9. Long-Term Debt and Lines of Credit

A summary of long-term debt follows:

(dollars in thousands)	October 27, 2013			October 28, 2012			April 28, 2013
Unsecured senior term notes	$	4,400		$	6,600		$	6,600
Canadian government loan		-			217			-
		4,400			6,817			6,600
Current maturities of long-term debt		(2,200	)		(2,401	)		(2,200	)
Long-term debt, less current maturities of long-term debt	$	2,200		$	4,416		$	4,400

Unsecured Term Notes

We entered into a note agreement dated August 11, 2008 that provided for the issuance of $11.0 million of unsecured term notes with a fixed interest rate of 8.01% and a term of seven years. Principal payments of $2.2 million per year are due on the notes beginning August 11, 2011. The remaining principal payments are payable over an average term 1.8 years through August 11, 2015. Any principal pre-payments would be assessed a penalty as defined in the agreement. The agreement contains customary financial and other covenants as defined in the agreement.

Revolving Credit Agreement – United States

At April 28, 2013, we had an unsecured Amended and Restated Credit Agreement with Wells Fargo Bank, N.A. (“Wells Fargo”) that provided for a revolving loan commitment of $7.6 million that was due to expire on August 25, 2013. This agreement provided for a pricing matrix to determine the interest rate payable on loans made under this agreement.

Effective August 13, 2013, we entered into a Credit Agreement (“Credit Agreement”) with Wells Fargo that replaced the agreement noted above. This Credit Agreement contains terms and covenants similar to the previous agreement and extends the term of the credit facility through August 31, 2015. Interest is charged at a rate equal to the one-month LIBOR rate plus a spread based on our ratio of debt to EBITDA as defined in the agreement (applicable interest rate of 1.77% at October 27, 2013).

This Credit Agreement provides for an unsecured revolving loan commitment of $10.0 million to be used to finance working capital and for general corporate purposes. The amount of borrowings that are outstanding under the revolving credit agreement with Culp Europe noted below decrease the $10.0 million available under this Credit Agreement.

At October 27, 2013, and April 28, 2013, there was a $195,000 outstanding letter of credit (all of which related to workers compensation) provided by the Credit Agreement. At October 28, 2012, there were no outstanding letters of credit. There were no borrowings outstanding under the agreement at October 27, 2013, October 28, 2012, and April 28, 2013.

Revolving Credit Agreement – China

We have an unsecured credit agreement associated with our operations in China that provides for a line of credit of up to 40 million RMB (approximately $6.6 million USD at October 27, 2013), expiring on June 8, 2014. This agreement has an interest rate determined by the Chinese government. There were no borrowings outstanding under the agreement as of October 27, 2013, October 28, 2012, and April 28, 2013.

Revolving Credit Agreement – Europe

Prior to August 13, 2013, we had an unsecured credit agreement associated with our operations in Poland that provided for a line of credit of up to 6.8 million Polish Zloty (approximately $2.2 million USD). This agreement bears interest at WIBOR (Warsaw Interbank Offered Rate) plus 2% (applicable interest rate of 4.5% at October 27, 2013). There were $585,000 and $561,000 (1.8 million Polish Zloty) in borrowings outstanding under this agreement at October 27, 2013 and April 28, 2013, respectively. There were $875,000 (2.8 million Polish Zloty) in borrowings outstanding under this agreement at October 28, 2012.

In connection with the Credit Agreement effective August 13, 2013 noted above, the outstanding borrowings, totaling $585,000 at October 27, 2013, are due on August 31, 2015 and decrease the $10.0 million available under the Credit Agreement.

Overall

Our loan agreements require, among other things, that we maintain compliance with certain financial covenants. At October 27, 2013, the company was in compliance with these financial covenants.

At October 27, 2013, the principal payment requirements of long-term debt during the next two years are: Year 1 – $2.2 million; and Year 2 - $2.2 million.

The fair value of the company’s long-term debt is estimated by discounting the future cash flows at rates currently offered to the company for similar debt instruments of comparable maturities. At October 27, 2013, the carrying value of the company’s long-term debt was $4.4 million and the fair value was $4.6 million. At October 28, 2012, the carrying value of the company’s long-term debt was $6.8 million and the fair value as $7.0 million. At April 28, 2013, the carrying value of the company’s long-term debt was $6.6 million and the fair value was $7.0 million.