Pledged Assets, Short and Long-Term Debt

12 Months Ended

Jul. 31, 2012

Pledged Assets, Short and Long-Term Debt [Abstract]

Pledged Assets, Short and Long-Term Debt

Note 8. Pledged Assets, Short and Long-Term Debt

Revolving Credit Facility: The Company has a credit facility with a bank which allows for borrowings of up to $9.5 million (collateral available on July 31, 2012 permits borrowings up to $9.0 million) with an interest rate based on either the one-, two- or three-month LIBOR plus 2.0 percent and adjusting each quarter based upon the Company's leverage ratio. As of July 31, 2012, interest under the facility is charged at 2.22 percent. The unused portion of the facility is charged at a rate of 0.20 percent. There were no borrowings under this facility at July 31, 2012. Outstanding amounts are collateralized by the Company's domestic receivables and inventory. This credit facility was amended on November 30, 2011, to extend the termination date through November 30, 2013.

The facility has two financial covenants: a maximum leverage ratio of 3.75 times and a minimum fixed charge coverage ratio of 1.1 times. As of July 31, 2012, the leverage ratio was 0.67 times and the minimum fixed charge coverage ratio was 2.03 times. Collateral availability under the line as of July 31, 2012, was approximately $9.0 million. The facility restricts the payment of dividends if, following the distribution, the fixed charge coverage ratio would fall below the required minimum.

Equipment Line of Credit: Under this credit facility, the Company may borrow up to $1.0 million, with interest at one-month LIBOR plus 3.0 percent.  Pursuant to the terms of the equipment line of credit, under no circumstances shall the rate be less than 3.5 percent per annum.  The unused portion of the facility is not charged a fee. There were no borrowings under this facility at July 31, 2012. The equipment line of credit was amended on November 30, 2011, to extend the maturity date to November 30, 2013.

Long-term debt as of July 31, 2012 and 2011 consisted of the following (dollars in thousands):

	2012		2011
Note payable to the estate of the late Dr. Leonard I. Malis, due in quarterly installments of $159,904 which includes interest at an imputed rate of 6.0 percent; remaining balance of $0  including the effects of imputing interest, paid December 15, 2011, collateralized by the Malis® trademark	$	--	$	313
Settlement obligation to Iridex Corporation ("Iridex"), due in annual installments of $800,000 which includes interest at an imputed rate of 8.0 percent; remaining balance of $0 including the effects of imputing interest, paid April 15, 2012		--		740
		--		1,053
Less current maturities		--		1,053
Long-term portion	$	--	$	--