NOTE 10: Debt

Long-term debt at the end of fiscal 2014 and 2013 consisted of the following:

In Thousands	2014		2013

U.S. credit facility	$	100,000	$	130,000
Euro Term Loan, due July 2016		-		24,847
U.S. Term Loan, due July 2016		161,875		170,625
7.00% Senior Notes, due August 2020		250,000		250,000
Government refundable advances		51,867		56,897
Obligation under capital leases		58,448		56,229
Other		304		540
		622,494		689,138
Less current maturities		12,774		21,279
Carrying amount of long-term debt	$	609,720	$	667,859

Long-term debt

In March 2011, the Company entered into a secured credit facility for $460 million made available through a group of banks. The credit facility is secured by substantially all of the Company’s assets and interest is based on standard inter-bank offering rates. The credit facility expires in July 2016. The interest rate ranges from LIBOR plus 1.50% to LIBOR plus 2.25%, depending on the leverage ratios at the time the funds are drawn. At October 31, 2014, the Company had $100.0 million outstanding under the secured credit facility at an interest rate of LIBOR plus 1.50%, which is currently 1.66%. An additional $59.8 million of unsecured foreign currency credit facilities have been extended by foreign banks for a total of $519.8 million available companywide. Available credit under the above credit facilities was $387.9 million at fiscal 2014 year end, when reduced by outstanding borrowings of $100.0 million and letters of credit of $31.9 million. In June 2014, the Company amended the secured credit facility to increase the U.K. borrower sublimit and to permit additional borrowers under the revolving credit facility in order to give the Company greater flexibility on foreign borrowing.

In July 2011, the Company amended the secured credit facility to provide for a €125.0 million term loan (Euro Term Loan). On June 30, 2014, the Company redeemed the €125.0 million Euro Term Loan. In connection with the redemption, the Company wrote off $0.5 million in unamortized debt issuance costs as a loss on extinguishment of debt in the third fiscal quarter of 2014.

In April 2013, the Company amended the secured credit facility to provide for a $175.0 million term loan (U.S. Term Loan). The interest rate on the U.S. Term Loan ranges from LIBOR plus 1.50% to LIBOR plus 2.25%, depending on the leverage ratios at the time the funds are drawn. At October 31, 2014, the Company had $161.9 million outstanding under the U.S. Term Loan at an interest rate of LIBOR plus 1.50%, which is currently 1.66%. The loan amortizes at 1.25% of the original principal balance quarterly through March 2016, with the remaining balance due in July 2016.

In April 2013, the Company redeemed the $175.0 million 2017 Notes. In connection with the redemption, the Company wrote off $1.3 million in unamortized debt issuance costs as a charge against interest expense. In addition, the Company incurred a $3.9 million redemption premium and received proceeds of $2.9 million from the termination of its $175.0 million interest rate swap agreements. As a result, the redemption of the 2017 Notes resulted in a net loss of $0.9 million on extinguishment of debt.

In August 2010, the Company issued $250.0 million in 7% Senior Notes due August 2020 (2020 Notes) and requiring semi-annual interest payments in March and September of each year until maturity. The net proceeds from the sale of the notes, after deducting $4.4 million of debt issuance cost, were $245.6 million. The 2020 Notes are general unsecured senior obligations of the Company. The 2020 Notes are guaranteed, jointly and severally on a senior basis, by all the existing and future domestic subsidiaries of the Company unless designated as an “unrestricted subsidiary,” and those foreign subsidiaries that executed related subsidiary guarantees under the indenture covering the 2020 Notes. The 2020 Notes are subject to redemption at the option of the Company at any time prior to August 1, 2015, at a price equal to 100% of the principal amount, plus any accrued interest to the date of redemption and a make-whole provision. The 2020 Notes are also subject to redemption at the option of the Company, in whole or in part, on or after August 1, 2015, at redemption prices starting at 103.500% of the principal amount plus accrued interest during the period beginning August 1, 2015, and declining annually to 100% of principal and accrued interest on or after August 1, 2018.

Based on quoted market prices, the fair value of the Company’s $250.0 million 2020 Notes was $266.9 million and $272.5 million as of October 31, 2014, and October 25, 2013, respectively. The carrying amounts of the secured credit facility, and the U.S. Term Loan due 2016 approximate fair value. The estimate of fair value for the 2020 Notes was based on Level 2 inputs as defined in the fair value hierarchy.

Government refundable advances consist of payments received from the Canadian government to assist in research and development related to commercial aviation. The repayment of this advance is based on year-over-year commercial aviation revenue growth at CMC beginning in 2014. Imputed interest on the advance was 4.6% at October 31, 2014. The debt recognized was $51.9 million and $56.9 million as of October 31, 2014, and October 25, 2013, respectively.

Capital leases

In fiscal 2008, the Company entered into a land and building lease for a 216,000 square-foot manufacturing facility for an Avionics & Controls segment facility. The land and building lease has a fixed term of 30 years. The expected minimum lease payments include a 2% annual rent increase. At October 31, 2014, the amount recorded as a capitalized lease obligation is $32.4 million. The imputed interest rate is 9%.

In fiscal 2009, the Company amended the building lease for an Avionics & Controls facility to extend the term of the lease to 2027. At October 31, 2014, the amount recorded as a capitalized lease obligation is $11.5 million. The imputed interest rate is 6.4%.

In fiscal 2013, the Company amended the building lease for an Avionics & Controls facility to extend the term of the lease to 2022. At October 31, 2014, the amount recorded as a capitalized lease obligation is $11.6 million. The imputed interest rate is 4.5%.

As of October 31, 2014, aggregate annual maturities of long-term debt and future non-cancelable minimum lease payments under capital lease obligations were as follows:

In Thousands

Fiscal Year
2015	$	16,626
2016		259,461
2017		5,411
2018		5,431
2019		5,521
2020 and thereafter		398,784
Total		691,234

Less: amount representing interest on capital leases		68,740
Total long-term debt	$	622,494

A number of underlying agreements contain various covenant restrictions which include maintenance of net worth, payment of dividends, interest coverage, and limitations on additional borrowings. The Company was in compliance with these covenants at October 31, 2014.