Question-and-Answer Session
Operator
(Operator Instructions) David Leiker.
David Leiker – Robert W. Baird
A couple of things first on the covenants; is your covenant calculated using total debt or is it debt net of cash?
Chad Utrup
It’s total debt. It’s funded debt plus letters of credit, David.
David Leiker – Robert W. Baird
Okay and where does that cash reside?
Chad Utrup
Various of our businesses. Most of it is overseas in Czech, some in UK for example.
David Leiker – Robert W. Baird
So, that cash wouldn’t be available to pay down debt?
Chad Utrup
Most of it is typically what we would call in like a one-day float, so it’s available the next business day; that’s why it’s held and that you see it as cash on the balance sheet.
David Leiker – Robert W. Baird
Yes, but given that your revolver’s in the US and the cash is overseas, that way you couldn’t really use that reduce the revolver, correct?
Chad Utrup
Oh, yes we could. In fact we transfer cash back and forth frequently. So yes, we could. It may be in one-day float, so it’s not available on the last day of the quarter per se but it is cash.
David Leiker – Robert W. Baird
Okay and then one last question on this item. What is the level of your intra-quarter borrowing? How much of your revolver do you use during the quarter?
Chad Utrup
We had roughly $10 million drawn at the end of the quarter. It probably goes up to $20 million on average, something like that.
David Leiker – Robert W. Baird
So, to the extent that I understand you can pay down the debt of the revolver, you have nothing borrowed on it, but if you’re not in compliance with the covenant, then you wouldn’t have the borrowings for intra-quarter, so how would you handle that?
Chad Utrup
I’m not sure I follow your question David
David Leiker – Robert W. Baird
Let’s just say for instance if you violated a covenant, so you wouldn’t have your revolver available to you; how would you handle your intra-quarter borrowings?
Chad Utrup
Well, we’ve got a considerable amount of flexibility through our working capital. If you don’t have a line of credit to borrow from, we’d have to just go through our receivables and payables and work it down that way. I mean we’ve got enough collateral to be able to do that in a situation like that. We’ve got $100 million plus in receivables to really work with and $9 million, $10 million drawn; I’m pretty comfortable we could come up with it if we needed to, but don’t plan on that event happening.
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