NOTE 9 - LONG-TERM DEBT

A summary of long-term debt is as follows:

LONG-TERM DEBT

(dollars in thousands)

Original

Date

Interest

February 28,

February 29,

Borrowed

Rates

Matures

2013

2012

$15 million unsecured Senior Note payable at a fixed interest rate of 7.24%. Interest payable quarterly. Annual principal payments of $3 million began in July 2008. Paid in full in July 2012.

07/97

7.24%

07/12

3,000

$75 million unsecured floating interest rate 10 year Senior Notes. Interest set and payable quarterly at three-month LIBOR plus 90 basis points. Principal is due at maturity. Notes can be prepaid without penalty. (1)

06/04

6.01%

06/14

75,000

75,000

$100 million unsecured Senior Notes payable at a fixed interest rate of 3.90%. Interest payable semi-annually. Annual principal payments of $20 million begin in January 2014. Prepayment of notes are subject to a “make whole” premium.

01/11

3.90%

01/18

100,000

100,000

Total long-term debt

175,000

178,000

Less current maturities of long-term debt

(20,000

)

(3,000

)

Long-term debt, excluding current maturities

155,000

175,000

(1) Floating interest rates have been hedged with an interest rate swap to effectively fix interest rates. Additional information regarding the swap is provided in Note (12) to these consolidated financial statements.

The fair market value of the fixed rate debt at February 28, 2013 computed using a discounted cash flow analysis was $105.73 million compared to the $100.00 million book value. All other long-term debt has floating interest rates, and its book value approximates its fair value at February 28, 2013.

All of our debt is unconditionally guaranteed, on a joint and several basis, by the Company and certain of its subsidiaries. Our debt agreements require the maintenance of certain financial covenants, including maximum leverage ratios, minimum interest coverage ratios and minimum consolidated net worth levels (as each of these terms is defined in the various agreements). Our debt agreements also contain other customary covenants, including, among other things, covenants restricting or limiting the Company, except under certain conditions set forth therein, from (1) incurring debt, (2) incurring liens on its properties, (3) making certain types of investments, (4) selling certain assets or making other fundamental changes relating to mergers and consolidations, and (5) repurchasing shares of our common stock and paying dividends.

As of February 28, 2013, our debt agreements effectively limited our ability to incur more than $313.00 million of additional debt from all sources, including our Credit Agreement. We were in compliance with the terms of these agreements as of February 28, 2013.

The following table contains a summary of the components of our interest expense for the periods covered by our consolidated statements of income:

INTEREST EXPENSE

(in thousands)

	Fiscal Years Ended the Last Day of February,
	2013		2012		2011

Interest and commitment fees	$	8,858	$	7,670	$	3,268
Deferred finance costs	903		823		428
Interest rate swap settlements, net	3,584		4,424		5,997
Total interest expense	$	13,345	$	12,917	$	9,693

The line entitled “Deferred finance costs” includes the fiscal year 2011 write-off of $0.09 million of unamortized deferred finance fees associated with the termination of a prior credit agreement.

See Note (21) to these consolidated financial statements for information regarding a loan agreement between Kaz USA, Inc. and the MBFC in connection with the issuance of taxable industrial revenue bonds by the MBFC that was entered into after fiscal year end 2013.