Long-Term Debt and Notes Payable

12 Months Ended

Jan. 31, 2012

Long-Term Debt and Notes Payable [Abstract]

Long-Term Debt and Notes Payable

9. Long-Term Debt and Notes Payable

Long-term debt and notes payable consist of the following (in thousands):

	As of January 31,
	2012			2011
Revolving line of credit	$	12,550		$	21,650
Equipment note		638			3,066
MCL notes		785			1,550
SAP equipment notes		210			254
		14,183			26,520
Less current portion		(1,399	)		(3,177	)
Long-term debt	$	12,784		$	23,343

On July 27, 2010, the Company entered into an amended credit agreement with First Victoria Bank (the “Bank”) that provides for borrowings of up to $35,000,000 on a revolving basis through May 31, 2012. The Company may, at its option, convert any or all balances outstanding under the revolving credit facility into a series of term notes with monthly amortization over 48 months.

Amounts available for borrowing are determined by a borrowing base. The borrowing base is computed based upon certain outstanding accounts receivable, certain portions of the Company’s lease pool and any lease pool assets that are to be purchased with proceeds from the facility. The revolving credit facility and any term loan are collateralized by essentially all of the Company’s domestic assets. Interest is payable monthly at the prime rate plus 50 basis points, which was 3.75% at January 31, 2012. Up to $7,000,000 of available borrowings under the revolving facility may be utilized to secure letters of credit. At January 31, 2012 letters of credit totaling $3.0 million were outstanding. The credit agreement contains certain financial covenants that require, among other things, for the Company to maintain a debt to shareholders’ equity ratio of no more than 0.7 to 1.0, maintain a current assets to current liabilities ratio of not less than 1.25 to 1.0, and have quarterly earnings before interest, taxes, depreciation and amortization (“EBITDA”) of not less than $2,000,000. The credit agreement also provides that the Company may not incur or maintain indebtedness in excess of $1,000,000 without the prior written consent of the Bank, except for borrowings related to the credit agreement. The Company was in compliance with each of these provisions as of and for the year ended January 31, 2012. The Company’s average borrowing levels under the revolving credit agreement for each of the years ended January 31, 2012, 2011 and 2010 were $12,200,000, $15,700,000 and $9,833,000, respectively.

In October 2010, the Company entered into a secured promissory note with a supplier in connection with the purchase of certain lease pool equipment. The note is repayable in 18 monthly installments, bears interest at 8% annually and is secured by the equipment purchased. The Company received the consent of the Bank for this transaction.

In March of 2010, MCL entered into two promissory notes related to the purchase of AES (See Note 3). The notes bear interest at 6.0% per year and are repayable in two equal installments on March 1, 2011 and 2012.

SAP has outstanding two notes payable related to the purchase of certain equipment. The notes, which are secured by the equipment purchased, bear interest at 7.4% and, 8.4% and are due through July 2014 and February 2013, respectively.