Financing Arrangements

12 Months Ended

Sep. 30, 2019

Financing Arrangements

Financing Arrangements

NOTE 11—FINANCING ARRANGEMENTS

Long-term debt consists of the following (in thousands):

September 30,	2019		2018
Series A senior unsecured notes payable to a group of insurance companies, interest fixed at 3.35%	$	50,000	$	50,000
Series B senior unsecured notes payable to a group of insurance companies, interest fixed at 3.35%		50,000		50,000
Series C senior unsecured notes payable to a group of insurance companies, interest fixed at 3.70%		25,000		25,000
Series D senior unsecured notes payable to a group of insurance companies, interest fixed at 3.93%		75,000		75,000
		200,000		200,000
Less unamortized debt issuance costs		(175)		(207)
Less current portion		(10,714)		—
	$	189,111	$	199,793

Maturities of long-term debt for each of the five years in the period ending September 30, 2024, are as follows: 2020 — $10.7 million; 2021 — $35.7 million; 2022 — $35.7 million; 2023 — $35.7 million; 2024 — $35.7 million.

In March 2013, we entered into a note purchase and private shelf agreement pursuant to which we issued $100.0 million of senior unsecured notes, bearing interest at a rate of 3.35% and maturing on March 12, 2025. Pursuant to the agreement, on July 17, 2015, we issued an additional $25.0 million of senior unsecured notes, bearing interest at a rate of 3.70% and maturing on March 12, 2025. Interest payments on the notes issued in 2013 and 2015 are due semi-annually and principal payments are due from 2021 through 2025. On February 2, 2016 we revised the note purchase agreement and we issued an additional $75.0 million of senior unsecured notes bearing interest at 3.93% and maturing on March 12, 2026. Interest payments on these notes are due semi-annually and principal payments are due from 2020 through 2026.

The agreement pertaining to the aforementioned notes also contained a provision that the coupon rate would increase by a further 0.50% should the company’s leverage ratio exceed a certain level.

We have a committed revolving credit agreement with a group of financial institutions in the amount of $800.0 million which is scheduled to expire in April 2024 (Revolving Credit Agreement). Under the terms of the Revolving Credit Agreement, the company may elect that the debts comprising each borrowing bear interest generally at a rate equal to (i) London Interbank Offer Rate (“LIBOR”) based upon tenor plus a margin that fluctuates between 1.00% and 2.00%, as determined by the company’s Leverage Ratio (as defined in the Revolving Credit Agreement) as set forth in the company’s most recently delivered compliance certificate or (ii) the Alternate Base Rate (defined as a rate equal to the highest of (a) the Prime Rate (b) the NYFRB rate plus 0.50% (c) the Adjusted LIBOR Rate plus 1.00%), plus a margin that fluctuates between 0.00% and 1.00%, as determined by the company’s Leverage Ratio as set forth in its most recently delivered compliance certificate. At September 30, 2019, the weighted average interest rate on outstanding borrowings under the Revolving Credit Agreement was 3.90%. Debt issuance and modification costs of $1.9 million were incurred in connection with an April 2019 amendment to the Revolving Credit Agreement which increased permitted borrowings from $400.0 million to $800.0 million. Costs incurred in connection with establishment of and amendments to this credit agreement are recorded in other assets on our Consolidated Balance Sheets, and are being amortized as interest expense using the effective interest method over the stated term of the Revolving Credit Agreement. At September 30, 2019, our total debt issuance costs have an unamortized deferred financing balance of $1.2 million. The available line of credit is reduced by any letters of credit issued under the Revolving Credit Agreement. As of September 30, 2019, there were $195.5 million of borrowings under this agreement and there were letters of credit outstanding totaling $31.5 million, which reduce the available line of credit to $573.0 million. The $31.5 million of letters of credit includes both financial letters of credit and performance guarantees.

Interest paid amounted to $16.8 million, $10.0 million and $14.8 million in fiscal 2019, 2018 and 2017, respectively.

As of September 30, 2019, we had letters of credit and bank guarantees outstanding totaling $39.9 million, which includes the $31.5 million of letters of credit on the Revolving Credit Agreement described above and $8.4 million of letters of credit issued under other facilities. The total of $39.9 million of letters of credit and bank guarantees includes $34.4 million that guarantees either our performance or customer advances under certain contracts and financial letters of credit of $5.5 million which primarily guarantee our payment of certain self-insured liabilities. We have never had a drawing on a letter of credit instrument, nor are any anticipated; therefore, we estimate the fair value of these instruments to be zero.

We have entered into a short-term borrowing arrangement in the U.K. in the amount of £20.0 million British pounds (equivalent to approximately $24.6 million) to help meet the short-term working capital requirements of our subsidiary. At September 30, 2019, no amounts were outstanding under this borrowing arrangement.

We maintain a cash account with a bank in the United Kingdom for which the funds are restricted as to use. The account is required to secure the customer’s interest in cash deposited in the account to fund our activities related to our performance under a fare collection services contract in the United Kingdom. The balance in the account as of September 30, 2019 was $19.5 million and is classified as restricted cash in our Consolidated Balance Sheets.

The terms of certain of our lending and credit agreements include provisions that require and/or limit, among other financial ratios and measurements, the permitted levels of debt, coverage of cash interest expense, and under certain circumstances, payments of dividends or other distributions to shareholders. As of September 30, 2019, these agreements have no restrictions on distributions to shareholders, subject to certain tests in these agreements.

In December 2018, we completed an underwritten public offering of 3,795,000 shares of our common stock, including the exercise of the underwriters’ option to purchase additional shares. All shares were offered by us at a price to the public of $60.00 per share. Net proceeds were $215.8 million, after deducting underwriting discounts and commissions and offering expenses of $11.9 million. We used the net proceeds to repay a portion of our outstanding borrowings under the Revolving Credit Agreement which was used to finance the acquisition of Trafficware and for general corporate purposes.

Our self-insurance arrangements are limited to certain workers’ compensation plans, automobile liability and product liability claims. Under these arrangements, we self-insure only up to the amount of a specified deductible for each claim. Self-insurance liabilities included in accrued compensation and other current liabilities on the balance sheet amounted to $7.4 million and $8.6 million as of September 30, 2019 and 2018, respectively.