debt consists of the following:

	December 31,
	2011			2010
	(Amounts in Thousands)
Term loan payable under the PNC Credit Agreement,interest based on Base Rate of 8.50%	$	-		$	7,444
Revolving loans payable under the PB Loan Agreement and the PNC Credit Agreement, respectively, interest based on Prime Rates, LIBOR Rates and Base Rates (3.01% - 5.50%)		14,359			15,432
Total debt		14,359			22,876
Less revolving loans, classified as current (see below)		(14,359	)		(15,432	)
Less current maturities		-			(1,275	)
Long-term debt	$	-		$	6,169

On October 4, 2011, CCP, Glit/Gemtex, Ltd. and 3254018 Nova Scotia Limited (collectively, the “Borrowers”), wholly-owned subsidiaries of the Company, entered into a Loan and Security Agreement (the “PB Loan Agreement”) with the PrivateBank and Trust Company (“PrivateBank”).  The PB Loan Agreement is a $20.0 million revolving credit facility, including a $3.0 million sub-limit for letters of credit and a $2.5 million sub-limit for capital expenditures (“CapEx Sublimit”).  The proceeds of the Borrowers’ initial borrowing under the PB Loan Agreement were used to repay the Revolving Credit, Term Loan and Security Agreement, as amended (“PNC Credit Agreement”), with PNC Bank, National Association (“PNC Bank”) and pay fees and expenses associated with the negotiation and consummation of the credit facility.  All extensions of credit under the PB Loan Agreement are collateralized by a first priority security interest in and lien upon substantially all present and future assets and properties of the Company and the Borrowers.  The Company guarantees the obligations of the Borrowers under the PB Loan Agreement.

The PB Loan Agreement has an expiration date of September 29, 2014 and its borrowing base is determined by eligible inventory and accounts receivable, amounting to $19.2 million at December 31, 2011.  The Company’s borrowing base under the PB Loan Agreement is reduced by the outstanding amount of standby and commercial letters of credit and any outstanding borrowings under the CapEx Sublimit.  There were no outstanding borrowings under the CapEx Sublimit as of December 31, 2011.  Currently, the Company’s largest letters of credit relate to its casualty insurance programs.  Upon extinguishment of the PNC Credit Agreement, the Company was required to advance cash to PNC Bank as collateral for the outstanding letters of credit in the amount of $2.6 million, all of which was still outstanding at December 31, 2011.  The cash advance is recorded within other current assets and the revolving credit agreement in the Consolidated Balance Sheets.  At December 31, 2011, total outstanding letters of credit were $2.4 million, all of which are issued by PNC Bank under the PNC Credit Agreement until they are transferred to PrivateBank under the PB Loan Agreement.

Borrowings under the PB Loan Agreement bear interest at a per annum rate equal to the sum of the Prime Rate Revolving Loans Applicable Margin plus the Prime Rate (each as defined in the PB Loan Agreement), or at a per annum rate equal to the sum of the LIBOR Rate Revolving Loans Applicable Margin plus the LIBOR Rate (each as defined in the PB Loan Agreement).  An unused commitment fee of 50 basis points per annum is payable monthly on the average unused amount of the PB Loan Agreement.

The PB Loan Agreement includes a financial covenant regarding fixed charge coverage ratio.  The Company was in compliance with this financial covenant at December 31, 2011.

All of the debt under the PB Loan Agreement is re-priced to current rates at frequent intervals.  Therefore, its fair value approximates its carrying value at December 31, 2011.  For the years ended December 31, 2011 and 2010, the Company had amortization of debt issuance costs, included within interest expense, of $0.9 million and $0.5 million, respectively.  Included in amortization of debt issuance costs for the year ended December 31, 2011 is approximately $0.5 million of debt issuance costs written off due to the extinguishment of the PNC Credit Agreement.  Included in amortization of debt issuance costs for the year ended December 31, 2010 is approximately $0.2 million of debt issuance costs written off due to the extinguishment of the Second Amended and Restated Credit Agreement with Bank of America.  The Company incurred $0.7 million of debt issuance costs during the year ended December 31, 2011 associated with entering into the PB Loan Agreement and amending the PNC Credit Agreement.

The PB Loan Agreement requires lockbox agreements which provide for all Company receipts to be swept daily to reduce borrowings outstanding.  These agreements, combined with the existence of a material adverse effect (“MAE”) clause in the PB Loan Agreement, cause the revolving credit facility to be classified as a current liability, per guidance in the Accounting Standards Codification established by the Financial Accounting Standards Board.  The Company does not expect to repay, or be required to repay, within one year, the balance of the revolving credit facility, which is classified as a current liability.  The revolving credit facility does not expire or have a maturity date within one year, but rather has a final expiration date of September 29, 2014.  The MAE clause, which is a fairly typical requirement in commercial credit agreements, allows the lender to require the loan to become due if it determines there has been a material adverse effect on the Company’s operations, business, properties, assets, liabilities, condition, or prospects.