FINANCING ARRANGEMENTS

9 Months Ended

Sep. 30, 2014

FINANCING ARRANGEMENTS

FINANCING ARRANGEMENTS

NOTE 3. FINANCING ARRANGEMENTS

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 September 30, 2014, we have borrowed $0.3 million against the $1.0 million capital term note.

Long-term debt at September 30, 2014 and December 31, 2013 consisted of the following:

	September 30		December 31
	2014		2013
Real Estate Term Loan 1, interest at three month LIBOR + 3.0%, due in installments through March 31, 2027	$	1,445,078	$	1,533,928
Real Estate Term Loan 2, interest at three month LIBOR + 3.0%, due in installments through December 31, 2027	1,488,000		1,571,700
Equipment loan, interest at three month LIBOR + 3.0%, due January 31, 2016	126,666		197,916
Equipment loan, interest at three month LIBOR + 3.0%, due May 31, 2018	1,182,356		1,135,546
Equipment loan, interest at three month LIBOR + 3.0%, due May 31, 2018	280,000		—
Blue Earth Bond, which bears a variable interest rate, due in installments through June 30, 2021	360,000		440,000
Total debt	4,882,100		4,879,090
Less current maturities	737,961		632,176
Long-term debt	$	4,144,139	$	4,246,914

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 September 30, 2014) while our real estate term notes bear interest at three-month LIBOR + 3.0% (approximately 3.25% at September 30, 2014).  The weighted-average interest rate on our line of credit was 2.7% and 2.9% for the three and nine months ended September 30, 2014, respectively.  The weighted-average rate on our real estate term notes was 3.3% and 3.4% for the three and nine months ended September 30, 2014, respectively.  At December 31, 2013, we had borrowing on our line of credit of $7,234,983, included in current debt on the balance sheet.  At September 30, 2014, we had borrowings on our line of credit of $7,831,089.  In the second quarter, the line of credit was extended and reclassified to long-term on our balance sheet to reflect its long-term nature.  The line of credit requires a lock box arrangement; however there are no acceleration clauses that would accelerate the maturity of our outstanding borrowings.

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 September 30, 2014, we have net unused availability under our line of credit of approximately $4.3 million.  The line is secured by substantially all of our assets.