CREDIT FACILITY

On September 1, 2017, we refinanced and replaced our then-existing $800.0 million credit facility with a new senior, secured five-year syndicated credit facility (the “Credit Facility”), consisting of a $900.0 million revolving line of credit and an $800.0 million amortizing term loan, scheduled to mature on September 1, 2022. In accordance with the terms of the Credit Facility, the line of credit was reduced to $800.0 million on September 1, 2018. The Credit Facility also provides for the issuance of up to $300.0 million for standby letters of credit and the issuance of up to $75.0 million in swingline advances. The obligations under the Credit Facility are secured on a first-priority basis by a lien on substantially all of our assets and properties, subject to certain exceptions.

Borrowings under the Credit Facility bear interest at a rate equal to 1-month LIBOR plus a spread that is based upon our leverage ratio. The spread ranges from 1.00% to 2.25% for Eurocurrency loans and 0.00% to 1.25% for base rate loans. At October 31, 2018, the weighted average interest rate on our outstanding borrowings was 4.34%. We also pay a commitment fee, based on our leverage ratio and payable quarterly in arrears, ranging from 0.200% to 0.350% on the average daily unused portion of the line of credit. For purposes of this calculation, irrevocable standby letters of credit, which are issued primarily in conjunction with our insurance programs, and cash borrowings are included as outstanding under the line of credit.

The Credit Facility contains certain covenants, including a minimum fixed charge coverage ratio of 1.50 to 1.0, a maximum leverage ratio, as well as other financial and non-financial covenants. The maximum leverage ratio was 4.75 to 1.0 through April 2018 and steps down to 3.50 to 1.0 by July 2020. On September 5, 2018, we amended our Credit Facility to increase the maximum leverage ratio for fiscal quarters commencing July 31, 2018 through April 30, 2021 by 25 basis points for such quarters. In the event of a material acquisition, as defined in the Credit Facility, we may elect to increase the leverage ratio to 3.75 to 1.0 for a total of four fiscal quarters, provided the leverage ratio had already been reduced to 3.50 to 1.0. Our borrowing capacity is subject to, and limited by, compliance with the covenants described above. At October 31, 2018, we were in compliance with these covenants.

The Credit Facility also includes customary events of default, including failure to pay principal, interest, or fees when due, failure to comply with covenants, the occurrence of certain material judgments, or a change in control of the Company. If certain events of default occur, including certain cross-defaults, insolvency, change in control, or violation of specific covenants, the lenders can terminate or suspend our access to the Credit Facility and declare all amounts outstanding (including all accrued interest and unpaid fees) to be immediately due and payable, and require that we cash collateralize the outstanding standby letters of credit.

Total deferred financing costs related to the Credit Facility were $18.7 million, consisting of $13.4 million related to the term loan and $5.2 million related to the line of credit, which are being amortized to interest expense over the term of the Credit Facility.

Credit Facility Information



(in millions)	October 31, 2018			October 31, 2017
Current portion of long-term debt
Gross term loan	$	40.0		$	20.0
Unamortized deferred financing costs	(3.0		)	(3.1		)
Current portion of term loan	$	37.0		$	16.9

Long-term debt
Gross term loan	$	740.0		$	780.0
Unamortized deferred financing costs	(6.9		)	(9.9		)
Total noncurrent portion of term loan	733.1			770.1
Line of credit⁽¹⁾⁽²⁾	169.0			391.2
Long-term debt	$	902.0		$	1,161.3

⁽¹⁾Standby letters of credit amounted to $152.9 million at October 31, 2018.

⁽²⁾At October 31, 2018, we had borrowing capacity of $467.3 million; however, covenant restrictions limited our borrowing capacity to $441.3 million.

Term Loan Maturities

During the first quarter of 2018, we made $20.0 million of principal payments. At October 31, 2018, the following principal payments are required under the term loan.



(in millions)	2019		2020		2021		2022
Debt maturities	$	40.0	$	60.0	$	120.0	$	560.0

Interest Rate Swaps

We enter into interest rate swaps to manage the interest rate risk associated with our floating-rate, LIBOR-based borrowings under the Credit Facility. Under these arrangements, we typically pay a fixed interest rate in exchange for LIBOR-based variable interest throughout the life of the agreement. We initially report the mark-to-market gain or loss on a derivative as a component of AOCI and subsequently reclassify the gain or loss into earnings when the hedged transactions occur and affect earnings. Interest payables and receivables under the swap agreements are accrued and recorded as adjustments to interest expense. All of our interest rate swaps have been designated and accounted for as cash flow hedges from inception. See Note 7, “Fair Value of Financial Instruments,” regarding the valuation of our interest rate swaps.

During April 2018, we elected to terminate all of our interest rate swaps and received cash proceeds of $25.9 million from the swap counterparties upon termination. We classified the cash proceeds as an operating activity on our consolidated statements of cash flows. We subsequently entered into new forward-starting interest rate swaps, as summarized below.



Notional Amount	Fixed Interest Rate	Effective Date	Maturity Date
$ 90.0 million	2.83%	November 1, 2018	April 30, 2021
$ 90.0 million	2.84%	November 1, 2018	October 31, 2021
$ 130.0 million	2.86%	November 1, 2018	April 30, 2022
$ 130.0 million	2.84%	November 1, 2018	September 1, 2022

At October 31, 2018, the amount recorded in AOCI for interest rate swaps was $17.8 million, net of taxes of $7.1 million. This amount included the gain realized upon termination, which will be amortized to interest expense as interest payments are made over the term of our Credit Facility. During 2018, we amortized $1.8 million of this gain, net of taxes of $0.7 million, to interest expense. Additionally, at October 31, 2018, the amount expected to be reclassified from AOCI to earnings during the next twelve months, including amounts from our new interest rate swaps, was $4.4 million, net of taxes of $1.7 million. At October 31, 2017, amounts recorded in AOCI were $1.7 million, net of taxes of $1.2 million.