Tecumseh Products 2012 Annual Report Download - page 26

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Cash provided by financing activities was $0.6 million in 2011 compared to $31.5 million provided by financing activities in
2010. Borrowings under our new U.S. facility increased $10.2 million in 2011. This increase was partially offset by reduced
foreign borrowings in 2011 compared to 2010, mainly due to decreased cash requirements to finance our working capital needs
due to the refunds of non-income taxes from foreign jurisdictions received in 2011.
Liquidity Sources
Credit Facilities and Cash on Hand
In addition to cash on hand, cash provided by operating activities and cash inflows related to non-operating activities, when
available we use bank debt and other foreign credit facilities such as accounts receivable factoring programs to fund our
working capital requirements. On April 21, 2011, we entered into an agreement with PNC Bank pursuant to which PNC Bank
provides senior secured revolving credit financing up to an aggregate of $45.0 million, including up to $10.0 million in letters
of credit. The agreement contains various covenants, including limitations on dividends, investments and additional
indebtedness and liens, and a minimum fixed charge coverage ratio, which would apply only if average undrawn borrowing
availability, as defined by the credit agreement, falls below a specified level. As of December 30, 2011, we entered into
Amendment 1 to the Revolving Credit and Security Agreement with PNC to amend certain non-financial covenants. We were
in compliance with all covenants and terms of the agreement as of December 31, 2012.
As of December 31, 2012, we had $10.0 million of borrowings outstanding under this facility. A quarterly covenant is based on
our average undrawn borrowing availability and was such that the covenant didn’t apply. At December 31, 2012, we had
outstanding letters of credit of $3.4 million and the capacity for additional borrowings under the borrowing base formula of
$2.1 million after giving effect to our fixed charge coverage ratio covenant. For a more detailed description of this facility, see
Note 8, “Debt”, of the Notes to Consolidated Financial Statements in Item 8 of this report. For the years ended December 31,
2012 and 2011, our average outstanding debt balance was $58.8 and $65.7 million, respectively. The weighted average interest
rate was 8.8% and 7.9% for the year ended December 31, 2012 and 2011, respectively.
As of December 31, 2012, our cash and cash equivalents on hand was $55.3 million. Our borrowings under current credit
facilities, including capital lease obligations, totaled $61.4 million at December 31, 2012, with an uncommitted additional
borrowing capacity of $8.5 million. We have various borrowing arrangements at our foreign subsidiaries to support working
capital needs and government sponsored borrowings which provide advantageous lending rates. In January 2012, we
terminated two facilities in Europe and replaced them with factoring arrangements. We also use these cash resources to fund
capital expenditures, and when necessary, to fund operating losses. Included in our debt balance at December 31, 2012 are
capital lease obligations of $1.9 million. For a more detailed discussion of our credit facilities, refer to Note 8, “Debt”, of the
Notes to Consolidated Financial Statements in Item 8 of this report. In the U.S. only a small portion of our cash balances are
insured by the Federal Deposit Insurance Corporation ("FDIC"). Any cash we hold in the U.S. that is not utilized for day-to-
day working capital requirements is primarily invested in secure, institutional money market funds, which are strictly regulated
by the U.S. Securities and Exchange Commission and operate under tight requirements for the liquidity, creditworthiness, and
diversification of their assets.
Cash inflows related to taxes
We expect to receive refunds of outstanding refundable non-income taxes. The actual amounts received as expressed in U.S.
Dollars will vary depending on the exchange rate at the time of receipt or future reporting date. Based on the U.S. Dollar to
actual exchange rate as of December 31, 2012, we expect to recover approximately $20.7 million of the $39.5 million
outstanding refundable taxes in 2013. Out of the $20.7 million current portion of the refundable non-income taxes, $15.9
million relates to our Brazilian location and $3.9 million relates to our India location. The tax authorities will not commit to an
actual date of payment and the timing of receipt may be different than planned if the tax authorities change their pattern of
payment or past practices.
Accounts Receivable Sales
Our Brazilian and European subsidiaries periodically factor their accounts receivable with financial institutions for seasonal
and other working capital needs. Such receivables are factored both with and without limited recourse to us and are excluded
from accounts receivable in our consolidated balance sheets. The amount of factored receivables, including both with limited
and without recourse, was $49.3 million and $34.3 million at December 31, 2012 and 2011, respectively. The amount of
factored receivables sold with limited recourse through our Brazilian subsidiary, which results in a contingent liability to us,
was $11.9 million and $10.1 million as of December 31, 2012 and 2011, respectively. The amount of factored receivables sold
without recourse at our Brazilian and European subsidiaries, which is recorded as a sale of the related receivables, was $37.4
million and $24.2 million as of December 31, 2012 and 2011 respectively. In addition to the credit facilities described
above, our Brazilian subsidiary also has an additional $26.7 million uncommitted, discretionary factoring credit facility with