Long-term Debt

12 Months Ended

Nov. 30, 2011

Long-term Debt [Abstract]

Long-term Debt

5. Long-Term Debt

	As of November 30,
	2011		2010
	(In millions)
Senior debt	$	50.0	$	51.1
Senior subordinated notes		75.0		75.0
Convertible subordinated notes, net of $4.0 million of debt discount as of November 30, 2010		200.2		264.6
Other debt		1.2		2.0
Total debt, carrying amount		326.4		392.7
Less: Amounts due within one year
Senior debt		2.5		0.5
Other debt		0.3		65.5
Total long-term debt, carrying amount	$	323.6	$	326.7

As of November 30, 2011, the Company’s annual fiscal year debt contractual principal maturities are summarized as follows:

	Total		2012		2013		2014		2015		2016		Thereafter
	(In millions)
Term loan	$	50.0	$	2.5	$	2.5	$	2.5	$	2.5	$	40.0	$	—
9 1/ 2% Notes		75.0		—		75.0		—		—		—		—
4 1/ 16% Debentures		200.0		—		—		—		200.0		—		—
2 1/ 4% Debentures		0.2		—		—		0.2		—		—		—
Other debt		1.2		0.3		0.2		0.2		0.2		0.2		0.1
Total debt	$	326.4	$	2.8	$	77.7	$	2.9	$	202.7	$	40.2	$	0.1

a.  Senior Debt:

	As of November 30,
	2011		2010
	(In millions)
Term loan, bearing interest at various rates (rate of 3.86% as of November 30, 2011), payable in quarterly installments of $0.1 million plus interest, maturing in November 2016	$	50.0	$	51.1

Senior Credit Facility

On November 18, 2011, the Company entered into a second amended and restated credit agreement (the “Senior Credit Facility”) with the lenders identified therein, and Wells Fargo Bank, National Association, as administrative agent. The Senior Credit Facility replaces the prior credit facility and, among other things, (i) extends the maturity date to November 18, 2016 (which date may be accelerated in certain cases); and (ii) replaces the existing revolving credit facility and credit-linked facility with (x) a revolving credit facility in an aggregate principal amount of up to $150.0 million (with a $100.0 million subfacility for standby letters of credit and a $5.0 million subfacility for swingline loans) and (y) a term loan facility in an aggregate principal amount of up to $50.0 million. The term loan facility will amortize at a rate of 5.0% of the original principal amount per annum to be paid in equal quarterly installments with any remaining amounts due on the maturity date. Outstanding indebtedness under the Senior Credit Facility may be voluntarily prepaid at any time, in whole or in part, in general without premium or penalty.

As of November 30, 2011, the Company had $67.1 million outstanding letters of credit under the $150.0 million revolving credit subfacility and had $50.0 million outstanding under the term loan facility.

In general, borrowings under the Senior Credit Facility bear interest at a rate equal to the LIBOR plus 350 basis points (subject to downward adjustment), or the base rate as it is defined in the credit agreement governing the Senior Credit Facility. In addition, the Company is charged a commitment fee of 50 basis points per annum on unused amounts of the revolving credit facility and 350 basis points per annum (subject to downward adjustment), along with a fronting fee of 25 basis points per annum, on the undrawn amount of all outstanding letters of credit.

The Company guarantees the payment obligations under the Senior Credit Facility. Any borrowings are further secured by (i) all equity interests owned or held by the loan parties, including interests in the Company’s Easton subsidiary and 66% of the voting stock (and 100% of the non-voting stock) of all present and future first-tier foreign subsidiaries of the loan parties; (ii) substantially all of the tangible and intangible personal property and assets of the loan parties; and (iii) certain real property owned by the loan parties located in Orange, Virginia and Redmond, Washington. The Company’s real property located in California, including the real estate holdings of Easton, are excluded from collateralization under the Senior Credit Facility.

The Company is subject to certain limitations including the ability to incur additional debt, make certain investments and acquisitions, and make certain restricted payments, including stock repurchases and dividends. The Senior Credit Facility includes events of default usual and customary for facilities of this nature, the occurrence of which could lead to an acceleration of our obligations thereunder. Additionally, the Senior Credit Facility includes certain financial covenants, including that the Borrower maintain (i) a maximum total leverage ratio of 3.50 to 1.00 (subject to upward adjustment in certain cases), calculated net of cash up to a maximum of $100.0; and (ii) a minimum interest coverage ratio of 2.40 to 1.00.

Financial Covenant	Actual Ratios as of November  30, 2011	Required Ratios
Interest coverage ratio, as defined under the Senior Credit Facility	5.27 to 1.00	Not less than: 2.4 to 1.00
Leverage ratio, as defined under the Senior Credit Facility	1.87 to 1.00	Not greater than: 3.5 to 1.00

The Company was in compliance with its financial and non-financial covenants as of November 30, 2011.

b. Senior Subordinated Notes:

	As of November 30,
	2011		2010
	(In millions)
Senior subordinated notes, bearing interest at 9.50% per annum, interest payments due in February and August, maturing in August 2013	$	75.0	$	75.0

9  ¹/2% Senior Subordinated Notes

In August 2003, the Company issued $150.0 million aggregate principal amount of its 9 ¹/2% Notes due 2013 in a private placement pursuant to Section 4(2) and Rule 144A under the Securities Act of 1933. The 9 ¹/2 % Notes have been exchanged for registered, publicly tradable notes with substantially identical terms. The 9 ¹/2 % Notes mature in August 2013. All or any portion of the 9 ¹/2% Notes may be redeemed by the Company at any time on or after August 15, 2008 at redemption prices beginning at 104.75% of the principal amount and reducing to 100% of the principal amount on August 15, 2011.

In February 2005, the Company redeemed $52.5 million principal amount of its 9  ¹/2% Notes, representing 35% of the $150 million aggregate principal outstanding. In accordance with the indenture governing the notes, the redemption price was 109.5% of the principal amount of the 9 ¹ /2% Notes redeemed, plus accrued and unpaid interest.

During fiscal 2010, the Company repurchased $22.5 million principal amount of its 9 ¹/2% Notes at 102% of par, plus accrued and unpaid interest using a portion of the net proceeds of its 4 ¹/16 % Debentures issued in December 2009 (See Note 13).

If the Company undergoes a change of control (as defined in the 9 ¹/2% Notes indenture) or sells assets, it may be required to offer to purchase the 9 ¹/2% Notes from the holders of such notes.

The 9  ¹/2% Notes are non-collateralized and subordinated to all of the Company’s existing and future senior indebtedness, including borrowings under its Senior Credit Facility. The 9 ¹/ 2% Notes rank senior to the 4 ¹/16% Debentures and the 2  ¹/4% Debentures. 9  ¹/2% Notes are guaranteed by the Company’s material domestic subsidiaries. Each subsidiary guarantee is non-collateralized and subordinated to the respective subsidiary’s existing and future senior indebtedness, including guarantees of borrowings under the Senior Credit Facility. The 9  ¹/2% Notes and related guarantees are effectively subordinated to the Company’s and the subsidiary guarantors’ collateralized debt and to any and all debt and liabilities, including trade debt of the Company’s non-guarantor subsidiaries.

The indenture governing the 9  ¹/2% Notes limits the Company’s ability and the ability of the Company’s restricted subsidiaries, as defined in the indenture, to incur or guarantee additional indebtedness, make restricted payments, pay dividends or distributions on, or redeem or repurchase, its capital stock, make investments, issue or sell capital stock of restricted subsidiaries, create liens on assets to secure indebtedness, enter into transactions with affiliates and consolidate, merge or transfer all or substantially all of the assets of the Company. The indenture also contains customary events of default, including failure to pay principal or interest when due, cross-acceleration to other specified indebtedness, failure of any of the guarantees to be in full force and effect, failure to comply with covenants and certain events of bankruptcy, insolvency, and reorganization, subject in some cases to notice and applicable grace periods.

In October 2004, the Company entered into a supplemental indenture to amend the indenture dated August 11, 2003 to (i) permit the refinancing of its outstanding 5  ³/4% convertible subordinated notes (“5  ³/4% Notes”) with new subordinated debt having a final maturity or redemption date later than the final maturity or redemption date of the 5 ³/4 % Notes being refinanced, and (ii) provide that the Company will have up to ten (10) business days to apply the proceeds of refinancing indebtedness toward the redemption or repurchase of outstanding indebtedness. The supplemental indenture also amended the definition of refinancing indebtedness to include indebtedness, the proceeds of which are used to pay a premium necessary to accomplish a refinancing.

In June 2006, the Company entered into a second supplemental indenture for the 9 ¹/2% Notes to amend the indenture dated August 11, 2003, as amended in October 2004, to permit the Company to incur additional indebtedness under its previous credit facility.

On November 24, 2009, the Company entered into a third supplemental indenture for the 9  ¹/2% Notes to amend the indenture dated August 11, 2003, as amended in October 2004 and June 2006, to add Easton Development Company, LLC as a guarantor party to the indenture.

c.  Convertible Subordinated Notes:

	As of November 30,
	2011		2010
	(In millions)
Convertible subordinated debentures, bearing interest at 2.25% per annum, interest payments due in May and November, maturing in November 2024	$	0.2	$	68.6
Debt discount on 2.25% convertible subordinated debentures		—		(4.0	)
Convertible subordinated debentures, bearing interest at 4.0625% per annum, interest payments due in June and December, maturing in December 2039		200.0		200.0
Total convertible subordinated notes	$	200.2	$	264.6

2  ¹/4% Convertible Subordinated Debentures

In November 2011, the Company redeemed $46.4 million principal amount of its 2  ¹/4% Debentures which were presented to the Company for payment.

During fiscal 2011 and 2010, the Company repurchased $22.0 million and $77.8 million principal amount of its 2 ¹/4% Debentures at various prices ranging from 93.0% of par to 99.60% of par (See Note 13).

As of December 1, 2009, the Company adopted the new accounting standards related to convertible debt securities that, upon conversion, may be settled by the issuer fully or partially in cash. The Company’s adoption of this guidance affects its 2  ¹/4% Debentures and requires the issuer of convertible debt instruments to separately account for the liability (debt) and equity (conversion option) components of such instruments and retrospectively adjust the financial statements for all periods presented. The fair value of the liability component shall be determined based on the market rate for similar debt instruments without the conversion feature and the residual between the proceeds and the fair value of the liability component is recorded as equity at the time of issuance. Additionally, the pronouncement requires transaction costs to be allocated on the same percentage as the liability and equity components.

The Company calculated the carrying value of the liability component at issuance as the present value of its cash flows using a discount rate of 8.86%. The carrying value of the liability component was determined to be $97.5 million. The equity component, or debt discount, of the 2 ¹/4 % Debentures was determined to be $48.9 million. The debt discount was amortized as a non-cash charge to interest expense over the period from the issuance date through November 20, 2011 which was the date holders can require the Company to repurchase all or part of the 2 ¹/4 % Debentures.

The $4.9 million of costs incurred in connection with the issuance of the 2 ¹/4 % Debentures were capitalized and bifurcated into deferred financing costs of $3.3 million and equity issuance costs of $1.6 million. The deferred financing costs are being amortized to interest expense from the issuance date through November 20, 2011.

The following table presents the carrying amounts of the liability and equity components:

	As of November 30,
	2011		2010
	(In millions)
Carrying amount of equity component, net of equity issuance costs	$	44.1	$	44.4
Principal amount of 2 1 /4% Debentures	$	0.2	$	68.6
Unamortized debt discount		—		(4.0	)
Carrying amount of liability component	$	0.2	$	64.6

The following table presents the interest expense components for the 2 ¹/ 4% Debentures:

	Year Ended
	2011			2010			2009
	(In millions)
Interest expense-contractual interest	$	1.3		$	2.6		$	3.3
Interest expense-amortization of debt discount		3.5			6.7			7.5
Interest expense-amortization of deferred financing costs		0.3			0.7			0.8
Effective interest rate		8.9	%		8.9	%		8.9	%

4  ¹/16% Convertible Subordinated Debentures

In December 2009, the Company issued $200.0 million in aggregate principal amount of 4  ¹/16% Debentures in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. The 4 ¹/16 % Debentures mature on December 31, 2039, subject to earlier redemption, repurchase, or conversion. Interest on the 4  ¹/16% Debentures accrues at 4.0625% per annum and is payable semiannually in arrears on June 30 and December 31 of each year, beginning June 30, 2010 (or if any such day is not a business day, payable on the following business day), and the Company may elect to pay interest in cash or, generally on any interest payment that is at least one year after the original issuance date of the 4 ¹/16% Debentures, in shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s option, subject to certain conditions.

The 4 ¹/16% Debentures are general unsecured obligations of the Company and rank equal in right of payment to all of the Company’s other existing and future unsecured subordinated indebtedness, including the 2  ¹/4% Debentures. The 4  ¹/16% Debentures rank junior in right of payment to all of the Company’s existing and future senior indebtedness, including all of its obligations under its Senior Credit Facility and all of its existing and future senior subordinated indebtedness, including the Company’s outstanding 9  ¹/2% Notes. In addition, the 4  ¹/16% Debentures are effectively subordinated to any of the Company’s collateralized debt, to the extent of such collateral, and to any and all debt and liabilities including trade debt of its subsidiaries.

Each holder of the 4 ¹/16% Debentures may convert its 4  ¹/16% Debentures into shares of the Company’s common stock at a conversion rate of 111.0926 shares per $1,000 principal amount, representing a conversion price of approximately $9.00 per share, subject to adjustment. In addition, if the holders elect to convert their 4  ¹/16% Debentures in connection with the occurrence of certain fundamental changes to the Company as described in the indenture, the holders will be entitled to receive additional shares of common stock upon conversion in some circumstances. Upon any conversion of the 4  ¹/16% Debentures, subject to certain exceptions, the holders will not receive any cash payment representing accrued and unpaid interest.

The Company may at any time redeem any 4 ¹/16 % Debentures for cash (except as described below with respect to any make-whole premium that may be payable) if the last reported sale price of the Company’s common stock has been at least 150% of the conversion price then in effect for at least twenty (20) trading days during any thirty (30) consecutive trading day period ending within five (5) trading days prior to the date on which the Company provides the notice of redemption.

The Company may redeem the 4  ¹/16% Debentures either in whole or in part at a redemption price equal to (i) 100% of the principal amount of the 4 ¹/16 % Debentures to be redeemed, plus (ii) accrued and unpaid interest, if any, up to, but excluding, the redemption date, plus (iii) if the Company redeems the 4  ¹/16% Debentures prior to December 31, 2014, a “make-whole premium” equal to the present value of the remaining scheduled payments of interest that would have been made on the 4 ¹ /16% Debentures to be redeemed had such 4 ¹ /16% Debentures remained outstanding from the redemption date to December 31, 2014. Any make-whole premium is payable in cash, shares of the Company’s common stock or a combination of cash and shares, at the Company’s option, subject to certain conditions.

Each holder may require the Company to repurchase all or part of its 4 ¹/ 16% Debentures on December 31, 2014, 2019, 2024, 2029 and 2034 (each, an “optional repurchase date”) at an optional repurchase price equal to (1) 100% of their principal amount plus (2) accrued and unpaid interest, if any, up to, but excluding, the date of repurchase. The Company may elect to pay the optional repurchase price in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock, at the Company’s option, subject to certain conditions.

If a fundamental change to the Company, as described in the indenture governing the 4 ¹/16% Debentures, occurs prior to maturity, each holder will have the right to require the Company to purchase all or part of its 4 ¹/16 % Debentures for cash at a repurchase price equal to 100% of their principal amount, plus accrued and unpaid interest, if any, up to, but excluding, the repurchase date.

If the Company elects to deliver shares of its common stock as all or part of any interest payment, any make-whole premium or any optional repurchase price, such shares will be valued at the product of (x) the price per share of the Company’s common stock determined during: (i) in the case of any interest payment, the twenty (20) consecutive trading days ending on the second trading day immediately preceding the record date for such interest payment; (ii) in the case of any make-whole premium payable as part of the redemption price, the twenty (20) consecutive trading days ending on the second trading day immediately preceding the redemption date; and (iii) in the case of any optional repurchase price, the forty (40) consecutive trading days ending on the second trading day immediately preceding the optional repurchase date; (in each case, the “averaging period” with respect to such date) using the sum of the daily price fractions (where “daily price fraction” means, for each trading day during the relevant averaging period, 5% in the case of any interest payment or any make-whole premium or 2.5% in the case of any optional repurchase, multiplied by the daily volume weighted average price per share of the Company’s common stock for such day), multiplied by (y) 97.5%. The Company will notify holders at least five (5) business days prior to the start of the relevant averaging period of the extent to which the Company will pay any portion of the related payment using shares of common stock.

Effective December 21, 2010, in accordance with the terms of the indenture, the restrictive legend on the 4 ¹/16% Debentures was removed and the 4 ¹/16% Debentures are freely tradeable pursuant to Rule 144 under the Securities Act of 1933 without volume restrictions by any holder that is not an affiliate of the Company at the time of sale and has not been an affiliate during the preceding three months.

Issuance of the 4  ¹/16% Debentures generated net proceeds of $194.1 million, which were used to repurchase long-term debt and other debt related costs.

d. Other Debt:

	As of November 30,
	2011		2010
	(In millions)
Promissory note, bearing interest at 5.00% per annum, payable in annual installments of $0.7 million plus interest, matured January 2011	$	—	$	0.7
Capital lease, payable in monthly installments, maturing in March 2017		1.2		1.3
Total other debt	$	1.2	$	2.0