Financing Arrangements

9 Months Ended

Feb. 28, 2015

Financing Arrangements

Financing Arrangements

Note 7 — Financing Arrangements

A summary of the carrying amount of our debt is as follows:

	February 28,			May 31,
	2015			2014
Revolving credit facility expiring April 24, 2018 with interest payable monthly	$	185.0		$	130.0
Secured credit facility (secured by aircraft and related engines and components) due April 23, 2015 with floating interest rate, payable monthly	23.0			29.9
Note payable due March 9, 2017 with floating interest rate, payable semi-annually on June 1 and December 1	20.0			30.0
Notes payable due January 15, 2022 with interest at 7.25% payable semi-annually on January 15 and July 15	332.0			332.6
Convertible notes payable due March 1, 2016 with interest at 2.25% payable semi-annually on March 1 and September 1	47.3			45.7
Other(1)	36.0			65.8
Total debt	643.3			634.0
Current maturities of debt	(43.9		)	(69.7		)
Long-term debt	$	599.4		$	564.3

(1) Included in Other is a mortgage loan (secured by Wood Dale, Illinois facility) due August 1, 2015 of $11.0 million and $11.0 million, 1.75% convertible notes due February 1, 2015 of $0 and $29.8 million, and an industrial revenue bond (secured by property, plant, and equipment) due August 1, 2018 of $25.0 million and $25.0 million at February 28, 2015 and May 31, 2014, respectively.

At February 28, 2015, the carrying value of our 7.25% bonds and 2.25% convertible notes was $379.4 million and the estimated fair value was approximately $407.6 million.  These debt issuances are classified as Level 2 in the fair value hierarchy.  This classification is defined as a fair value determined using market-based inputs other than quoted prices that are observable for the liability, either directly or indirectly.

At February 28, 2015, our remaining variable rate and fixed rate debt had a fair value that approximates the carrying value of $264.0 million.  These debt instruments are classified as Level 3 in the fair value hierarchy, which is defined as a fair value determined based upon one or more significant unobservable inputs.

We are subject to a number of covenants under our financing arrangements, including at February 28, 2015 restrictions that relate to the payment of cash dividends, maintenance of minimum net working capital and tangible net worth levels, fixed charge coverage ratio, sales of assets, additional financing, purchase of our shares and other matters.  We are in compliance with all financial and other covenants under our financing arrangements.

Convertible Notes

During the three-month period ended November 30, 2014, we repurchased all of the outstanding 1.75% convertible notes due February 1, 2015 with total face value of $30.0 million for $31.1 million cash including $1.1 million of accrued interest.

As of February 28, 2015 and May 31, 2014, the long-term debt and equity component (recorded in capital surplus, net of income tax benefit) for our 2.25% convertible notes consisted of the following:

	February 28,			May 31,
	2015			2014
Long-term debt:
Principal amount	$	49.8		$	49.8
Unamortized discount	(2.5		)	(4.1		)
Net carrying amount	$	47.3		$	45.7
Equity component, net of tax	$	20.6		$	20.6

The unamortized discount on the liability component of long-term debt is being amortized using the effective interest method based on an effective rate of 7.41% for our 2.25% convertible notes.  The “if converted” value for our 2.25% convertible notes does not exceed its principal amount.

The interest expense associated with all convertible notes was as follows:

	Three Months Ended				Nine Months Ended
	February 28,				February 28,
	2015		2014		2015		2014
Coupon interest	$	0.3	$	0.8	$	1.2	$	2.5
Amortization of deferred financing fees	—		0.1		0.1		0.3
Amortization of discount	0.4		1.5		1.7		4.4
Interest expense related to convertible notes	$	0.7	$	2.4	$	3.0	$	7.2

Credit Facility Amendment

On March 24, 2015, we entered into an amendment (the “Amendment”) to our credit agreement dated April 12, 2011, as amended, with various financial institutions, as lenders and Bank of America, N.A., as administrative agent for the lenders (the “Credit Agreement”).

Under the terms of the Credit Agreement as in effect prior to the Amendment, the aggregate revolving credit commitment amount under the Credit Agreement was $475 million.  The Amendment increases the above-referenced $475 million to $500 million.  Under certain circumstances, the Company also could request an increase to the revolving commitment by an aggregate amount of up to $250 million, not to exceed $750 million in total.

The Amendment also extends the maturity of the Credit Agreement by approximately two years to March 24, 2020.  The Amendment also deleted the minimum fixed charge coverage ratio and added a minimum interest coverage ratio.  Except as specifically amended and modified by the Amendment, the terms and conditions of the Credit Agreement remain in effect.

Redemption of 7.25% Senior Notes

We have sent out a notice of redemption for our $325 million 7.25% Senior Notes. The redemption price for the Senior Notes will include an approximately $45 million make-whole premium and we will record a pre-tax charge for this amount in the fourth quarter of fiscal 2015.