Note 4 - Pledged Assets, Notes Payable and Long-Term Debt

12 Months Ended

Apr. 30, 2012

4. PLEDGED ASSETS, NOTES PAYABLE AND LONG-TERM DEBT

As of April 30, 2012, the Company had two credit agreements including an operating line of credit and Industrial Revenue Bonds that are secured by its production and headquarters facility in Olathe, Kansas.

The Company’s $6,000,000 operating line of credit provides the Company and its wholly-owned subsidiary with short-term financing for their working capital requirements. The line of credit’s borrowing capacity is calculated as a specified percentage of accounts receivable and inventory on a monthly basis and was amended on October 28, 2011 to extend the expiration date of the line of credit to October 30, 2013. The total amount of borrowing base for the line of credit as of April 30, 2012 was approximately $4,682,000, of which $3,932,000 was available. It is secured by accounts receivable and inventory and accrues interest at a performance-based rate that is based on the prime rate (3.25% at April 30, 2012) plus/minus 0.5% and has an interest rate floor of 3.50%. The interest rate actually assessed is determined by the Company’s debt-to-tangible net worth ratio and was 3.5% on April 30, 2012. The loan agreement has various covenants, including a financial covenant pertaining to the maintenance of total tangible net worth and a required debt service coverage ratio. The $750,000 in borrowings outstanding on the line of credit as of April 30, 2012 is presented on the balance sheet as long-term in accordance with the terms of the line of credit.

The following table is a summary of the Company’s long-term debt and related current maturities (in thousands):

	April 30, 2012		April 30, 2011
Industrial revenue bonds, Series 2006A, 5-year adjustable interest rate based on the yield on 5-year United States Treasury Notes, plus .45% (1.89% as of April 30, 2012), due in monthly principal and interest payments beginning October 1, 2006 through maturity on September 1, 2026, secured by real estate. Effective September 1, 2011, the 5-year adjustable interest rate was reset to 1.89% for the next five years.	$	2,985	$	3,144

Operating line of credit, $6,000,000 limit on borrowing capacity, prime rate (3.25% at April 30, 2012) plus/minus 0.5% performance based interest with an interest rate floor of 3.5%, due in full on October 30, 2013, secured by accounts receivable and inventory. The interest rate as of April 30, 2012 was 3.5%.		750		1,950
		3,735		5,094
Less current maturities		181		134
Total long-term debt	$	3,554	$	4,960

The approximate aggregate amount of principal to be paid on the long-term debt and line of credit during each of the next five years ending April 30 is as follows (in thousands):

Year	Amount
2013	$	181
2014		935
2015		189
2016		192
2017		196
Thereafter		2,042
	$	3,735

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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