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Note 8 - Industrial Revenue Bond
3 Months Ended
Mar. 31, 2013
Industrial Revenue Bond [Text Block]
Note 8.  Industrial Revenue Bond.

On December 28, 2006, the Company engaged in an industrial revenue bond (“IRB”) transaction with the City of Atchison, Kansas (the “City”) in order to receive ten-year real property tax abatement on its newly constructed office building and technical center in Atchison, Kansas. At the time of this transaction, the facilities were substantially completed and had been financed with internally-generated cash flow.  The Company recorded the office building and technical center assets into property and equipment on the consolidated balance sheets.  Pursuant to this transaction, the City issued $7,000 principal amount of its IRB to the Company and then the City used the proceeds to purchase the office building and technical center from the Company.  The City then leased the facilities back to the Company under a capital lease, the terms of which provide for the payment of basic rent in an amount sufficient to pay interest at a rate 4.9 percent on the IRB, payable annually on December 1st of each year.  A balloon payment of $7,000 will be due upon maturity of the IRB on December 1, 2016.  The Company’s obligation to pay rent under the lease provides for the both the same interest and balloon payment amounts and the same due dates as the City’s obligation to pay debt service on the IRB, which the Company holds. The lease permits the Company to present the IRB at any time for cancellation, upon which our obligation to pay basic rent would be cancelled.  The Company does not intend to do this until their maturity date on December 1, 2016, at which time the Company may elect to purchase the facilities for $100 dollars (not in thousands).  Because the Company owns all outstanding IRB, management considers the debt de-facto cancelled and, accordingly, no amount for an investment in IRB or the related obligations under the capital lease is reflected on our balance sheet.  In connection with this transaction, the Company agreed to pay the city an administrative fee of $50, which is payable over 10 years.  If the Company were to present the IRB for cancellation prior to maturity, the $50 fee would be accelerated.

Below is a summary of the financial asset and liability that are offset at March 31, 2013 and December 31, 2012, respectively.

   
(i)
   
(ii)
   
(iii) = (i) - (ii)
 
Description
 
Gross
Amounts of
Recognized
Assets
(Liabilities)
   
Gross
Amounts
offset in the
Balance Sheet
   
Net Amounts of
Assets (Liabilities)
presented in the
Balance Sheet
 
March 31, 2013
                 
Investment in IRBs
  $ 7,000     $ 7,000     $ -  
Capital lease obligation
  $ (7,000 )   $ (7,000 )      $ -  
                         
December  31, 2012
                       
Investment in IRBs
  $ 7,000     $ 7,000     $ -  
Capital lease obligation
  $ (7,000 )   $ (7,000 )      $ -