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Debt
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Jul. 02, 2011
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt |
Note 15 – Debt
Short-term debt at July 2, 2011 and December 31, 2010 consisted of the following:
In March 2011, the Company entered into a $300.0 million secured, asset-based facility (Facility), which is expected to remain in place through March 2016. Borrowings under this Facility are subject to the value of the borrowing base, consisting of certain accounts receivable and inventory of the Company's domestic subsidiaries. As of July 2, 2011, the borrowing base totaled $281.1 million and available borrowing capacity totaled $229.2 million, net of $51.9 million of letters of credit outstanding under the Facility. The Company has the ability to issue up to $125.0 million in letters of credit under the Facility. The Company pays a facility fee of 25.0 to 62.5 basis points per annum, which is adjusted based on a leverage ratio. The facility fee was 37.5 basis points per annum as of July 2, 2011. Under the terms of the Facility, the Company has multiple borrowing options, including borrowing at a rate tied to adjusted LIBOR plus a spread of 225 to 300 basis points, which is adjusted based on a leverage ratio. The borrowing spread was 250 basis points as of July 2, 2011. The Company may also borrow at the highest of the following, plus a spread of 125 to 200 basis points, which is adjusted based on a leverage ratio (150 basis points as of July 2, 2011): the Federal Funds rate plus 0.50 percent, the Prime Rate established by JPMorgan Chase Bank, N.A. or the one month adjusted LIBOR rate plus 1.00 percent. The Company's borrowing capacity may also be affected by the fixed charge covenant included in the Facility. The covenant requires that the Company maintain a fixed charge coverage ratio, as defined in the agreement, of greater than 1.0 times, whenever unused borrowing capacity plus certain cash balances (together representing Availability), falls below $37.5 million. At the end of the second quarter of 2011, the Company had a fixed charge coverage ratio in excess of 1.0 times, and therefore had full access to borrowing capacity available under the Facility. When the fixed charge covenant ratio is below 1.0 times, the Company is required to maintain at least $37.5 million of Availability in order to be in compliance with the covenant. Consequently, the borrowing capacity is effectively reduced by $37.5 million whenever the fixed charge covenant ratio falls below 1.0 times. Upon entering into the Facility, the Company terminated its existing Mercury Receivables ABL Facility and its $400.0 million secured, asset-based facility, which was set to expire in May 2012. As a result of terminating these agreements, the Company wrote off $1.1 million of deferred debt issuance costs during the first quarter of 2011.
Long-term debt at July 2, 2011 and December 31, 2010 consisted of the following:
The Company repurchased $8.0 million and $26.7 million of its 11.75 percent Senior notes due 2013 (2013 Notes) during the three months and six months ended July 2, 2011, respectively. During the three months and six months ended July 2, 2011, the Company also repurchased $4.0 million of its 11.25 percent Senior notes due 2016 (2016 Notes) and $13.0 million of its 7.125 percent notes due 2027. The Company recorded a Loss on early extinguishment of debt on the Consolidated Statements of Operations of $0.9 million and $5.2 million during the three months and six months ended July 2, 2011, respectively, associated with these retirements. During the three months and six months ended July 3, 2010, the Company repurchased $24.8 million and $27.8 million, respectively, of its 11.75 percent Senior notes due 2013. The Company recorded a Loss on early extinguishment of debt on the Consolidated Statements of Operations of $4.1 million and $4.4 million for the three months and six months ended July 3, 2010, respectively, associated with these retirements.
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