Annual report pursuant to Section 13 and 15(d)

Long-Term Debt

Long-Term Debt

12 Months Ended

Dec. 31, 2014

NOTE 8. LONG-TERM DEBT

Long-term debt, net as of December 31, 2014 and December 31, 2013, was as follows:


	December 31,
	2014		2013

Revolving credit facilities (a)	$	-	$	10,320
Foreign credit facilities (b)		3,844		997
5% Senior Subordinated Notes due 2017 (c)		18,491		17,154
Capital leases (d)		-		47
Term notes (e)		102		9,523
		22,437		38,041
Less current portion		(3,875)		(1,910)
	$	18,562	$	36,131

(a)

As of December 31, 2014, the Company had drawn $0 on a $20,000 revolving credit facility with Zions First National Bank (the “Lender”) with a maturity date of April 1, 2017. On July 23, 2014, upon the closing of the GMP Sale, the Company paid off amounts outstanding under the revolving credit facility with the Lender in full.

On February 28, 2014, the Company together with its direct and indirect domestic subsidiaries entered into a first amendment (the “Amendment”) to the amended and restated loan agreement dated March 8, 2013 (the “Loan Agreement”) with the Lender to reduce its existing Term Facility from $15,000 to $10,000 pursuant to an amended and restated term loan promissory note (the “Amended and Restated Term Loan Promissory Note”). Also pursuant to the Amendment, the Company terminated its outstanding Acquisition Facility which previously allowed the Company to borrow up to $10,000 to fund permitted acquisitions and amended certain covenants.

On October 31, 2014, the Company together with its direct and indirect domestic subsidiaries entered into a second amended and restated loan agreement (the “Second Amended and Restated Loan Agreement”) with the Lender, which matures on April 1, 2017. Under the Second Amended and Restated Loan Agreement, the Company has a $30,000 revolving line of credit (the “Revolving Line of Credit”) pursuant to a second amended and restated promissory note (revolving loan) (the “Revolving Line of Credit Promissory Note”) which is inclusive of a $10,000 accordion option (the “Accordion”) available to the Company to increase the Revolving Line of Credit on a seasonal or permanent basis for funding general corporate needs including working capital, capital expenditures, permitted loans or investments in subsidiaries, and the issuance of letters of credit.

All debt associated with the Second Amended and Restated Loan Agreement bears interest at one-month London Interbank Offered Rate (“LIBOR”) plus an applicable margin as determined by the ratio of Total Senior Debt to Trailing Twelve Month EBITDA as follows: (i) one month LIBOR plus 4.00% per annum at all times that Total Senior Debt to Trailing Twelve Month EBITDA ratio is greater than or equal to 2.00; (ii) one month LIBOR plus 3.00% per annum at all times that Total Senior Debt to Trailing Twelve Month EBITDA ratio is greater than 1.00 and less than 2.00; and (iii) one month LIBOR plus 2.00% per annum at all times that Total Senior Debt to Trailing Twelve Month EBITDA ratio is less than 1.00 or if the Company has cash or marketable securities equal to or greater than $30,000. The Second Amended and Restated Loan Agreement requires the payment of any unused commitment fee of (i) .6% per annum at all times that Total Senior Debt to Trailing Twelve Month EBITDA ratio is greater than or equal to 2.00; (ii) .5% per annum at all times that Total Senior Debt to Trailing Twelve Month EBITDA ratio is greater than 1.00 and less than 2.00; and (iii) .4% per annum at all times that Total Senior Debt to Trailing Twelve Month EBITDA ratio is less than 1.00.

The Second Amended and Restated Loan Agreement contains certain restrictive debt covenants that require the Company and its subsidiaries to maintain an EBITDA based minimum Trailing Twelve Month EBITDA, a minimum net worth, a positive amount of asset coverage, and limitations on capital expenditures all as calculated in the Second Amended and Restated Loan Agreement. In addition, the Second Amended and Restated Loan Agreement contains covenants restricting the Company and its subsidiaries from pledging or encumbering their assets, with certain exceptions, and from engaging in acquisitions other than acquisitions permitted by the Second Amended and Restated Loan Agreement. The Second Amended and Restated Loan Agreement contains customary events of default (with grace periods where customary) including, among other things, failure to pay any principal or interest when due; any materially false or misleading representation, warranty, or financial statement; failure to comply with or to perform any provision of the Second Amended and Restated Loan Agreement; and default on any debt or agreement in excess of certain amounts.

(b)

The Company’s foreign subsidiaries have revolving credit facilities with various financial institutions. As of December 31, 2014 and 2013, the credit limit on these facilities was approximately $7,684 and $1,956, respectively, and the Company’s foreign subsidiaries had drawn $3,844 and $314, respectively, on these facilities. The outstanding facility as of December 31, 2014 has a variable interest rate of 2.61% with a maturity of January 31, 2015. The facilities are secured by certain assets of the foreign subsidiaries. The Company had $0 and $340 in letters of credit as of December 31, 2014 and 2013, respectively.

Liabilities assumed through the Company’s acquisition of POC included a receivable securitization facility with a foreign financial institution, which was utilized in the normal course of business as part of managing cash flows. The facility was closed during the year ended December 31, 2014. As of December 31, 2013, the Company had utilized $683 of the available $2,314 on this facility. The Company’s obligation to the financial institution was collateralized by accounts receivable. At December 31, 2013, the Company’s consolidated balance sheet included $683 receivables that were securitized and $683 of associated liabilities.

(c)

In connection with the Company’s acquisition of Gregory on May 2010, $22,056 and $554 in subordinated notes were issued to the Gregory Stockholders. The notes have a seven year term, 5% stated interest rate payable quarterly, and are prepayable at any time. Given the below market interest rate for comparably secured notes and the relative illiquidity of the notes, we discounted the notes to $13,127 and $316, respectively, at date of acquisition. We are accreting the discount on the notes to interest expense using the effective interest method over the term of the notes. During the years ended December 31, 2014, 2013 and 2012, $1,337, $1,162 and $1,012, respectively, of the discounts were accreted and recorded as interest expense in the accompanying statements of comprehensive income (loss).

(d)

The various capital leases payable to banks were paid off during the year ended December 31, 2014.

(e)

The Loan Agreement provided for a Term Facility pursuant to which the Lender made available $15,000 for funding permanent working capital, of which $10,000 was used upon the close of the Loan Agreement to reduce amounts owed on the already existing revolving credit facility. On February 28, 2014, the Loan Agreement was amended to eliminate the remaining $5,000 of unused term debt. On July 23, 2014, upon the closing of the GMP Sale, the Company paid off amounts outstanding under the Term Facility with the Lender, which was $8,954 as of June 30, 2014. On October 31, 2014, pursuant to the Second Amended and Restated Loan Agreement, the Company terminated its outstanding term loan facility. Other various term loans are payable to financial institutions and a government entity with interest rates ranging from 0.75% to 5.50% monthly installments ranging from $0 to $3. The notes mature between January 2016 and March 2017 and are secured by certain equipment.

The aggregate maturities of long-term debt and revolving lines of credit for the years subsequent to December 31, 2014 are as follows:


2015	$	3,875
2016		3
2017		22,678
2018		-
2019		-
Thereafter		-
Total future long-term debt payments		26,556
Less amount representing debt discounts		(4,119)
Total carrying amount of long-term debt		22,437
Less current portion		(3,875)
Long-term debt obligations	$	18,562

Property held under capital leases as of December 31, 2014 and 2013, was $0 and $228, respectively, and accumulated amortization was $0 and $98, respectively.