NOTE 8— DEBT
The carrying value of the Company's outstanding debt consists of the following: |
| | | | | | | |
| January 31, |
| 2013 | | 2012 |
| (In thousands) |
Senior notes, interest at 3.75% payable semi-annually, due September 21, 2017 | $ | 350,000 |
| | $ | 0 |
|
Less—unamortized debt discount | (1,238 | ) | | 0 |
|
Senior notes, net | 348,762 |
| | 0 |
|
Capital leases | 6,243 |
| | 6,512 |
|
Loan payable to Brightstar Corp. | 0 |
| | 14,940 |
|
Interest-free revolving credit loan payable to Brightstar Corp. | 0 |
| | 36,306 |
|
Other committed and uncommitted revolving credit facilities, average interest rate of 2.09% and 7.15% at January 31, 2013 and January 31, 2012, respectively, expiring on various dates through fiscal 2017 | 166,975 |
| | 47,985 |
|
| 521,980 |
| | 105,743 |
|
Less—current maturities (included as “Revolving credit loans and current portion of long-term debt, net”) | (167,522 | ) | | (48,490 | ) |
Total long-term debt | $ | 354,458 |
| | $ | 57,253 |
|
Senior Notes
In September 2012, the Company issued $350.0 million aggregate principal amount of 3.75% Senior Notes in a public offering, resulting in cash proceeds of approximately $345.8 million, net of debt discount and debt issuance costs of approximately $1.3 million and $2.9 million, respectively (the “Senior Notes”). The debt issuance costs incurred in connection with the public offering will be amortized over the life of the Senior Notes as additional interest expense using the effective interest method. The Company pays interest on the Senior Notes semi-annually in arrears on March 21 and September 21 of each year, beginning on March 21, 2013 and ending on the maturity date of September 21, 2017. The Company, at its option, may redeem the Senior Notes at any time in whole or from time to time in part, at a redemption price equal to the greater of (i) 100% of the principal amount of the Senior Notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Senior Notes being redeemed, discounted at a rate equal to the sum of the applicable Treasury Rate plus 50 basis points, plus accrued and unpaid interest up to the date of redemption. The Senior Notes are senior, unsecured obligations and rank equally in right of payment with all of the Company’s other unsecured and unsubordinated indebtedness.
Loans Payable to Brightstar
In October, 2010, Brightstar entered into an agreement to loan BEL its share of the funding requirements for an acquisition by BEL (the “Acquisition Loan”). The Acquisition Loan from Brightstar, plus any accrued interest, had a repayment date of September, 2015, or earlier if agreed between the two parties, and bears interest at the applicable LIBOR rate plus 4.0% per year, to be paid annually on October 1.
The Company also had an interest-free revolving credit loan from Brightstar that was issued in connection with the operations of BEL (the “Brightstar Revolver”). The terms of the Brightstar Revolver included no contractual repayment date and allowed for the revolving credit loan to increase or decrease in accordance with the working capital requirements of BEL, as determined by the Company. Effective October 2010, a resolution of BEL’s board was approved stating that the Brightstar Revolver would not be repaid for the foreseeable future and therefore the revolving credit loan was classified as long-term debt in the Company’s Consolidated Balance Sheet at January 31, 2012.
As discussed in Note 6 - Acquisitions, in September 2012 the Company acquired Brightstar's fifty percent ownership interest in BEL and in accordance with the terms of the acquisition agreement, the Company repaid both the Acquisition Loan and the Brightstar Revolver.
Other Credit Facilities
The Company has a $500.0 million Credit Agreement with a syndicate of banks (the “Credit Agreement”), which among other things, i) provides for a maturity date of September 27, 2016, ii) provides for an interest rate on borrowings, facility fees and letter of credit fees based on the Company’s non-credit enhanced senior unsecured debt rating as determined by Standard & Poor’s Rating Service and Moody’s Investor Service, and iii) may be increased to a maximum of $750.0 million, subject to certain conditions. The Credit Agreement includes various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers, including a maximum debt to capitalization ratio and a minimum interest coverage ratio. The Company pays interest on advances under the Credit Agreement at the applicable LIBOR rate plus a predetermined margin that is based on the Company’s debt rating. There was $42.9 million outstanding under the Credit Agreement at January 31, 2013, at an interest rate of 1.65%. There were no amounts outstanding under the Credit Agreement at January 31, 2012.
The Company has an agreement with a syndicate of banks (the “Receivables Securitization Program”) that allows the Company to transfer an undivided interest in a designated pool of U.S. accounts receivable, on an ongoing basis, to provide security or collateral for borrowings up to a maximum of $400.0 million. Under this program, the Company legally isolates certain U.S. trade receivables into a wholly-owned bankruptcy remote special purpose entity. Such receivables, which are recorded in the Consolidated Balance Sheet, totaled $690.6 million and $619.8 million at January 31, 2013 and 2012, respectively. As collections reduce accounts receivable balances included in the security or collateral pool, the Company may transfer interests in new receivables to bring the amount available to be borrowed up to the maximum. This program was renewed in October 2012 for a period of two years and interest is to be paid on advances under the Receivables Securitization Program at the applicable commercial paper or LIBOR rate plus an agreed-upon margin. There was $83.5 million outstanding under this program at January 31, 2013, at an interest rate of 1.02%. There were no amounts outstanding under the Receivables Securitization Program at January 31, 2012.
In addition to the facilities described above, the Company has various other committed and uncommitted lines of credit and overdraft facilities totaling approximately $579.2 million at January 31, 2013 to support its operations. Most of these facilities are provided on an unsecured, short-term basis and are reviewed periodically for renewal. There was $40.6 million outstanding on these facilities at January 31, 2013, at a weighted average interest rate of 4.76%, and there was $48.0 million outstanding at January 31, 2012 at a weighted average interest rate of 7.15%.
In consideration of the financial covenants discussed below, the Company’s maximum borrowing availability on the credit facilities is approximately $767.1 million, of which $167.0 million was outstanding at January 31, 2013. Certain of the Company’s credit facilities contain limitations on the amounts of annual dividends and repurchases of common stock. Additionally, certain credit facilities require compliance with certain warranties and covenants. The financial ratio covenants contained within these credit facilities include a debt to capitalization ratio and a minimum interest coverage ratio. At January 31, 2013, the Company was in compliance with all such covenants; however, subsequently the Company has entered into certain waiver agreements with respect to these and other obligations within certain of the Company's credit facilities in connection with the Company’s restatement discussed in Note 2 - Restatement of Consolidated Financial Statements. Each of the waiver agreements relates primarily to representations that may have been incorrect when made, the Company’s potential failure to comply with certain covenants, including principally financial reporting covenants, as well as the potential defaults and events of default that may have arisen or could arise as a result of the foregoing. The ability to draw funds under certain credit facilities is dependent upon maintaining sufficient collateral (in the case of the Receivables Securitization Program) and meeting the aforementioned financial covenants, which may limit the Company’s ability to draw the full amount of these facilities.
At January 31, 2013, the Company had also issued standby letters of credit of $84.4 million. These letters of credit typically act as a guarantee of payment to certain third parties in accordance with specified terms and conditions. The issuance of these letters of credit reduces the Company’s borrowing availability under certain of the above-mentioned facilities.
Future payments of debt and capital leases at January 31, 2013 and for succeeding fiscal years are as follows (in thousands):
|
| | | | |
Fiscal year: | | |
2014 | | $ | 167,768 |
|
2015 | | 793 |
|
2016 | | 751 |
|
2017 | | 668 |
|
2018 | | 350,668 |
|
Thereafter | | 4,459 |
|
Total payments | | 525,107 |
|
Less - amounts representing interest on capital leases | | (1,889 | ) |
Total principal payments | | $ | 523,218 |
|
