FINANCING AGREEMENTS

12 Months Ended

Dec. 31, 2011

FINANCING AGREEMENTS

FINANCING AGREEMENTS

NOTE 3 FINANCING AGREEMENTS

        Our credit agreement with Wells Fargo Bank (WFB) provides for a line of credit arrangement of $13.5 million, which expires on May 31, 2013, if not renewed. The credit arrangement also has a real estate term note with a maturity date of May 31, 2012, and a $475,000 equipment term loan tied to equipment purchased in the Mankato acquisition (Note 9). The $1,009,050 balance of the real estate term note was classified as current at December 31, 2011, however we are in negotiations to finalize and extend our real estate term note prior to maturity. Under the agreement, both the line of credit and real estate term note are subject to variations in the LIBOR rate. Our line of credit bears interest at three-month LIBOR + 3.00% (3.60% at December 31, 2011) while our real estate term note bears interest at three-month LIBOR + 3.5% (4.1% at December 31, 2011). The weighted-average interest rate on our line of credit and real estate term note were 3.81% and 4.27%, respectively for the year ended December 31, 2011. We had borrowings on our line of credit of $9,345,044 and $5,615,121 outstanding as of December 31, 2011 and 2010, respectively.

        The line of credit and other installment debt with WFB contain certain covenants which, among other things, require us to adhere to regular reporting requirements, abide by annual shareholder dividend limitations, maintain certain financial performance, and limit the amount of annual capital expenditures.

        The availability under the line is subject to borrowing base requirements, and advances are at the discretion of the lender. At December 31, 2011, we have net unused availability under our line of credit of approximately $3.9 million. The line is secured by substantially all of our assets.

        A summary of long-term debt balances at December 31, 2011 and 2010 is as follows:

Description	2011			2010
Term notes payable—Wells Fargo Bank, N.A.
Real estate term note	$	1,009,050		$	1,354,568
Equipment notes bearing interest at three month LIBOR + 4.5% (approx. 5.1%) and 4.95%, maturing May 2013 and May 2012, respectively with combined monthly payments of approximately $42,000 plus interest; secured by substantially all assets.		514,077			493,510
Industrial revenue bond payable to the City of Blue Earth, Minnesota which bears a variable interest rate (approx. 0.4% at December 31, 2011), and has a maturity date of June 1, 2021, with principal of $80,000 payable annually on June 1		600,000			725,000
Total long-term debt		2,123,127			2,573,078
Current maturities of long-term debt		(1,310,210	)		(841,760	)
Long-term debt—net of current maturities	$	812,917		$	1,731,318

        Future maturity requirements for long-term debt are as follows:

Years Ending December 31,	Amount
2012	$	1,310,210
2013		372,917
2014		80,000
2015		80,000
2016		80,000
Future		200,000
	$	2,123,127

        On June 28, 2006, we entered into an interest rate swap agreement with a notional amount of $1,440,000 to effectively convert our industrial revenue bond debt from a variable rate to a fixed rate of 4.07% for five years, which expired in June 2011. We did not use this interest rate swap for speculative purposes. The fair value of the swap of $18,140 was recorded in Other Long-Term Liabilities at December 31, 2010. The change in the fair value of ($18,140) and ($27,772) for the years ended December 31, 2011 and 2010, respectively was recorded as a component of interest expense.