

NOTE 4:	CORPORATE BORROWINGS AND CAPITAL LEASE OBLIGATIONS

Indebtedness Outstanding. Debt consists of the following:



	December 31,
	2015			2014
Credit Agreement - Revolver, 2.315% (variable rate) due 2020	$	23,172		$	—
Credit Agreement - Fixed Asset Sub-Line term loan, 2.693% (variable rate) due 2020	6,254			6,670
Secured Promissory Note, 3.71% (variable rate) due 2022	2,670			—
Secured Promissory Note, 6.89% (variable rate), due 2016.	36			404
Capital Lease Obligation, 2.61%, due 2017	1,964			3,209
Unamortized loan fees	(636		)	(384		)
Total	33,460			9,899
Less current maturities of long term debt	(3,345		)	(2,613		)
Long-term debt	$	30,115		$	7,286

The Company has a credit agreement with its bank group for $80,000 that expires in February 2020. The credit agreement includes a quantitative covenant that requires a Fixed Charge Coverage Ratio (as defined in the agreement) to not be less than 1.10:1.00 if excess availability is less than $10,000. The Company was in compliance with these covenants at December 31, 2015.

In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30), which simplifies the presentation of debt issuance costs. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. ASU 2015-03 is effective for financial statements issued for fiscal years beginning after December 15, 2015 (and interim periods within those fiscal years) with retrospective application required (see Note 15). The Company's consolidated balance sheets have been retrospectively adjusted for the presentation of debt issuance costs as required by ASU 2015-03 for the year ended December 31, 2014. As of December 31, 2015 and December 31, 2014, the Company had $636 and $384, respectively, of unamortized loan fees related to its debt that were reclassified as a direct deduction from the carrying amount of the related debt liability in the consolidated balance sheets for each of the years presented.

Leases

Capital Lease Obligation. On June 28, 2011, the Company sold a major portion of the new process water cooling towers and related equipment being installed at its Atchison facility to U.S. Bancorp Equipment Finance, Inc. for $7,335 and leased them from U.S. Bancorp pursuant to a Master Lease Agreement and related Schedule. Monthly rentals under the lease are $110 (plus applicable sales/use taxes, if any) and continue for 72 months from that date with a rate of 2.61 percent. The Company may purchase the leased property after 60 months for approximately $1,328, or at the end of the term for fair market value to be determined at that time. Given this continuing involvement, the Company treated this as a financing transaction. The lessor may, at its option, extend the lease for specified periods after the end of the term if the Company fails to exercise its purchase option. Under the terms of the Master Lease, is responsible for property taxes and assumes responsibility for insuring and all risk of loss or damage to the property.

Obligations under the Master Lease may be accelerated if an event of default occurs and continues for 10 days. In addition to payment defaults and breaches of representations and covenants, events of default include defaults under any other agreement with lessor or payment default under any obligation. In such event, among other matters, lessor may cancel the Master Lease, take possession of the property and seek to recover the present value of future rentals, the residual value of the property and the value of lost tax benefits.

Lenders having liens on the Atchison facility, including its revolving credit lender, Wells Fargo Bank, National Association, entered into mortgagee's waivers with respect to the leased property. As described in Note 2, this equipment is included in property, plant and equipment.

4.90% Industrial Revenue Bond Obligation. On December 28, 2006, the Company engaged in an industrial revenue bond transaction with the City of Atchison, Kansas ("the City") pursuant to which the City (i) under a trust indenture, ("the Indenture"), issued $7,000 principal amount of its industrial revenue bonds ("the Bonds") to the Company and used the proceeds thereof to acquire from the Company its newly constructed office building and technical innovations center in Atchison, Kansas, ("the Facilities") and (ii) leased the Facilities back to the Company under a capital lease ("the Lease"). The assets related to this transaction are included in property and equipment.

The Bonds mature on December 1, 2016 and bear interest, payable annually on December 1 of each year commencing December, 2007 at the rate of 4.90 percent per annum. Basic rent under the lease is payable annually on December 1 in an amount sufficient to pay principal and interest on the Bonds. The Indenture and Lease contain certain provisions, covenants and restrictions customary for this type of transaction. In connection with the transaction, the Company agreed to pay the city an administrative fee of $50 payable over 10 years.

The purpose of the transaction was to facilitate certain property tax abatement opportunities available related to the constructed facilities. The facilities acquired with bond proceeds will receive property tax abatements which terminate upon maturity of the Bonds on December 1, 2016. The issuance of the Bonds was integral to the tax abatement process. Financing for the Facilities was provided internally from the Company’s operating cash flow. Accordingly, upon consummation of the transaction and issuance of the Bonds, the Company acquired all Bonds issued for $7,000, excluding transaction fees. As a result, the Company owns all of the outstanding Bonds. Because the Company owns all outstanding Bonds, management considers the debt canceled and, accordingly, no amount for these Bonds is reflected as debt outstanding on the Consolidated Balance Sheets as of December 31, 2015 or 2014.

Below is a summary of the financial asset and liability that are offset as of December 31, 2015 and 2014, respectively.



	(1)			(2)			(3) = (1) - (2)
	Gross Amounts of Recognized Assets (Liabilities)			Gross Amounts offset in the Balance Sheet			Net Amounts of Assets (Liabilities) presented in the Balance Sheet
December 31, 2015:
Investment in bonds	$	7,000		$	7,000		$	0
Capital lease obligation	$	(7,000	)	$	(7,000	)	$	0

December 31, 2014:
Investment in bonds	$	7,000		$	7,000		$	0
Capital lease obligation	$	(7,000	)	$	(7,000	)	$	0

Leases and Debt Maturities. The Company leases railcars and other assets under various operating leases. For railcar leases, the Company is generally required to pay all service costs associated with the railcars. Rental payments include minimum rentals plus contingent amounts based on mileage. Rental expenses under operating leases with terms longer than one month were $2,283, $2,241 and $2,844 for the years ended December 31, 2015 and 2014, respectively. Minimum annual payments and present values thereof under existing debt maturities, capital leases and minimum annual rental commitments under non-cancelable operating leases are as follows:



					Capital Leases
Year Ending December 31,	Credit Agreement		Long-Term Debt		Minimum Lease Payments		Less Interest		Net Present Value		Total Debt
2016	$	—	$	380	$	1,988	$	24	$	1,964	$	2,344
2017	—		357		—		—		—		357
2018	—		371		—		—		—		371
2019	—		385		—		—		—		385
2020	29,426		400		—		—		—		29,826
Thereafter	—		813		—		—		—		813
Total	$	29,426	$	2,706	$	1,988	$	24	$	1,964	$	34,096