Long-Term Debt

Debt as of December 31, 2013 and 2012 consisted of the following (in thousands):



	2013			2012
Senior secured revolving credit facility, due in October 2015	$	28,109		$	217,494
Convertible senior subordinated debentures at 4.125%, due in February 2027	10,641			10,009
Other notes and lease obligations	6,536			7,299
	45,286			234,802
Less current maturities of long-term debt	(14,102		)	(5,427		)
	$	31,184		$	229,375

The Company's senior secured revolving credit agreement, (the “Credit Agreement”), as entered into on October 28, 2010, originally provided for a $400 million senior secured revolving credit facility maturing in October 2015. The Credit Agreement contains certain covenants that are customary for similar credit arrangements, including covenants relating to, among other things, financial reporting and notification, compliance with laws, preservation of existence, maintenance of books and records, use of proceeds, maintenance of properties and insurance, and limitations on liens, dispositions, issuance of debt, investments, payment of dividends, repurchases of capital stock, acquisitions, transactions with affiliates, and capital expenditures. There also are financial covenants that require the Company to maintain a maximum leverage ratio (consolidated funded indebtedness to consolidated EBITDA, each as defined in the Credit Agreement, as amended) and a minimum interest coverage ratio (consolidated EBITDA to consolidated interest charges, each as defined in the Credit Agreement, as amended).

On May 30, 2013, the Company entered into a Fourth Amendment ("the Amendment") to its Credit Agreement. Pursuant to the Amendment, the Credit Agreement was amended to: (i) decrease the aggregate principal amount of the revolving credit facility to $250,000,000 from $400,000,000, and limit the Company's borrowings under the revolving credit facility to an amount not to exceed $200,000,000 aggregate principal amount through December 31, 2013; (ii) increase the maximum leverage ratio to 4.00 to 1.00 from 3.50 to 1.00 until January 1, 2014, when the maximum leverage ratio reverts back to 3.50 to 1.00; (iii) decrease the minimum interest coverage ratio to 3.00 to 1.00 from 3.50 to 1.00 until January 1, 2014, when the minimum interest coverage ratio will revert back to 3.50 to 1.00; (iv) in calculating consolidated EBITDA for purposes of determining the ratios, provide for the add back to consolidated EBITDA of up to an additional $15,000,000 for future one-time cash restructuring charges and (v) provide for an increase of (A) 25 basis points in the margin applicable to determining the interest rate on borrowings under the revolving credit facility and letter of credit fees and (B) 10 basis points in the commitment fee, all during periods when the leverage ratio exceeds 3.50 to 1.00. The initial restructuring charge limitation of $15,000,000 for the life of the agreement was reached in the fourth quarter of 2012. As a result of reaching the charge limitation, EBITDA for the leverage ratio as of December 31, 2013 was reduced by cash charges of $3,871,000. Compliance with the ratios is tested at the end of the quarter in accordance with the Credit Agreement. As a result of the Amendment, the Company incurred $436,000 in fees in the second quarter of 2013 which were capitalized and are being amortized through October, 2015. In addition, as a result of reducing the capacity of the facility from $400,000,000 to $250,000,000, the Company wrote-off $1,216,000 in fees previously capitalized in the second quarter of 2013, which is reflected in the expense of the North America / HME segment.

The Credit Agreement also provides for the issuance of swing line loans. Borrowings under the Credit Agreement bear interest, at the Company's election, at (i) the London Inter-Bank Offer Rate (“LIBOR”) plus a margin; or (ii) a Base Rate Option plus a margin. The applicable margin is currently 2.25% per annum for LIBOR loans and 1.25% for the Base Rate Option loans based on the Company's leverage ratio. In addition to interest, the Company is required to pay commitment fees on the unused portion of the Credit Agreement. The commitment fee rate is currently 0.35% per annum. Like the interest rate spreads, the commitment fee is subject to adjustment based on the Company's leverage ratio. The obligations of the borrowers under the Credit Agreement are secured by substantially all of the Company's U.S. assets and are guaranteed by substantially all of the Company's material domestic and foreign subsidiaries.

As of December 31, 2013, the Company's leverage ratio was 2.30 and the Company's interest coverage ratio was 7.51 compared to a leverage ratio of 2.66 and an interest coverage ratio of 19.00 as of December 31, 2012. As of December 31, 2013, the Company was in compliance with all covenant requirements and under the most restrictive covenant of the Company's borrowing arrangements, the Company had the capacity to borrow up to an additional $40,143,000.

The Company may from time to time seek to retire or purchase its 4.125% Convertible Senior Subordinated Debentures due 2027, in privately negotiated transactions or otherwise so long as no event of default is then occurring or would be caused thereby and the Company’s leverage ratio after such redemption, purchase or repurchase is not more than 3.00 to 1. The Credit Agreement provides for customary events of default with corresponding grace periods, including, among other things, failure to pay any principal or interest when due, failure to perform or observe covenants, bankruptcy or insolvency events and change of control. Such purchases or exchanges, if any, will depend on prevailing market conditions, the Company's liquidity requirements, contractual restrictions and other factors. The amounts involved in any such transactions, individually or in the aggregate, may be material. The Company did not repurchase and extinguish any of its Convertible Senior Subordinated Debentures in 2013 compared to repurchase and extinguishment of principal amounts of $500,000 in 2012 and $63,351,000 in 2011. As of December 31, 2013, the Company had $13,350,000 remaining of Convertible Senior Subordinated Debentures.

While there is general concern about the potential for rising interest rates, the Company believes that its exposure to interest rate fluctuations is manageable given that portions of the Company's debt are at fixed rates into 2014, the Company has the ability to utilize swaps to exchange variable rate debt to fixed rate debt, if needed, and the Company's free cash flow should allow it to absorb any modest rate increases in the months ahead without any material impact on its liquidity or capital resources. The Company is a party to an interest rate swap agreement to effectively convert a portion of floating rate revolving credit facility debt to fixed rate debt to avoid the risk of changes in market interest rates. Specifically, an interest rate swap agreement, as of December 31, 2013, for a notional amount of $12,000,000 through April 2014 was entered into that fixes the LIBOR component of the interest rate on that portion of the revolving credit facility debt at rate of 0.54% for an effective aggregate rate of 2.79%. As of December 31, 2013, the weighted average floating interest rate on revolving credit borrowing was 2.39% compared to 2.21% as of December 31, 2012.

In 2007, the Company issued $135,000,000 principal amount of Convertible Senior Subordinated Debentures due 2027. The debentures are unsecured senior subordinated obligations of the Company guaranteed by substantially all of the Company’s domestic subsidiaries, pay interest at 4.125% per annum on each February 1 and August 1, and are convertible upon satisfaction of certain conditions into cash, common shares of the Company, or a combination of cash and common shares of the Company, subject to certain conditions. The debentures allow the Company to satisfy the conversion using any combination of cash or stock, and at the Company’s discretion. The Company intends to satisfy the accreted value of the debentures using cash. Assuming adequate cash on hand at the time of conversion, the Company also intends to satisfy the conversion spread using cash, as opposed to stock. As of December 31, 2013, the principal amount of the Company’s Convertible Notes exceeded the if-converted value of those notes by $851,000. The Company retired principal amounts of $500,000 in 2012 compared $63,351,000 in 2011 of Convertible Notes at a premium above par. In accordance with ASC 470-20, Convertible Debt, the Company utilized the inducement method of accounting to calculate the loss associated with the early retirement of the convertible debt. The Company recorded expense of $312,000 and $24,200,000 related to the loss on the debt extinguishment including the write-off of $11,000 and $1,554,000 of deferred financing fees, which were previously capitalized in 2012 and 2011, respectively.

The Company includes the dilutive effect of shares necessary to settle the conversion spread in the Net Earnings per Share- Assuming Dilution calculation unless such amounts are anti-dilutive. The initial conversion rate is 40.3323 shares per $1,000 principal amount of debentures, which represents an initial conversion price of approximately $24.79 per share. Holders of the debentures can convert the debt to common stock if the Company’s common stock price is at a level in excess of $32.23, a 30% premium to the initial conversion price for at least twenty trading days during a period of thirty consecutive trading days preceding the date on which the notice of conversion is given. At a conversion price of $32.23 (30% premium over $24.79), the full conversion of the convertible debt equates to 539,000 shares. The debentures are redeemable at the Company’s option, subject to specified conditions, on or after February 6, 2012 through and including February 1, 2017. The Company may redeem some or all of the debentures for cash on or after February 1, 2017. Holders have the right to require the Company to repurchase all or some of their debentures upon the occurrence of certain circumstances on February 1, 2017 and 2022. The Company evaluated the terms of the call, redemption and conversion features under the applicable accounting literature, including Derivatives and Hedging, ASC 815, and determined that the features did not require separate accounting as derivatives. The notes, debentures and common shares issuable upon conversion of the debentures have been registered under the Securities Act.

The components of the Company’s convertible debt as of December 31, 2013 and 2012 consist of the following (in thousands):



	2013			2012
Carrying amount of equity component	$	25,381		$	25,381

Principal amount of liability component	$	13,350		$	13,350
Unamortized discount	(2,709		)	(3,341		)
Net carrying amount of liability component	$	10,641		$	10,009

The unamortized discount of $2,709,000 is to be amortized through February 2017. The effective interest rate on the liability component was 11.5% for 2007 through 2012. Non-cash interest expense of $633,000, $577,000 and $1,565,000 was recognized in 2013, 2012 and 2011, respectively, in comparison to actual interest expense paid of $551,000, $560,000 and $1,670,000 based on the stated coupon rate of 4.125%, for each of the same periods. The convertible debt was not convertible as of December 31, 2013 nor was the convertible debt conversion price threshold of $32.23 met during 2013.

Included in the senior secured revolving credit facility, there were no borrowings denominated in foreign currencies as of December 31, 2012 or December 31, 2013. For 2013 and 2012, the weighted average interest rate on all borrowings was 2.73% and 2.36%, respectively.

The aggregate minimum maturities of long-term debt for each of the next five years are as follows: $14,102,000 in 2014, $1,148,000 in 2015, $16,175,000 in 2016, $1,249,000 in 2017, and $694,000 in 2018. Interest paid on all borrowings was $4,046,000, $8,866,000 and $10,789,000 in 2013, 2012 and 2011, respectively.