G. DEBT

Notes Payable:

Notes payable consists of amounts borrowed under unsecured line of credit agreements. These lines of credit may be withdrawn at the option of the banks. The following is aggregate borrowing information at June 30 (in thousands):

	2014			2013

Available credit lines	$	3,372		$	18,072
Unused credit lines		3,372			18,072

Total notes payable	$	-		$	-
Weighted-average interest rates on credit lines		2.9	%		2.1	%

Long-term Debt:

Long-term debt consisted of the following at June 30 (in thousands):

	2014			2013

Revolving loan agreement	$	11,200		$	16,300
10-year unsecured senior notes		7,143			10,714
Capital lease obligations		29			44
Other long-term debt		32			95

Subtotal		18,404			27,153
Less: current maturities		(3,604	)		(3,681	)

Total long-term debt	$	14,800		$	23,472

On June 30, 2014, the Company and its wholly-owned subsidiary, Twin Disc International S.A. ("Twinsa") entered into a multi-currency revolving loan agreement with Wells Fargo Bank, National Association ("Wells Fargo"). Pursuant to the Credit Agreement, the Company and Twinsa may, from time to time, enter into revolving credit loans in amounts not to exceed, in the aggregate, Wells Fargo's revolving credit commitment of $60,000,000. In general, outstanding revolving credit loans will bear interest at LIBOR plus 1.00%. The rate was 1.16% at June 30, 2014. In addition to principal and interest payments, the Company and Twinsa will be responsible for paying a quarterly commitment fee equal to 0.15% of the average daily unused revolving credit commitment. The Company and Twinsa have the option of making additional prepayments subject to certain limitations. The Credit Agreement is scheduled to expire on May 31, 2018. The outstanding balance of $11,200,000 at June 30, 2014 is classified as long-term debt. This agreement contains certain covenants, including restrictions on investments, acquisitions and indebtedness. Financial covenants include a minimum consolidated adjusted net worth amount, a minimum EBITDA for the most recent four fiscal quarters of $11,000,000 at June 30, 2014, and a maximum total funded debt to EBITDA ratio of 3.0 at June 30, 2014. As of June 30, 2014, the Company was in compliance with these financial covenants. The minimum adjusted net worth covenant fluctuates based upon actual earnings and the Company's compliance with that covenant is based on the Company's shareholders' equity as adjusted by certain pension accounting items. As of June 30, 2014, the minimum adjusted equity requirement was $120,831,000, and the Company was in compliance with this covenant.

Prior to June 30, 2014, the Company had a revolving loan agreement with BMO Harris Bank NA (BMO), successor by merger to M&I Marshall & Ilsley Bank. During the fourth quarter of fiscal 2011, the total commitment was increased to $40,000,000 from $35,000,000 and the term was extended to May 31, 2015. The outstanding balance of $16,300,000 at June 30, 2013, was classified as long-term debt. In accordance with the loan agreement, as amended, the Company could borrow at LIBOR plus an additional "Add-On," between 1.5% and 2.5%, depending on the Company's total funded debt to EBITDA ratio. The rate was 1.84% at June 30, 2013. This agreement contained certain covenants, including restrictions on investments, acquisitions and indebtedness. Financial covenants included a minimum consolidated net worth amount, as defined, a minimum EBITDA for the most recent four fiscal quarters, and a maximum total funded debt to EBITDA ratio. As of June 30, 2013, the Company was in compliance with these financial covenants. On June 30, 2014, the Company terminated the BMO agreement and paid the full outstanding amounts owed as of June 30, 2014, which totaled $14,042,534. The Company did not incur any early termination penalties in connection with the termination of the BMO agreement.

On June 30, 2014, the Company entered into an Amended and Restated Note Purchase and Private Shelf Agreement (the "Prudential Agreement"). Among other things, the Prudential Agreement: (a) amends and restates the "Note Agreement" between the Company and Purchasers dated as of April 10, 2006, as it has been amended from time to time (the "2006 Agreement"); and (b) sets forth the terms of the potential sale and purchase of up to $50,000,000 in "Shelf Notes" as defined in the Prudential Agreement (the "Shelf Notes") by the Company to Prudential. The notes sold by the Company to the Existing Holders under the 2006 Agreement (the "2006 Notes") are deemed outstanding under, and are governed by, the terms of the Prudential Agreement. The 2006 Notes bear interest on the outstanding principal balance at a fixed rate of 6.05% per annum and mature on April 10, 2016. The 2006 Notes mature and become due and payable in full on April 10, 2016 (the "Payment Date"). Prior to the Payment Date, the Company is obligated to make quarterly payments of interest during the term of the 2006 Notes, plus prepayments of principal of $3,571,429 on April 10 of each year from 2010 to 2015, inclusive. The outstanding balance was $7,142,857 and $10,714,286 at June 30, 2014 and June 30, 2013, respectively. Of the outstanding balance, $3,571,429 was classified as a current maturity of long-term debt at June 30, 2014 and June 30, 2013, respectively. The remaining $3,571,429 is classified as long-term debt. In addition to the interest payments and any mandatory principal payments required under the terms of the Shelf Note, the Company will pay an issuance fee of 0.10% of the aggregate principal balance of each of the Shelf Notes sold to, and purchased by, Prudential. In addition the Company will pay a one-time structuring fee of $25,000 on or before September 30, 2014, unless there is an acceptance of a sale of Shelf Notes prior to such date, in which case the structuring fee will be waived. The Company may prepay the Shelf Notes or the 2006 Notes, subject to certain limitations. At no time during the term of the Prudential Agreement may the aggregate outstanding principal amount of the 2006 Notes and the Shelf Notes exceed $35,000,000. The Prudential Agreement includes financial covenants regarding minimum net worth, minimum EBIDTA for the most recent four (4) fiscal quarters of $11,000,000 and a maximum total funded debt to EBIDTA ratio of 3.0. As of June 30, 2014, the Company was in compliance with these financial covenants. In addition, the Company will be required to make an offer to purchase the 2006 Notes and Shelf Notes upon a Change of Control, and any such offer must include the payment of a Yield-Maintenance Amount. The Prudential Agreement also includes certain covenants that limit, among other things, certain indebtedness, acquisitions and investments. The Prudential Agreement also has a most favored lender provision whereby the Prudential Agreement shall be automatically modified to include any additional covenant or event of default that is included in any agreement evidencing, securing, guarantying or otherwise related to other indebtedness in excess of $1,000,000.

Prior to June 30, 2014, the Company and its wholly-owned subsidiary Twin Disc International, S.A. had a multi-currency revolving Credit Agreement with Wells Fargo Bank, National Association (the "Prior Credit Agreement"). The Company entered into this agreement on November 19, 2012. Pursuant to the Prior Credit Agreement, the Company could, from time to time, enter into revolving credit loans in amounts not to exceed, in the aggregate, Wells Fargo's revolving credit commitment of $15,000,000. In general, outstanding revolving credit loans (other than foreign currency loans) would bear interest at one of the following rates, as selected by the Company: (1) a "Base Rate," which is equal to the highest of (i) the prime rate; (ii) the federal funds rate plus 0.50%; or (iii) LIBOR plus 1.00%; or (2) a "LIBOR Rate" (which is equal to LIBOR divided by the difference between 1.00 and the Eurodollar Reserve Percentage (as defined in the Prior Credit Agreement)) plus 1.50%. Outstanding revolving credit loans that are foreign currency loans would bear interest at the LIBOR Rate plus 1.50%, plus an additional "Mandatory Cost," which was designed to compensate Wells Fargo for the cost of compliance with the requirements of the Bank of England and/or the Financial Services Authority, or the requirements of the European Central Bank. In addition to principal and interest payments, the Borrowers were responsible for paying monthly commitment fees equal to 0.25% of the unused revolving credit commitment. The Company had the option of making additional prepayments subject to certain limitations. The Prior Credit Agreement included financial covenants regarding minimum net worth, minimum EBITDA for the most recent four fiscal quarters of $11,000,000, and a maximum total funded debt to EBITDA ratio of 3.0. As of June 30, 2014, the Company was in compliance with these financial covenants. The Prior Credit Agreement also included certain restrictive covenants that limit, among other things, certain investments, acquisitions and indebtedness. The Prior Credit Agreement provided that it shall automatically include any covenants or events of default not previously included in the Prior Credit Agreement to the extent such covenants or events of default were granted to any other lender of an amount in excess of $1,000,000. The Prior Credit Agreement also included customary events of default, including events of default under the BMO agreement or the Prudential Note Agreement. Following an event of default, Wells Fargo could accelerate all amounts outstanding under any revolving credit notes or the Prior Credit Agreement. The Prior Credit Agreement was scheduled to expire on May 31, 2015. However, by entering into the $60,000,000 Wells Fargo multi-currency revolving Credit Agreement noted above, the Company also terminated this $15,000,000 multi-currency revolving Credit Agreement. As of June 30, 2014, there were no borrowings under the Prior Credit Agreement.

The aggregate scheduled maturities of outstanding long-term debt obligations in subsequent years are as follows (in thousands):

Fiscal Year
2015	$	3,604
2016		3,571
2017		-
2018		11,200
2019		-
Thereafter		29
	$	18,404