7. Long-Term Debt

Expected future minimum principal payments under our debt obligations are as follows: $250,000 in fiscal 2015 (which we have both the intent and ability to refinance at that time, therefore we have classified this balance as long term debt on the balance sheet as of April 26, 2014), $150,000 in fiscal 2018, $60,000 in fiscal 2019 and $265,000 in years thereafter.

In March 2008, Patterson issued fixed-rate senior notes with an aggregate principal amount of $450,000, consisting of (i) $50,000 4.63% senior notes, paid in fiscal 2013; (ii) $250,000 5.17% senior notes, due fiscal 2015; and (iii) $150,000 5.75% senior notes, due fiscal 2018.

Also in March 2008, we entered into a term loan agreement with a group of banks in the principal amount of $75,000, which was paid in fiscal 2013. The term loan required interest at a floating rate based on LIBOR plus a spread that ranged from 0.50% to 1.25% based on our leverage ratio, as defined in the agreement.

In December 2011, we issued fixed-rate senior notes with an aggregate principal amount of $325,000, consisting of (i) $60,000 2.95% senior notes, due fiscal 2019; (ii) $165,000 3.59% senior notes, due fiscal 2022; and (iii) $100,000 3.74% senior notes, due fiscal 2024.

A portion of the proceeds from the issuance of debt in December 2011 was used to repurchase shares of our common stock and to repay borrowings under our revolving line of credit. The remaining proceeds are intended to be used for general corporate purposes. Debt issuance costs associated with the issuance of debt in March 2008 of $1,800 and in December 2011 of $1,800 are being amortized to interest expense over the life of the related debt.

In addition, in March 2008 we entered into two forward starting interest rate swap agreements, each with notional amounts of $100,000 and accounted for as cash flow hedges, to hedge interest rate fluctuations in anticipation of the issuance of the 5.17% senior notes due fiscal 2015 and the 5.75% senior notes due fiscal 2018, respectively. Upon issuance of the hedged debt, Patterson settled the forward starting interest rate swap agreements and recorded a $1,000 increase, net of income taxes, to other comprehensive income, which is being amortized against interest expense over the life of the related debt. The pre-tax amount reclassified into earnings during fiscal years 2014, 2013 and 2012 was $200. The amount expected to be reclassified into earnings during fiscal 2015 is also expected to be $200.

Patterson has available a $300,000 revolving credit facility through December 2016. Interest on borrowings is based on LIBOR plus a spread which can range from 1.125% to 1.875%. This spread as well as a commitment fee on the unused portion of the facility are based on our leverage ratio, as defined in the agreement. There were no outstanding borrowings under the facility at April 26, 2014 or April 27, 2013.

The debt agreements contain various financial covenants including certain leverage and interest coverage ratios as defined in the agreements. Patterson met the financial and nonfinancial covenants under the debt agreements as of April 26, 2014.

Patterson’s debt consists of the following:


	April 26, 2014		April 27, 2013
5.17% senior notes due fiscal 2015	$	250,000	$	250,000
5.75% senior notes due fiscal 2018		150,000		150,000
2.95% senior notes due fiscal 2019		60,000		60,000
3.59% senior notes due fiscal 2022		165,000		165,000
3.74% senior notes due fiscal 2024		100,000		100,000
Total debt		725,000		725,000
Less: current debt obligations		—		—

Long-term debt	$	725,000	$	725,000