FINANCING AGREEMENTS

12 Months Ended

Dec. 31, 2014

NOTE 3 FINANCING AGREEMENTS

We have a credit agreement with Wells Fargo Bank (WFB) which was most recently amended on May 16, 2014 and provides for a line of credit arrangement of $13.5 million that expires, if not renewed, on May 31, 2018. The credit arrangement also has a $1.8 million real estate term note outstanding with a maturity date of March 31, 2027, an additional $1.7 million real estate term note outstanding that is due, if not renewed, on December 31, 2027, an equipment loan for $1.6 million and a new term loan facility of up to $1.0 million for capital expenditures, both with maturity dates of May 31, 2018. As of December 31, 2014, we have borrowed $0.3 million against the $1.0 million capital term note.

Under the credit agreement, both the line of credit and real estate term notes are subject to variations in the LIBOR rate. Our line of credit bears interest at three-month LIBOR + 2.5% (approximately 2.75% at December 31, 2014) while our real estate term notes bear interest at three-month LIBOR + 3.0% (approximately 3.25% at December 31, 2014). The weighted-average interest rate on our line of credit and real estate term note were 2.9% and 3.4%, respectively for the year ended December 31, 2014. We had borrowings on our line of credit of $7,998,184 and $7,234,983 outstanding as of December 31, 2014 and 2013, respectively.

The credit agreement contains 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, 2014, we have net unused availability under our line of credit of approximately $5.1 million. The line is secured by substantially all of our assets.

A summary of long-term debt balances at December 31, 2014 and 2013 is as follows:

Description	2014			2013
Term notes payable—Wells Fargo Bank, N.A.
Real estate term notes bearing interest at three month LIBOR + 3.0% (approx. 3.25%), maturing March 31, 2027, and December 31, 2017 with combined monthly payments of approximately $19,000 plus interest, secured by substantially all assets.	$	2,875,560		$	3,105,627
Equipment notes bearing interest at three month LIBOR + 3.0% (approx. 3.25%) maturing May 2018 with a combined monthly payments of approximately $27,000 plus interest, secured by substantially all assets		1,569,781			1,333,463
Industrial revenue bond payable to the City of Blue Earth, Minnesota which bears a variable interest rate (approx. 0.24% at December 31, 2014), and has a maturity date of June 1, 2021, with principal of $80,000 payable annually on June 1		360,000			440,000

Total long-term debt		4,805,341			4,879,090
Current maturities of long-term debt		(732,835	)		(632,176	)

Long-term debt—net of current maturities	$	4,072,506		$	4,246,914

Future maturity requirements for long-term debt outstanding as of December 31, 2014, are as follows:

Years Ending December 31,	Amount
2015	$	732,835
2016		645,752
2017		637,835
2018		793,625
2019		270,067
Future		1,725,227

	$	4,805,341

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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