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DEBT ARRANGEMENTS | 12 Months Ended
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Sep. 30, 2012
DEBT ARRANGEMENTS [Abstract] |
DEBT ARRANGEMENTS | 8. DEBT ARRANGEMENTS Long-term debt consisted of the following at September 30:
|  | 2012 |  |  | 2011 |
Mortgage note payable to a bank, payable in monthly principal and interest installments of $40. Interest is fixed at 4.1%. Collateralized by underlying property. Due October, 2013. (b) |  | $ | 3,236 |  |  | $ | 3,573 |
Mortgage note payable to a bank, payable in monthly principal and interest installments of $17. Interest is fixed at 4.1%. Collateralized by underlying property. Due October, 2013. (b) |  |  | 1,532 |  |  |  | 1,674 |
Replacement note payable to a bank, payable in monthly principal installments of $14 plus interest. The interest rate is 4.5%. Collateralized by West Lafayette and Evansville properties. Due October, 2013. (a) (b) |  |  | 1,074 |  |  |  | 1,245 |
Note payable to Algo Holdings, payable in monthly installments of $10. There is no interest on this note if paid within terms. Termed May 1, 2012. See Note 13. |  |  | - |  |  |  | 85 |
|  | $ | 5,842 |  |  | $ | 6,577 |
Less current portion |  |  | 583 |  |  |  | 735 |
|  | $ | 5,259 |  |  | $ | 5,842 |
Our principal payment obligation for the year ending September 30, 2013 is $583. Cash interest payments of $715 and $647 were made in 2012 and 2011, respectively. Mortgages and note payable We have notes payable to Regions Bank ("Regions") aggregating approximately $5,800. Regions notes payable currently include two outstanding mortgages on our facilities in West Lafayette and Evansville, Indiana, which total $4,768. The mortgages originally mature in November 2012 with an interest rate fixed at 4.1% and monthly principal payments of approximately $38 plus interest. (a) On November 29, 2010, we executed amendments on two loans with Regions. Regions agreed to accept a $500 principal payment on the note payable maturing on December 18, 2010 and a $500 principal payment on one mortgage maturing on February 11, 2011. The principal payments were made on December 17, 2010 and February 11, 2011, respectively. Upon receipt of these two payments, Regions incorporated the two loans into a replacement note payable for $1,341 maturing on November 1, 2012. The replacement note payable bears interest at a per annum rate equal to the 30-day LIBOR plus 300 basis points (minimum of 4.5%) with monthly principal payments of approximately $14 plus interest. The replacement note payable is secured by real estate at our West Lafayette and Evansville, Indiana locations. At September 30, 2012, the replacement note payable had a balance of $1,074. As part of the amendment, Regions also agreed to amend the loan covenants for the related debt to be more favorable to us. Regions requires us to maintain certain ratios including a fixed charge coverage ratio and total liabilities to tangible net worth ratio. The fixed charge coverage ratio calculation currently requires a ratio of not less than 1.25 to 1.00. We are also required to maintain a ratio of our total liabilities to tangible net worth ratio of not greater than 2.10 to 1.00. If we fail to comply with these covenants, the loan agreement restricts our ability to purchase fixed assets. (b) On November 9, 2012, we executed a sixth amendment with Regions. On December 21, 2012, we executed an amended and restated sixth amendment with Regions. Regions agreed to extend the term loan and mortgage loan maturity dates to October 31, 2013. The unpaid principal on the notes was incorporated into a replacement note payable for $5,786 bearing interest at LIBOR plus 400 basis points (minimum of 6.0%) with monthly principal payments of approximately $47 plus interest. The replacement note payable is secured by real estate at our West Lafayette and Evansville, Indiana locations. At September 30, 2012, we were not in compliance with the fixed charge coverage and the total liabilities to tangible net worth ratios in the Regions agreements, mainly due to the net losses in the first nine months of fiscal 2012, restructuring charges incurred in current fiscal year and the treatment of our warrants as a liability instead of as equity. On November 6, 2012, Regions waived compliance with the fixed charge coverage ratio. On December 21, 2012, Regions waived compliance with the total liabilities to tangible net worth ratio. Based on projections for fiscal 2013, we expect to be in compliance with the fixed charge coverage covenants for fiscal 2013 and in breach of the total liabilities to tangible net worth ratio covenant for the first two fiscal quarters of 2013, primarily due to the treatment of our warrants as a liability. On September 10, 2013, Regions waived our expected breach. Failure to comply with those covenants in future quarters would be a default under the Regions loans, requiring us to negotiate with Regions regarding loan modifications or waivers. If we are unable to obtain such modifications or waivers, Regions could accelerate the maturity of the loans and cause a cross default with our other lender. The Regions loans contain both cross-default provisions with each other and with the revolving line of credit with Entrepreneur Growth Capital described below. The mortgages and replacement note payable with Regions mature in the first quarter of fiscal 2014. We intend to refinance the amounts in lieu of making balloon payments for the remaining principal balances or sell the building in West Lafayette, Indiana. On July 12, 2012, we listed for sale our 7.25 acres and 120,000 square foot facility at 2701 Kent Avenue, West Lafayette, Indiana with the intent to leaseback 80% of that square footage in which to continue our laboratory and manufacturing operations. The asking price was $12,500. We performed an impairment analysis on the building when we listed it for sale, but noted no impairment necessary. As of September 30, 2012 the net book value of the facility and land was $9,585. We may be unsuccessful in renegotiating the terms of the debt or those terms may be unfavorable to us. For these reasons, if we are unsuccessful at refinancing our long-term debt, our operating results and financial condition could be adversely affected. Revolving Line of Credit On January 13, 2010, we entered into a new $3,000 revolving line of credit agreement ("Credit Agreement") with EGC. The term of the Credit Agreement expires on January 31, 2014. If we terminate prior to the expiration of the term, then we are subject to an early termination fee equal to the minimum interest charges of $15 for each of the months remaining until expiration. Borrowings under the Credit Agreement bear interest at an annual rate equal to Citibank's Prime Rate plus five percent (5%), or 8.25% as of September 30, 2012, with minimum monthly interest of $15. Interest is paid monthly. The line of credit also carries an annual facilities fee of 2% and a 0.2% collateral monitoring fee. Borrowings under the Credit Agreement are secured by a blanket lien on our personal property, including certain eligible accounts receivable, inventory, and intellectual property assets, a second mortgage on our West Lafayette and Evansville real estate and all common stock of our U.S. subsidiaries and 65% of the common stock of our non-United States subsidiary. Borrowings are calculated based on 75% of eligible accounts receivable. Under the Credit Agreement, the Company has agreed to restrict advances to subsidiaries, limit additional indebtedness and capital expenditures and maintain a minimum tangible net worth of at least $8,500. Pursuant to the terms of the Credit Agreement, the line of credit will automatically renew on January 31, 2014 unless either party gives a 60-day notice of intent to terminate or withdraw. On December 21, 2012, we negotiated an amendment to this Credit Agreement. The amendment reduced the minimum tangible net worth covenant requirement from $8,500 to $8,000, effective on January 1, 2013, and waived all non-compliances with this covenant through December 31, 2012. The Credit Agreement also contains cross-default provisions with the Regions loans and any future EGC loans. At September 30, 2012, we were not in compliance with the minimum tangible net worth covenant requirement. On December 21, 2012, EGC waived compliance with this covenant as part of the amendment. Based on projections for fiscal 2013, we expect to be in breach of the tangible net worth covenant for our first three quarters of fiscal 2013, but in compliance in our fourth fiscal quarter. EGC waived our projected breach for our first fiscal quarter of 2013 in the amendment to the Credit Agreement on December 21, 2012. EGC waived our expected breach for our second and third fiscal quarters of 2013 on October 9, 2013. At September 30, 2012, we had available borrowing capacity of $1,927 on this line, of which $1,444 was outstanding.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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