Fair Value of Financial Instruments and Long Term Debt

12 Months Ended

Apr. 30, 2022

Fair Value of Financial Instruments and Long-Term Debt

FAIR VALUE OF FINANCIAL INSTRUMENTS AND LONG-TERM DEBT

U.S. GAAP requires that each financial asset and liability carried at fair value be classified into one of the following of the fair value hierarchy levels, which is based upon the quality of the inputs used in the valuation. Level 1 inputs are quoted market prices in active markets for identical assets and liabilities. Level 2 inputs are observable market based inputs or unobservable inputs that are corroborated by market data (excluding those included within Level 1). Level 3 inputs are unobservable inputs that are not corroborated by market data. The Company has not changed its valuation techniques in measuring the fair value of any financial assets and liabilities during the period. A summary of the fair value of the Company’s financial instruments follows.

Cash and cash equivalents, receivables, and accounts payable: The carrying amount approximates fair value due to the short maturity of these instruments or the recent purchase of the instruments at current rates of interest.

Long-term debt: The fair value of the Company’s long-term debt and finance lease obligations (including current maturities) is estimated based on the current rates offered to the Company for debt of the same or similar issues. The fair value of the Company’s long-term debt was approximately $1,508,000 and $1,391,000, respectively, at April 30, 2022 and 2021. The fair value calculated excludes finance lease obligations of $74,234 and $14,085 outstanding at April 30, 2022 and April 30, 2021, respectively, which are grouped with long-term debt on the consolidated balance sheets.

Term Loan Facilities

In order to fund the acquisition of Buchanan Energy (see Note 2) the Company drew a senior unsecured term loan in the aggregate principal amount of $300 million during the first quarter of fiscal 2022. During the third quarter, the Company amended its existing credit agreement to (a) provide for a new senior unsecured term loan in the aggregate principal amount of $150 million (collectively with the $300 million term loan, the "Term Loan Facilities") and (b) decrease the minimum index for LIBOR-based loans, which includes both the Term Loan Facilities and the Revolver Facility, discussed below. The proceeds of the $150 million term loan were, in-part, utilized to fund the acquisition of 40 stores from Pilot Corporation (see Note 2).

Amounts borrowed under the Term Loan Facilities bear interest at variable rates based upon, at the Company’s option, either: (i) the Adjusted LIBO Rate, plus a margin ranging from 1.55% to 2.60%; or (ii) the ABR Rate, plus a margin ranging from 0.20% to 1.60%. The Company currently has elected the Adjusted LIBO Rate, and there is an option to elect either rate in subsequent interest periods. The applicable margins are dependent upon the Company's Consolidated Leverage Ratio, as defined in the credit agreement establishing the Term Loan Facilities as calculated quarterly. The outstanding principal balance is required to be repaid in equal quarterly installments in an amount equal to 1.25% of the original principal amount, on the last day of each March, June, September and December, with the balance of the Term Loan Facilities due on January 6, 2026. During the fourth quarter of the fiscal year, the Company made prepayments of $167,500 on the Term Loan Facilities. As a result of the prepayment, the Company has fully paid each of the quarterly installments required and as such, no amounts have been recognized in current maturities and no amounts are due until January 6, 2026. The Company had an outstanding principal balance of $265,625 on the Term Loan Facilities at April 30, 2022.

Revolving Facility

The Company has a committed unsecured revolving credit facility in the aggregate principal amount of $450,000 (the "Revolving Facility"). The maturity date for the revolving facility is January 11, 2024. Amounts borrowed under the Revolving Facility bear interest at variable rates based upon, at the Company’s option, either: (a) the LIBO Rate adjusted for statutory reserve requirements (but no less than 0.50%), plus a margin ranging from 1.05% to 1.85%; or (b) an alternate base rate, which is the higher of (i) the prime rate announced by the Administrative Agent, (ii) the federal funds rate plus 1/2 of 1.00%, and (iii) the one-month LIBO Rate plus 1.00%, plus a margin ranging from 0.05% to 0.85%. The Revolving Facility also carries a facility fee of 0.20% to 0.40% per annum. The applicable margins and facility fee are dependent upon the Company’s Consolidated Leverage Ratio, as noted above. The Company had $0 outstanding under the Revolving Facility at April 30, 2022 and April 30, 2021.

Bank Line

The Company has an additional unsecured bank line of credit (the "Bank Line") with availability up to $25,000. The $25,000 availability under the Bank Line is encumbered by a $5,492 of letter of credit (refer to Note 10 for further discussion). The Bank Line bears interest at a variable rate subject to change from time to time based on changes in an independent index referred to in the Bank Line as the Federal Funds Offered Rate. There was $0 outstanding at April 30, 2022 and 2021. The Bank Line is due upon demand.

The carrying amount of the Company’s long-term debt and finance lease obligations by issuance is as follows:


	As of April 30,
	2022		2021
Finance lease liabilities (Note 7)	$	74,234	$	14,085
3.67% Senior notes (Series A) due in 7 installments beginning June 17, 2022, and ending June 15, 2028	$	150,000	150,000
3.75% Senior notes (Series B) due in 7 installments beginning December 17, 2022 and ending December 18, 2028	50,000		50,000
3.65% Senior notes (Series C) due in 7 installments beginning May 2, 2025 and ending May 2, 2031	50,000		50,000
3.72% Senior notes (Series D) due in 7 installments beginning October 28, 2025 and ending October 28, 2031	50,000		50,000
3.51% Senior notes (Series E) due June 13, 2025	150,000		150,000
3.77% Senior notes (Series F) due August 22, 2028	250,000		250,000
2.85% Senior notes (Series G) due August 7, 2030	325,000		325,000
2.96% Senior notes (Series H) due August 6, 2032	325,000		325,000
Variable rate Term Loan Facilities, due January 6, 2026	265,625		—
Debt issuance costs	(1,990)		(336)
	1,687,869		1,363,749
Less current maturities	24,466		2,354
	$	1,663,403	$	1,361,395

Interest expense is net of interest income of $48, $168, and $860 for the years ended April 30, 2022, 2021, and 2020, respectively. Interest expense is also net of interest capitalized of $2,031, $4,537, and $5,258 during the years ended April 30, 2022, 2021, and 2020, respectively.

The agreements relating to the above long-term debt contain certain operating and financial covenants. At April 30, 2022, the Company was in compliance with all such operating and financial covenants.

Listed below are the aggregate maturities of long-term debt, excluding finance lease obligations (refer to Note 7 for future minimum payments under finance leases), for the 5 years commencing May 1, 2022 and thereafter:


Years ended April 30,
2023	$	20,000
2024	32,000
2025	32,000
2026	457,625
2027	48,000
Thereafter	1,026,000
	$	1,615,625

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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