Indebtedness

6 Months Ended

May 03, 2019

The following is a summary of the company's indebtedness:



(Dollars in thousands)	May 3, 2019			May 4, 2018			October 31, 2018
Revolving credit facility	$	90,000		$	—		$	91,000
$200 million term loan	200,000			—			—
$300 million term loan	300,000			—			—
7.800% debentures	100,000			100,000			100,000
6.625% senior notes	123,885			123,823			123,854
$130 million term loan	—			91,000			—
Less: unamortized discounts, debt issuance costs and deferred charges	(2,806		)	(2,521		)	(2,305		)
Total indebtedness, net	811,079			312,302			312,549
Less: current portion of long-term debt	(90,000		)	(13,000		)	—
Long-term debt, less current portion	$	721,079		$	299,302		$	312,549

Principal payments required on the company's outstanding indebtedness, based on the maturity dates defined within the company's debt arrangements, for the remainder of fiscal 2019 and succeeding five fiscal years are as follows: fiscal 2019 (remainder), $0.0 million; fiscal 2020, $0.0 million; fiscal 2021, $0.0 million; fiscal 2022, $215.0 million; fiscal 2023, $120.0 million; fiscal 2024, $255.0 million; and after fiscal 2024, $225.0 million.

Revolving Credit Facility

In June 2018, the company replaced its prior revolving credit facility and term loan, which were scheduled to mature in October 2019, with an unsecured senior five-year revolving credit facility that, among other things, increased the company's borrowing capacity to $600 million, from $150 million, and expires in June 2023. Included in the company's $600 million revolving credit facility is a $10 million sublimit for standby letters of credit and a $30 million sublimit for swingline loans. At the company's election, and with the approval of the named borrowers on the revolving credit facility and the election of the lenders to fund such increase, the aggregate maximum principal amount available under the facility may be increased by an amount up to $300 million. Funds are available under the revolving credit facility for working capital, capital expenditures, and other lawful corporate purposes, including, but not limited to, acquisitions and common stock repurchases, subject in each case to compliance with certain financial covenants described below. In connection with the entry into the new revolving credit facility during June 2018, the company incurred approximately $1.9 million of debt issuance costs, which are being amortized over the life of the revolving credit facility under the straight-line method as the results obtained are not materially different from those that would result from the use of the effective interest method. The company classifies the debt issuance costs related to its revolving credit facility within other assets on the Condensed Consolidated Balance Sheets, regardless of whether the company has any outstanding borrowings on the revolving credit facility.

As of May 3, 2019, the company had $90.0 million outstanding under the revolving credit facility resulting from amounts drawn to fund the portion of the purchase price of the company's acquisition of CMW not financed under the company's term loan credit agreement, $1.9 million outstanding under the sublimit for standby letters of credit, and $508.1 million of unutilized availability under the revolving credit facility. As of October 31, 2018, the company had $91.0 million outstanding under the revolving credit facility, $1.5 million outstanding under the sublimit for standby letters of credit, and $507.5 million of unutilized availability under the revolving credit facility. As of May 4, 2018, the company had no borrowings under the revolving credit facility that was in place at that time. Typically, the company's revolving credit facility is classified as long-term debt within the company's Condensed Consolidated Balance Sheets as the company has the ability to extend the outstanding borrowings under the revolving credit facility for the full-term of the facility. However, if the company intends to repay a portion of the outstanding balance under the revolving credit facility within the next twelve months, the company reclassifies the portion of outstanding borrowings under the revolving credit facility that the company intends to repay within the next twelve months to current portion of long-term debt within the Condensed Consolidated Balance Sheets. As of May 3, 2019, the company reclassified $90.0 million of outstanding borrowings under the revolving credit facility to current portion of long-term debt within the company's Condensed Consolidated Balance Sheets. As of October 31, 2018, the $91.0 million of outstanding borrowings under the company's revolving credit facility were classified as long-term debt within the company's Condensed Consolidated Balance Sheets.

The company's revolving credit facility contains customary covenants, including, without limitation, financial covenants, such as the maintenance of minimum interest coverage and maximum leverage ratios; and negative covenants, which among other things, limit disposition of assets, consolidations and mergers, restricted payments, liens, and other matters customarily restricted in such agreements. Most of these restrictions are subject to certain minimum thresholds and exceptions. The company was in compliance with all covenants related to the credit agreement for the company's revolving credit facility as of May 3, 2019 and October 31, 2018. As of May 4, 2018, the company was in compliance with all covenants related to the credit agreement for the revolving credit facility that was in place at that time.

Outstanding loans under the revolving credit facility, if applicable, other than swingline loans, bear interest at a variable rate generally based on LIBOR or an alternative variable rate based on the highest of the Bank of America prime rate, the federal funds rate or a rate generally based on LIBOR, in each case subject to an additional basis point spread as defined in the credit agreement. Swingline loans under the revolving credit facility bear interest at a rate determined by the swingline lender or an alternative variable rate based on the highest of the Bank of America prime rate, the federal funds rate or a rate generally based on LIBOR, in each case subject to an additional basis point spread as defined in the credit agreement. Interest is payable quarterly in arrears. For the three and six month periods ended May 3, 2019, the company made interest payments of approximately $1.8 million and $1.0 million on the outstanding borrowings of the revolving credit facility. The company did not incur interest expense on the revolving credit facility that was in place during the three and six months ended May 4, 2018, as the company had no borrowings under the facility that was in place at that time.

Term Loan Credit Agreement

In March 2019, the company entered into a term loan credit agreement with a syndicate of financial institutions for the purpose of partially funding the purchase price of the company's acquisition of CMW and the related fees and expenses incurred in connection with such acquisition. The term loan credit agreement provided for a $200 million three year unsecured senior term loan facility maturing on April 1, 2022 and a $300 million five year unsecured senior term loan facility maturing on April 1, 2024. The funds under both term loan facilities were received on April 1, 2019 in connection with the closing of the company's acquisition of CMW. There are no scheduled principal amortization payments prior to maturity on the $200 million three year unsecured senior term loan facility. For the $300 million five year unsecured senior term loan facility, the company is required to make quarterly amortization payments of 2.5 percent of the aggregate principal balance beginning with the last business day of the thirteenth calendar quarter ending after April 1, 2019, with the remainder of the unpaid principal balance due at maturity. No payments are required during the first three years of the $300 million five year unsecured senior term loan facility. The term loan facilities may be prepaid and terminated at the company's election at any time without penalty or premium.

In connection with the company's entry into the term loan credit agreement in March 2019, the company incurred approximately $0.6 million of debt issuance costs, which are being amortized over the life of the respective term loans under the straight-line method as the results obtained are not materially different from those that would result from the use of the effective interest method. Unamortized deferred debt issuance costs are netted against the outstanding borrowings under the term loan credit agreement on the company's Condensed Consolidated Balance Sheets. As of May 3, 2019, there were $200 million and $300 million of outstanding borrowings under the term loan credit agreement for the $200 million three year unsecured senior term loan facility and the $300 million five year unsecured senior term loan facility, respectively, which are classified as long-term debt within the company's Condensed Consolidated Balance Sheets.

The term loan credit agreement contains customary covenants, including, without limitation, financial covenants, such as the maintenance of minimum interest coverage and maximum leverage ratios; and negative covenants, which among other things, limit disposition of assets, consolidations and mergers, restricted payments, liens, and other matters customarily restricted in such agreements. Most of these restrictions are subject to certain minimum thresholds and exceptions. The company was in compliance with all covenants related to the company's term loan credit agreement as of May 3, 2019.

Outstanding borrowings under the term loan credit agreement bear interest at a variable rate generally based on LIBOR or an alternative variable rate, based on the highest of the Bank of America prime rate, the federal funds rate, or a rate generally based on LIBOR, in each case subject to an additional basis point spread as defined in the term credit loan agreement. Interest is payable quarterly in arrears. For the three and six month periods ended May 3, 2019, the company made interest payments of approximately $1.6 million on the outstanding borrowings under the term loan credit agreement.

7.8% Debentures

In June 1997, the company issued $175 million of debt securities consisting of $75 million of 7.125 percent coupon 10-year notes and $100 million of 7.8 percent coupon 30-year debentures. The $75 million of 7.125 percent coupon 10-year notes were repaid at maturity during fiscal 2007. In connection with the issuance of $175 million in long-term debt securities, the company paid

$23.7 million to terminate three forward-starting interest rate swap agreements with notional amounts totaling $125 million. These swap agreements had been entered into to reduce exposure to interest rate risk prior to the issuance of the new long-term debt securities. As of the inception of one of the swap agreements, the company had received payments that were recorded as deferred income to be recognized as an adjustment to interest expense over the term of the new debt securities. As of the date the swaps were terminated, this deferred income totaled $18.7 million. The excess termination fees over the deferred income recorded was deferred and is being recognized as an adjustment to interest expense over the term of the debt securities issued.

6.625% Senior Notes

On April 26, 2007, the company issued $125 million in aggregate principal amount of 6.625 percent senior notes due May 1, 2037 and priced at 98.513 percent of par value. The resulting discount of $1.9 million and the underwriting fee and direct debt issuance costs of $1.5 million associated with the issuance of these senior notes are being amortized over the term of the notes using the straight-line method as the results obtained are not materially different from those that would result from the use of the effective interest method. Although the coupon rate of the senior notes is 6.625 percent, the effective interest rate is 6.741 percent after taking into account the issuance discount. Interest on the senior notes is payable semi-annually on May 1 and November 1 of each year. The senior notes are unsecured senior obligations of the company and rank equally with the company's other unsecured and unsubordinated indebtedness. The indentures under which the senior notes were issued contain customary covenants and event of default provisions. The company may redeem some or all of the senior notes at any time at the greater of the full principal amount of the senior notes being redeemed or the present value of the remaining scheduled payments of principal and interest discounted to the redemption date on a semi-annual basis at the treasury rate plus 30 basis points, plus, in both cases, accrued and unpaid interest. In the event of the occurrence of both (i) a change of control of the company, and (ii) a downgrade of the notes below an investment grade rating by both Moody's Investors Service, Inc. and Standard & Poor's Ratings Services within a specified period, the company would be required to make an offer to purchase the senior notes at a price equal to 101 percent of the principal amount of the senior notes plus accrued and unpaid interest to the date of repurchase.

$130 Million Term Loan

In October 2014, the company obtained a $130 million term loan with various banks, which, at that time, was a part of a new credit agreement that included a new revolving credit facility. Under the credit agreement, interest on outstanding term loan borrowings was based on a LIBOR rate (or other rates quoted by the Administrative Agent, Bank of America, N.A.) plus a basis point spread defined in the credit agreement. As described in further detail in the section titled "Revolving Credit Facility" within this Note, in June 2018, the company replaced its term loan and prior revolving credit facility, which were scheduled to mature in October 2019, with an unsecured senior five-year revolving credit facility that expires in June 2023.