8. DEBT AND CAPITAL LEASE OBLIGATIONS

Debt at September 3, 2016 and August 29, 2015 consisted of the following:


	September 3,		August 29,
	2016		2015

Credit Facility:
Revolver	$	217,000	$	188,000
Term loan		187,500		212,500
Private Placement Debt:
Senior notes, series A		75,000		-
Senior notes, series B		100,000		-
Capital lease and financing obligations		28,268		27,804
Less: unamortized debt issuance costs		(946)		(1,020)
Total debt	$	606,822	$	427,284
Less: current maturities of long-term debt(1)		(267,050)		(213,165)
Long-term debt	$	339,772	$	214,119

(1)

Net of unamortized debt issuance costs expected to be amortized in the next twelve months.

Credit Facility

In April 2013, in connection with the acquisition of its Class C Solutions Group, the Company entered into a new $650,000 credit facility (the “Credit Facility”). The Credit Facility, which matures in April 2018, provides for a five-year unsecured revolving loan facility in the aggregate amount of $400,000 and a five-year unsecured term loan facility in the aggregate amount of $250,000.

The Credit Facility also permits the Company, at its request, and upon the satisfaction of certain conditions, to add one or more incremental term loan facilities and/or increase the revolving loan commitments in an aggregate amount not to exceed $200,000. Subject to certain limitations, each such incremental term loan facility or revolving commitment increase will be on terms as agreed to by the Company, the Administrative Agent and the lenders providing such financing.

Borrowings under the Credit Facility bear interest, at the Company’s option, either at (i) the LIBOR (London Interbank Offered Rate) rate plus the applicable margin for LIBOR loans ranging from 1.00% to 1.375%, based on the Company’s consolidated leverage ratio; or (ii) the greatest of (a) the Administrative Agent’s prime rate in effect on such day, (b) the federal funds effective rate in effect on such day, plus 0.50% and (c) the LIBOR rate that would be calculated as of such day in respect of a proposed LIBOR loan with a one-month interest period, plus 1.00%, plus, in the case of each of clauses (a) through (c), an applicable margin ranging from 0.00% to 0.375%, based on the Company’s consolidated leverage ratio. The Company is required to pay a quarterly undrawn fee ranging from 0.10% to 0.20% per annum on the unutilized portion of the Credit Facility based on the Company’s consolidated leverage ratio. The Company is also required to pay quarterly letter of credit usage fees ranging between 1.00% to 1.375% (based on the Company’s consolidated leverage ratio) on the amount of the daily average outstanding letters of credit, and a quarterly fronting fee of 0.125% per annum on the undrawn and unexpired amount of each letter of credit. The applicable borrowing rate for the Company for any borrowings outstanding under the Credit Facility at September 3, 2016 was 1.52%, which represented LIBOR plus 1.00%. Based on the interest period the Company selects, interest may be payable every one, two, three or six months. Interest is reset at the end of each interest period. The Company currently elects to have loans under the Credit Facility bear interest based on LIBOR with one-month interest periods.

The Credit Facility contains several restrictive covenants including the requirement that the Company maintain a maximum consolidated leverage ratio of total indebtedness to EBITDA of no more than 3.00 to 1.00, and a minimum consolidated interest coverage ratio of EBITDA to total interest expense of at least 3.00 to 1.00, during the term of the Credit Facility. Borrowings under the Credit Facility are guaranteed by certain of the Company’s subsidiaries.

During fiscal 2016, the Company borrowed $305,000 under the revolving loan facility and repaid $276,000 and $25,000 of the revolving loan facility and term loan facility, respectively. During fiscal 2015, the Company borrowed $336,000 under the revolving loan facility and repaid $218,000 and $25,000 of the revolving loan facility and term loan facility, respectively.

At September 3, 2016 and August 29, 2015, the Company was in compliance with the operating and financial covenants of the Credit Facility.

Private Placement Debt

In July 2016, in connection with the Company’s “modified Dutch auction” tender offer, the Company completed the issuance and sale of the following unsecured senior notes (collectively “Private Placement Debt”):

$75,000 aggregate principal amount of 2.65% Senior Notes, Series A, due July 28, 2023 (“Senior notes, series A”); and

$100,000 aggregate principal amount of 2.90% Senior Notes, Series B, due July 28, 2026 (“Senior notes, series B”)

The Private Placement Debt is due, in full, on the stated maturity dates. Interest is payable semi-annually at the fixed stated interest rates. The Private Placement Debt contains several restrictive covenants including the requirement that the Company maintain a maximum consolidated leverage ratio of total indebtedness to EBITDA (earnings before interest expense, taxes, depreciation, amortization and stock based compensation) of no more than 3.00 to 1.00, and a minimum consolidated interest coverage ratio of EBITDA to total interest expense of at least 3.00 to 1.00, during the term of the Private Placement Debt. At September 3, 2016, the Company was in compliance with the operating and financial covenants of the Private Placement Debt.

Maturities of debt, excluding capital lease and financing obligations, as of September 3, 2016 are as follows:


	Maturities of
Fiscal Year	Debt
2017	$	267,000
2018		137,500
2019		—
2020		—
2021		—
Thereafter		175,000
Total	$	579,500

Capital Lease and Financing Obligations

In connection with the construction of the Company’s customer fulfillment center in Columbus, Ohio, the Finance Authority holds the title to the building and entered into a long-term lease with the Company. The lease has a 20-year term with a prepayment option without penalty between 7 and 20 years. At the end of the lease term, the building’s title is transferred to the Company for a nominal amount when the principal of and interest on the bonds have been fully paid. The lease has been classified as a capital lease in accordance with ASC Topic 840. At September 3, 2016 and August 29, 2015, the capital lease obligation was approximately $27,022. Under this arrangement, the Finance Authority has issued taxable bonds to finance the structure and site improvements of the Company’s customer fulfillment center in the amount of $27,022 outstanding at both September 3, 2016 and August 29, 2015.

From time to time, the Company enters into capital leases and financing arrangements to purchase certain equipment. The equipment acquired from these vendors is paid over a specified period of time based on the terms agreed upon. During the fiscal year ended September 3, 2016, the Company entered into a capital lease and various financing obligations for certain information technology equipment totaling $1,321 and $453, respectively. During the fiscal year ended August 29, 2015, the Company entered into various capital leases and financing obligations for certain information technology equipment totaling $530.

The gross amount of property and equipment acquired under these capital leases and financing agreements at September 3, 2016 and August 29, 2015 was approximately $30,298 and $32,535, respectively. Related accumulated amortization totaled $2,878 and $4,815 as of September 3, 2016 and August 29, 2015, respectively. Amortization expense of property and equipment acquired under these capital leases and financing arrangements was approximately $2,073 for the fiscal year ended 2016.

At September 3, 2016, approximate future minimum payments under capital leases and financing arrangements are as follows:


Fiscal Year	Payments under capital leases and financing arrangements
2017	$	1,120
2018		993
2019		993
2020		27,324
Total minimum lease payments	$	30,430
Less: amount representing interest		2,162
Present value of minimum lease payments	$	28,268
Less: current portion		471
Long-term capital leases and financing arrangements	$	27,797