Long term obligations

6 Months Ended

Jun. 30, 2014

6.	Long term obligations

Total long-term obligations as of June 30, 2014 and December 31, 2013 consist of the following (in thousands):

	June 30,		December 31,
	2014		2013
Vendor obligations
Capital lease obligations ⁽¹⁾	$	773	$	17
Deferred lease payments ⁽²⁾		813		764
Microsoft licenses ⁽³⁾		797		-

Pension obligations
Accrued pension liability		3,681		3,317
		6,064		4,098
Less: Current portion of long term obligations		870		351
Totals	$	5,194	$	3,747

⁽¹⁾ In March 2014, the Company entered into an equipment sale leaseback agreement with a financing company. The cash proceeds from the transaction were $0.9 million. The Company leased the equipment for a period of 36 months at an effective interest rate of approximately 6% and has the option to purchase the equipment at a nominal amount at the end of the lease term. The Company has accounted for this transaction as a financing arrangement, wherein the equipment remains on the Company’s books and will continue to be depreciated. As of June 30, 2014, the Company had made $0.1 million in lease payments under the sale lease back agreement.

⁽²⁾ Deferred lease payments represents the effect of straight-lining non-financing type lease payments over the respective lease terms.

⁽³⁾ In March 2014, the Company renewed a vendor agreement to acquire certain additional software licenses and to receive support and subsequent software upgrades on these and other currently owned software licenses through February 2017. Pursuant to this agreement, the Company is obligated to pay approximately $0.4 million annually over the term of the agreement. The total cost, net of deferred interest (in thousands), was allocated to the following asset accounts in 2014:

Prepaid expenses and other current assets	$	356
Other assets		713
Property and equipment		136
	$	1,205

- 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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