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Fair Value of Financial Instruments and Long Term Debt

12 Months Ended

Apr. 30, 2023

Fair Value of Financial Instruments and Long-Term Debt

FAIR VALUE OF FINANCIAL INSTRUMENTS AND LONG-TERM DEBT

U.S. GAAP requires that each financial asset and liability carried at fair value be classified into one of the following of the fair value hierarchy levels, which is based upon the quality of the inputs used in the valuation. Level 1 inputs are quoted market prices in active markets for identical assets and liabilities. Level 2 inputs are observable market-based inputs or unobservable inputs that are corroborated by market data (excluding those included within Level 1). Level 3 inputs are unobservable inputs that are not corroborated by market data. The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period. A summary of the fair value of the Company’s financial instruments follows.

Cash and cash equivalents, receivables, and accounts payable: The carrying amount approximates fair value due to the short maturity of these instruments or the recent purchase of the instruments at current rates of interest.

Long-term debt: The fair value of the Company’s long-term debt (including current maturities) is estimated based on the current rates offered to the Company for debt of the same or similar issuances which are considered Level 2 inputs. The fair value of the Company’s long-term debt was approximately $1,437,000 and $1,508,000, respectively, at April 30, 2023 and 2022. The fair value calculated excludes finance lease obligations of $95,072 and $74,234 outstanding at April 30, 2023 and April 30, 2022, respectively, which are grouped with long-term debt on the consolidated balance sheets.

Prior Credit Agreement

During the fourth quarter, the Company made a $15,625 prepayment on the existing term loan facility under its credit agreement dated January 11, 2019, as amended, by and among the Company, the lenders party thereto and Royal Bank of Canada, as administrative agent (the “Prior Credit Agreement”). On April 21, 2023, the Company subsequently terminated the Prior Credit Agreement, and repaid in full, all outstanding indebtedness thereunder (which as of such date was $250,000 under the term loan facility and $0 under the revolving credit facility).

New Credit Agreement

On April 21, 2023, the Company entered into a new credit agreement, by among the lenders thereto and Wells Fargo Bank, National Association, as administrative agent (the “New Credit Agreement”), to provide for (a) a $250 million unsecured term loan (the “Term Loan Facility”) and (b) an $850 million unsecured revolving credit facility (the “Revolving Facility” and together with the Term Loan Facility, the “Credit Facilities”). The Term Loan Facility was used to refinance the existing term loan under the Prior Credit Agreement, as noted above, and to pay fees and expenses in connection therewith. The Revolving Facility is available for working capital and other general corporate purposes of the Company and its subsidiaries. The transaction was primarily treated as a debt modification for accounting purposes.

Amounts borrowed under the Credit Facilities bear interest at variable rates based upon, at the Company’s option: (a) either Term SOFR or Daily Simple SOFR, in each case plus 0.10% (with a floor of 0.00%) for the interest period in effect, plus an applicable margin ranging from 1.10% to 1.70% or (b) an alternate base rate, which generally equals the highest of (i) the prime commercial lending rate announced by the Administrative Agent as its “prime rate”, (ii) the federal funds rate plus 1/2 of 1.00%, and (iii) Adjusted Daily Simple SOFR plus 1.00%, each plus an applicable margin ranging from 0.10% to 0.70% and each with a floor of 1.00%. The Revolving Facility carries a facility fee of 0.15% to 0.30% per annum. The applicable margins and facility fee, in each case, are dependent upon the Company’s quarterly Consolidated Leverage Ratio, as defined in the New Credit Agreement.

The outstanding principal balance on the Term Loan Facility is required to be repaid in equal quarterly installments in an amount equal to 1.25% of the original principal amount, on the last day of each March, June, September, and December, with the balance of the Credit Facilities due on April 21, 2028. The New Credit Agreement contains an expansion option permitting the Company to request an increase of either of the Credit Facilities from time to time not to exceed the greater of (a) $900 million and (b) 100% of Consolidated EBITDA (as defined in the New Credit Agreement) of the Company for the four most recently completed fiscal quarters, from the lenders or other financial institutions acceptable to the Company and the administrative agent, upon the satisfaction of certain conditions, including the consent of the lenders whose commitments would increase.

Under the Prior Credit Agreement, the Company had $0 outstanding on the revolving facility, and $265,625 outstanding on the term loan facility at April 30, 2022. Under the New Credit Agreement, the Company had $0 outstanding on the Revolving Facility and $250,000 outstanding on the Term Loan Facility at April 30, 2023.

Bank Line

The Company has an additional unsecured bank line of credit (the "Bank Line") with availability up to $25,000 at April 30, 2023. The $25,000 availability under the Bank Line is encumbered by a $432 letter of credit. The Bank Line bears interest at a variable rate subject to change from time to time based on changes in an independent index referred to in the Bank

Line as the Federal Funds Offered Rate. There was $0 outstanding at April 30, 2023 and 2022. The Bank Line is due upon demand. Subsequent to year-end, and effective June 1, 2023, the Bank Line was increased from $25,000 to $50,000.

The carrying amount of the Company’s long-term debt and finance lease obligations by issuance is as follows:


	As of April 30,
	2023		2022
Finance lease liabilities (Note 7)	$	95,072	$	74,234
3.67% Senior Notes (Series A) due in 7 installments beginning June 17, 2022, and ending June 15, 2028	135,000		150,000
3.75% Senior Notes (Series B) due in 7 installments beginning December 17, 2022 and ending December 18, 2028	45,000		50,000
3.65% Senior Notes (Series C) due in 7 installments beginning May 2, 2025 and ending May 2, 2031	50,000		50,000
3.72% Senior Notes (Series D) due in 7 installments beginning October 28, 2025 and ending October 28, 2031	50,000		50,000
3.51% Senior Notes (Series E) due June 13, 2025	150,000		150,000
3.77% Senior Notes (Series F) due August 22, 2028	250,000		250,000
2.85% Senior Notes (Series G) due August 7, 2030	325,000		325,000
2.96% Senior Notes (Series H) due August 6, 2032	325,000		325,000
Variable rate term loan facility, requiring quarterly installments ending April 21, 2028	250,000		265,625
Debt issuance costs	(1,698)		(1,990)
	$	1,673,374	$	1,687,869
Less current maturities	52,861		24,466
	$	1,620,513	$	1,663,403

Interest expense is net of interest income of $7,823, $48, and $168 for the years ended April 30, 2023, 2022, and 2021, respectively. Interest expense is also net of interest capitalized of $3,631, $2,031, and $4,537 during the years ended April 30, 2023, 2022, and 2021, respectively.

The agreements relating to the above long-term debt contain certain operating and financial covenants. At April 30, 2023, the Company was in compliance with all such operating and financial covenants.

Listed below are the aggregate maturities of long-term debt, excluding finance lease obligations (refer to Note 7 for future minimum payments under finance leases), for the 5 years commencing May 1, 2023 and thereafter:


Years ended April 30,
2024	$	44,500
2025	44,500
2026	204,500
2027	60,500
2028	248,000
Thereafter	978,000
	$	1,580,000

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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