Financing Arrangements

12 Months Ended

Dec. 31, 2011

Financing Arrangements [Abstract]

Financing Arrangements

6.     Financing arrangements

Financing arrangements consisted of the following at December 31, 2011 and 2010:

	2011			2010
	(In thousands)
Senior Notes	$	172,500		$	172,500
Revolving credit facility		17,000			—
Other		2,608			2,093
Total debt	$	192,108		$	174,593
Less: current portion		(2,232	)		(1,606	)
Long-term portion	$	189,876		$	172,987

Our financing arrangements include $172.5 million of unsecured convertible senior notes (“Senior Notes”) and a $125.0 million revolving credit facility. The Senior Notes bear interest at a rate of 4.0% per year, payable semi-annually in arrears on April 1 and October 1 of each year, beginning April 1, 2011. Holders may convert the Senior Notes at their option at any time prior to the close of business on the business day immediately preceding the October 1, 2017 maturity date. The conversion rate is initially 90.8893 shares of our common stock per $1,000 principal amount of Senior Notes (equivalent to an initial conversion price of $11.00 per share of common stock), subject to adjustment in certain circumstances. Upon conversion, the Senior Notes will be settled in shares of our common stock. We may not redeem the Senior Notes prior to their maturity date.

In November 2011, we entered into a Second Amended and Restated Credit Agreement (the “Credit Agreement”) which provides for a $125 million revolving loan facility available for borrowings and letters of credit and expires in November 2016. Under the terms of the Credit Agreement, we can elect to borrow at an interest rate either based on LIBOR plus a margin based on our consolidated leverage ratio, ranging from 175 to 300 basis points, or at an interest rate based on the greatest of: (a) prime rate, (b) the federal funds rate in effect plus 50 basis points, or (c) the Eurodollar rate for a Eurodollar Loan with a one-month interest period plus 100 basis points, in each case plus a margin ranging from 75 to 200 basis points. The applicable margin on LIBOR borrowings on December 31, 2011 was 200 basis points. In addition, we are required to pay a commitment fee on the unused portion of the Facility of 37.5 basis points. The Credit Facility contains customary financial and operating covenants, including a consolidated leverage ratio, a senior secured leverage ratio and an interest coverage ratio. We were in compliance with these covenants as of December 31, 2011.

At December 31, 2011, $17.0 million was outstanding under the Credit Agreement, and $14.0 million in letters of credit were issued and outstanding under the Credit Agreement leaving $94.0 million of availability at December 31, 2011. Additionally, we had $0.7 million in letters of credit outstanding relating to foreign operations.

The Credit Agreement is a senior secured obligation, secured by first liens on all of our U.S. tangible and intangible assets, including our accounts receivable and inventory. Additionally, a portion of the capital stock of our non-U.S. subsidiaries has also been pledged as collateral.

Our foreign Fluid Systems and Engineering subsidiaries in Italy and Brazil maintain local credit arrangements consisting primarily of lines of credit with several banks, which are renewed on an annual basis. We utilize local financing arrangements in our foreign operations in order to provide short-term local liquidity needs, as well as to reduce the net investment in foreign operations subject to foreign currency risk. Advances under these short-term credit arrangements are typically based on a percentage of the subsidiary’s accounts receivable or firm contracts with certain customers. The weighted average interest rate under these arrangements was 3.54% and 2.26% on total outstanding balances of $2.2 million and $1.5 million at December 31, 2011 and 2010, respectively.

We incurred net interest expense of $9.2 million, $10.3 million, and $9.3 million for the years ended December 31, 2011, 2010 and 2009, respectively. Scheduled maturities of all long-term debt are as follows (in thousands):

2013	$	65
2014		65
2015		65
2016		181
Thereafter		189,500
Total	$	189,876