(7) SHORT-TERM AND LONG-TERM CREDIT

At December 31, 2012 and 2011, the Partnership’s long-term debt comprises (000’s):

	2012		2011
Term debt	$	7,875	$	8,925
Current portion	1,050		1,050
Long-term debt	$	6,825	$	7,875

On May 2, 2000, the Partnership entered into a credit agreement with Pacific Coast Farm Credit Services, PCA (currently American AgCredit, PCA) comprised of a $5.0 million revolving line of credit and a $4.0 million promissory note. On August 4, 2010 the Partnership and American AgCredit, PCA executed an amendment to the credit agreement which provides a term loan of $10.5 million and a revolving credit facility of $5.0 million until July 15, 2011 and $4.0 million from July 16, 2011 to July 13, 2012. On March 7, 2011, the Credit Agreement was amended to maintain the revolving credit facility at $5.0 million through July 13, 2012. On July 12, 2012, the Partnership and American AgCredit, PCA executed the Fifth Amendment to Revolving Promissory Note and Second Amendment to Fourth Amended and Restated Credit Agreement which extended the maturity date of its $5.0 million revolving credit facility from July 13, 2012 to May 1, 2014. On June 30, 2009, the Partnership executed a term loan promissory note for $600,000 with American AgCredit, PCA.

Advances under the revolving credit facility bear interest at the base rate of 4.0% or the prime rate as published in the Wall Street Journal plus 1%, whichever is higher. From and after the first anniversary date, the Partnership is required to pay a facility fee of 0.30% to 0.375% per annum, depending on certain financial ratios on the daily unused portion of credit. The Partnership, at its option, may make prepayments without penalty.

There was $2.4 million outstanding on the revolving credit facility as of December 31, 2012 and 2011, with interest at 4.25%, which the Partnership paid off in March 2013 and February 2011, respectively.

At December 31, 2012, the outstanding balance on the $10.5 million term loan was $7.9 million. At December 31, 2011, the outstanding balance on the $10.5 million term loan was $8.9 million. The term loan bears fixed interest as 6.5% per annum and matures on July 1, 2020.

The estimated fair values of the Partnership’s financial instruments has been determined using an estimated market rate of 4.25 % in 2012 and 2011 with similar terms and remaining maturities to that of the current financial instruments. The Partnership has not considered the lender fees in determining the estimated fair value.

The estimated fair values of the Partnership’s financial instrument are as follows (000’s):

	2012				2011
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Long-term debt	$	7,875	$	8,479	$	8,925	$	9,690

Both the revolving credit loan and the term debt are collateralized by all personal and real property assets of the Partnership. The credit agreement contains certain restrictions associated with partner distributions, further indebtedness, sales of assets, and maintenance of certain financial minimums. Significant restrictive financial covenants consist of the following:

1. No restricted payments shall be declared or made without prior lender approval.

2. Minimum tangible net worth as of December 31, 2010 shall not be below $41.0 million and shall be increased dollar for dollar by the amount of positive Consolidated Net Income achieved by the Partnership, beginning January 1, 2010 and thereafter.

3. The minimum quarterly consolidated trailing twelve month EBITDA shall not be less than $1.5 million at the end of each quarter commencing in June 30, 2010.

At December 31, 2012, the Partnership’s working capital was $2.0 million and its current ratio was 1.35 to 1. At December 31, 2011, the Partnership’s working capital was $1.4 million and its current ratio was 1.28 to 1. At December 31, 2010, the Partnership’s working capital was negative $534,000 and its current ratio was 0.91 to 1. On August 4, 2010 the Partnership entered into a Fourth Amended and Restated Credit Agreement with American AgCredit PCA. The agreement extends the maturity date of the Revolving Note from August 14, 2010 to July 13, 2012 and provides the maximum revolving loan of $5.0 million until July 13, 2012 as amended March 7, 2011. On July 12, 2012, the Partnership and American AgCredit, PCA executed the Fifth Amendment to Revolving Promissory Note and Second Amendment to Fourth Amended and Restated Credit Agreement which extended the maturity date of its $5.0 million revolving credit facility from July 13, 2012 to May 1, 2014. The Partnership was in compliance with the terms and conditions of the Credit Agreement at December 31, 2012 and 2011. The Partnership was in compliance with the terms and conditions of the Credit Agreement at December 31, 2010 except for the minimum consolidated EBITDA covenant. On March 7, 2011, the lender provided a waiver to the loan covenant for the quarter ended December 31, 2010. Had the lender not waived this violation, all obligations and indebtedness, at the lender’s option, could have been accelerated and become due and payable.

Capital and Operating Leases. The Partnership had no capital leases as of December 31, 2012 and December 31, 2011. The Partnership has operating leases for land.

Land Leases. The Partnership leases the land underlying 1,911 acres of its orchards under long-term operating leases which expire through dates ending 2045. The Partnership has a month-to-month permit to farm 11 acres of macadamia orchards. Operating leases provide for changes in minimum rent based on fair value at certain points in time. Each of the land leases provides for additional lease payments based on USDA-reported macadamia nut price levels. Those contingent lease payments totaled $47,000 in 2012, $40,000 in 2011, and $29,000 in 2010. Total lease rent for all land operating leases was $181,000 in 2012, $177,000 in 2011, and $170,000 in 2010.

Equipment Operating Leases. The Partnership leases equipment for the farming operation to include vehicles, blower sweepers and harvester. The operating lease terms range from three to five years. The operating lease cost was $3,000, $9,000, and $42,000 in 2012, 2011 and 2010, respectively.

Contractual obligations as of December 31, 2012 for the Partnership are detailed in the following table (000’s):

Contractual Obligations	Total		2013		2014		2015		2016		2017		Remaining
Long-term debt	$	7,875	$	1,050	$	1,050	$	1,050	$	1,050	$	1,050	$	2,625
Line of credit	2,400		2,400		—		—		—		—		—
Operating leases	2,517		156		162		161		161		161		1,716
Total	$	12,792	$	3,606	$	1,212	$	1,211	$	1,211	$	1,211	$	4,341