CREDIT FACILITY

On November 30, 2010, we entered into a $800.0 million syndicated credit agreement pursuant to which we obtained an unsecured revolving credit facility (the “2010 Facility”). This credit agreement, as amended from time to time, is referred to as the “2010 Credit Agreement.”

The 2010 Credit Agreement contained certain financial covenants that included a maximum leverage ratio of 3.25 to 1.0 and a minimum fixed charge coverage ratio of 1.50 to 1.0. In addition, we were required to maintain a consolidated net worth in an amount not less than the sum of (i) $570.0 million, (ii) 50% of our consolidated net income (with no deduction for net loss), and (iii) 100% of our aggregate increases in stockholders’ equity beginning on November 30, 2010. As of July 31, 2017, we were in compliance with the covenants under our 2010 Credit Agreement.

On September 1, 2017, we refinanced and replaced our 2010 Facility with a new syndicated secured credit facility. Refer to Note 15, “Subsequent Events,” for additional details.

2010 Facility Information



(in millions)	July 31, 2017		October 31, 2016
Cash borrowings	$	264.7	$	268.3
Standby letters of credit	127.7		130.9

Interest Rate Swaps

We enter into interest rate swaps to manage the interest rate risk associated with our floating-rate, LIBOR-based borrowings under our 2010 Facility. Under these arrangements, we typically pay a fixed interest rate in exchange for LIBOR-based variable interest throughout the life of the agreement.

During 2016, we entered into three interest rate swap agreements with effective dates of April 7, 2016 and May 11, 2016, an underlying aggregate notional amount of $105.0 million, and a fixed interest rate of 1.05%. These swaps were designated and accounted for as cash flow hedges from inception and mature on April 7, 2021 and May 11, 2021. See Note 7, “Fair Value of Financial Instruments,” regarding the valuation of our interest rate swaps.

We initially report the effective portion of a derivative’s mark-to-market gain or loss as a component of AOCL and subsequently reclassify the gain or loss into earnings when the hedged transactions occur and affect earnings. The ineffective portion of the gain or loss is reported in earnings immediately. Interest payables and receivables under the swap agreements are accrued and recorded as adjustments to interest expense.

At July 31, 2017 and October 31, 2016, the amounts recorded in AOCL were $1.4 million and $0.2 million, respectively. At July 31, 2017, the amount expected to be reclassified from AOCL to earnings during the next twelve months was $0.6 million.