Note 3 - Lease Obligations and Long-Term Debt

12 Months Ended

Jun. 30, 2014

Leases [Abstract]

Leases of Lessee Disclosure [Text Block]

(3)     LEASE OBLIGATIONS AND LONG-TERM DEBT

Lease Obligations

The Company leases certain revenue and service equipment under long-term lease agreements, payable in monthly installments.

Equipment obtained under a capital lease is reflected on the Company's balance sheet and the related lease bears interest at rates ranging from 1.4% to 5.4% per annum, maturing at various dates through 2020.

Assets held under operating leases are not recorded on the Company's consolidated balance sheet. The Company leases revenue and service equipment under non-cancellable operating leases expiring at various dates through February 2019.

The Company leases warehouse and office space under non-cancellable operating leases expiring at various dates through July 2017. Certain real estate leases contain renewal options.

Total rental expense under operating leases was as follows for 2014, 2013, and 2012 (in thousands):

	2014		2013		2012
Revenue and service equipment	$	6,351	$	6,973	$	5,986
Office facilities and terminals		3,353		2,386		2,185
	$	9,704	$	9,359	$	8,171

Future minimum lease payments relating to capital leases and to operating leases with initial or remaining terms in excess of one year are as follows (in thousands):

Year ended June 30,	Capital Leases		Operating Leases
2015	$	70,264	$	23,489
2016		22,580		6,182
2017		12,845		3,139
2018		22,798		2,534
2019		39,002		14,325
Thereafter		28,928		---
Total minimum lease payments	$	196,417	$	49,669
Less amounts representing interest		9,313
Present value of minimum lease payments	$	187,104
Less current maturities		67,439
Non-current portion	$	119,665

The Company is obligated for lease residual value guarantees of $22.3 million, with $12.3 million due in fiscal 2015. The guarantees are included in the future minimum lease payments above. To the extent the expected value at lease termination date is lower than the residual value guarantee; we would accrue for the difference over the remaining lease term. As of June 30, 2014, the Company believes the expected value at lease termination date is greater than the residual value guarantee.

Debt

The Company had debt, excluding lines of credit, of $13.3 million at June 30, 2014, of which $3.7 million is classified as current. Debt includes revenue equipment installment notes of $2.3 million with an average interest rate of 4.12 percent at June 30, 2014 due in monthly installments with final maturities at various dates through June 2019. Included in debt is $5.9 million related to our escrow agreement from the sale of lease purchase units sold to Element Financial Corp. that carry no interest rate. Additionally, $4.4 million of debt relates to non-compete agreement payments related to acquisitions that carry no interest rates. The remainder of the balance relates to miscellaneous items acquired through acquisitions that carry no interest rate.

Lines of Credit

In December 2010, we entered into a five-year revolving credit facility agented by Bank of America, N.A. The facility refinanced our previous credit facility and provides for ongoing working capital needs and general corporate purposes. Bank of America, N.A. served as the lead arranger in the facility and Wells Fargo Bank, N.A. also participated in the new facility. The facility provides for ongoing working capital needs and general corporate purposes. In May 2013, we increased our credit facility and extended the maturity. At June 30, 2014, we were authorized to borrow up to $200.0 million under this credit facility, which expires May 2018. The applicable interest rate under this agreement is based on either a base rate equal to Bank of America, N.A.'s prime rate or LIBOR plus an applicable margin between 0.75% and 1.375% that is adjusted quarterly based on our lease adjusted total debt to EBITDAR ratio. At June 30, 2014, the credit facility had an outstanding balance of $73.8 million and $0.8 million utilized for letters of credit. The facility is collateralized by the assets of all the U.S. and Canadian subsidiaries of the Company. We are obligated to comply with certain financial covenants under our credit agreement and we were in compliance with these covenants at June 30, 2014.