from the 10-Q filed today
NOTE 7. CREDIT FACILITY
In October 1997, the Company entered into a $200 million credit facility ("Credit Facility") with a syndicate of financial institutions. The four-year facility consists of a $50 million term loan and a $150 million revolving line of credit, both unsecured. The term loan provides for quarterly principal payments, beginning January 1999 and continuing through October 2001. The term loan provides for interest payments that vary based on the London Interbank Offered Rate ("LIBOR"), plus an applicable margin. Additionally, the terms of the facility require the Company to maintain certain financial ratios, observe a series of additional covenants, and prohibit the Company from paying dividends without prior bank approval. As of June 30, 1998, the Company was not in compliance with one of the covenants under the Credit Facility. On August 11, 1998, the Company obtained the necessary amendments from the financial institutions to maintain compliance with the Credit Facility. Under these amendments, the revolving line of credit will be reduced from $150 million to $100 million and the Credit Facility will be converted to a secured facility. The Company believes it will be in compliance with all covenants under the Credit Facility for the upcoming three month period ended September 30, 1998. However, if the Company experiences a material unexpected decrease in sales orders or a material unexpected increase in expenses, as it did during the three month period ended June 30, 1998, the Company may again need to seek amendments to maintain compliance with the covenants of the Credit Facility. There can be no assurance the Company will be successful in obtaining such amendments, if required. As of June 30, 1998, the $50 million term loan was outstanding in full, and no amounts were outstanding under the $150 million revolving line of credit.
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