Long-Term Debt

3 Months Ended

Sep. 30, 2011

Long-Term Debt

Long-Term Debt

Note 8.  Long-Term Debt

Long-term debt consists of the following:

	September 30,		June 30,
	2011		2011
Pennsylvania Industrial Development Authority loan	836,947		856,549
Tax-exempt bond loan (PAID)	425,000		425,000
Wells Fargo N.A. Townsend Road mortgage	2,971,111		3,022,046
PIDA Townsend Road mortgage	1,975,039		2,000,000
First National Bank of Cody mortgage	1,491,345		1,518,336
Total debt	7,699,442		7,821,931
Less current portion	632,206		629,435
Long term debt	$	7,067,236	$	7,192,496

Current Portion of Long Term Debt

	September 30, 2011		June 30, 2011
Pennsylvania Industrial Development Authority loan	79,775		79,228
Tax-exempt bond loan (PAID)	135,000		135,000
Wells Fargo N.A. Townsend Road mortgage	203,733		203,733
PIDA Townsend Road mortgage	102,214		101,262
First National Bank of Cody mortgage	111,484		110,212
Total current portion of long term debt	$	632,206	$	629,435

The Company financed $1,250,000 through the Pennsylvania Industrial Development Authority (PIDA).  The Company is required to make equal payments each month for 180 months starting February 1, 2006 with interest of two and three-quarter percent per annum.

In April 1999, the Company entered into a loan agreement (the “Agreement”) with a governmental authority, the Philadelphia Authority for Industrial Development (the “Authority” or “PAID”), to finance future construction and growth projects of the Company. The Authority issued $3,700,000 in tax-exempt variable rate demand and fixed rate revenue bonds to provide the funds to finance such growth projects pursuant to a trust indenture (“the Trust Indenture”).  A portion of the Company’s proceeds from the bonds was used to pay for bond issuance costs of approximately $170,000.  The Trust Indenture requires that the Company repay the Authority loan through installment payments beginning in May 2003 and continuing through May 2014, the year the bonds mature. The bonds bear interest at the floating variable rate determined by the organization responsible for selling the bonds (the “remarketing agent”).  The interest rate fluctuates on a weekly basis.  The effective interest rate at September 30, 2011 and June 30, 2011 was 0.36% and 0.40%, respectively.

During the third and fourth quarters of Fiscal 2011, the Company negotiated a set of mortgages on its new Townsend Road facility with both Wells Fargo N.A. and the PIDA.  The Wells Fargo portion of the loan is for $3,056,000, bears a floating interest rate of the One Month LIBOR rate plus 2.95%, amortizes the loan over a 15 year term and has an eight year maturity date.  The effective interest rate at September 30, 2011 and June 30, 2011 was 3.17% and 3.14%, respectively.  The PIDA portion of the loan is for $2,000,000, bears an interest rate 3.75% and matures in 15 years.  Both loans closed and were funded in May 2011. As of September 30, 2011, the Company was in compliance with the financial covenants under the loan agreements.

The Company has executed Security Agreements with Wells Fargo, PIDA and PIDC in which the Company has agreed to pledge its working capital, some equipment and its Townsend Road property to collateralize the amounts due.

The Company is the primary beneficiary to a variable interest entity (“VIE”) called Cody LCI Realty, LLC.  See Note 15, Consolidation of Variable Interest Entity for additional description.  The VIE owns land and a building which is being leased to Cody.  A mortgage loan with First National Bank of Cody has been consolidated in the Company’s financial statements, along with the related land and building.  The mortgage requires monthly principal and interest payments of $14,782.  Effective February 2011, the interest rate was modified from a fixed rate of 7.5% to a floating rate with a floor of 4.5% and a ceiling of 9.0%, with payments to be made through April 2022.  As of September 30, 2011 and June 30, 2011, the effective rate was 4.65% and 4.50%, respectively.  The mortgage is collateralized by the land and building.

Long-term debt amounts due, for the twelve month periods ending September 30 are as follows:

Twelve	Amounts Payable
Month Periods	to Institutions
2012	$	632,206
2013	509,331
2014	521,603
2015	533,820
2016	546,533
Thereafter	4,955,949
	$	7,699,442