Sale/Leaseback Transaction

9 Months Ended

Jun. 30, 2011

Sale/Leaseback Transaction

Sale/Leaseback Transaction

(5)           Sale/Leaseback Transaction

On October 3, 2003, the Company completed an industrial revenue bond financing with Gove County, Kansas that is intended to provide property tax savings for 10 years on the plant site. The principal amount of the bonds is $32,000,000. The Company, as holder of the industrial revenue bonds, is due interest at 3.5% per annum with interest payable semi-annually on March 1 and September 1.  This interest income is directly offset by the lease payments on the plant.  The Company and Gove County have agreed to waive the payment of both the lease payments and the interest amounts since they offset; they are recorded, however, for accounting purposes.  Both the bonds and the corresponding lease have terms of 30 years.  The lease qualifies as a capital lease. Interest income recognized on the industrial revenue bonds for the nine month period ended June 30, 2011 and 2010 was $840,000.  This amount is equal to the lease expense of the plant.