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Revolving Credit Facilities and Mortgage Payable | 6 Months Ended
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Sep. 30, 2018
Debt Disclosure [Abstract] |
Revolving Credit Facilities and Mortgage Payable | Revolving Credit Facilities and Mortgage Payable Primary Credit Facility In September 2018, the Company refinanced in full and terminated its Second Amended and Restated Credit Agreement dated as of November 13, 2014, as amended (Prior Credit Agreement). The refinanced revolving credit facility agreement is with JPMorgan Chase Bank, N.A. (JPMorgan), as the administrative agent, Citibank, N.A., Comerica Bank (Comerica) and HSBC Bank USA, N.A., as co-syndication agents, MUFG Bank, Ltd. and U.S. Bank National Association as co-documentation agents, and the lenders party thereto, with JPMorgan and Comerica acting as joint lead arrangers and joint bookrunners (the Credit Agreement). The Credit Agreement provides for a five-year, $400,000 unsecured revolving credit facility (Primary Credit Facility), contains a $25,000 sublimit for the issuance of letters of credit, and matures on September 20, 2023. In addition to allowing borrowings in US dollars, the Credit Agreement provides a $175,000 sublimit for borrowings in Euros, Sterling, Canadian dollars and any other foreign currency that is subsequently approved by JPMorgan, each lender and each bank issuing letters of credit. Subject to customary conditions and the approval of any lender whose commitment would be increased, the Company has the option to increase the maximum principal amount available under the Credit Agreement by up to an additional $200,000, resulting in a maximum available principal amount of $600,000. However, none of the lenders has committed at this time to provide any such increase in the commitments. The obligations of the Company and each other borrower under the Primary Credit Facility are guaranteed by the Company’s existing and future wholly-owned domestic subsidiaries (other than certain immaterial subsidiaries, foreign subsidiaries, foreign subsidiary holding companies and specified excluded subsidiaries). All obligations under the Primary Credit Facility and the foregoing guaranty are unsecured. Amounts borrowed under the Primary Credit Facility may be prepaid at any time. In addition, the Company has the right to permanently reduce or terminate the lenders' commitments provided under the Credit Agreement, subject to customary conditions. Certain of the Company's foreign subsidiaries may also borrow under the Primary Credit Facility, which permits the Company, subject to customary conditions and notice periods, to designate one or more additional subsidiaries organized in foreign jurisdictions to borrow under the Primary Credit Facility, subject to the foreign currency sublimit noted above. The Company is liable for the obligations of each foreign borrower, but the obligations of the foreign borrowers are several (not joint) in nature. Interest Terms. At the Company's election, interest under the Credit Agreement is tied to the adjusted London Interbank Offered Rate (LIBOR) or the Alternate Base Rate (ABR). Revolving loans will initially bear interest at adjusted LIBOR plus 1.25% per annum, in the case of LIBOR borrowings, or at ABR plus 0.25% per annum. ABR is defined as the rate per annum equal to the greater of (1) the prime rate, (2) the federal funds effective rate plus 0.50%, and (3) adjusted LIBOR for a one-month interest period plus 1.00%. The initial compliance certificate is due 45 days from the quarter ending September 30, 2018, and once delivered, interest for borrowings in US dollars will be variable and will fluctuate between adjusted LIBOR plus 1.125% per annum and adjusted LIBOR plus 1.625% per annum (or between ABR plus 0.125% per annum and ABR plus 0.625% per annum), based on the Company's total adjusted leverage ratio. Borrowings made in foreign currencies will have interest based on currency-specific LIBOR or the Canadian deposit offered rate (CDOR) if made in Canadian dollars. As of September 30, 2018, the US dollar LIBOR and ABR rates, with relevant spreads for ABR and LIBOR borrowings made this quarterly period, were 3.51% and 5.50%, respectively. The Company will initially be required to pay fees of 0.15% per annum on the daily unused amount under the Primary Credit Facility. After the compliance certificate is delivered for the quarter ending September 30, 2018, the fee rate will fluctuate between 0.125% and 0.20% per annum, based upon the Company’s total adjusted leverage ratio. Borrowing Activity. On termination of the Prior Credit Agreement, the Company repaid $27,000 of borrowings made during the six months ended September 30, 2018 and had outstanding letters of credit of $549, which continued to be upheld under the Credit Agreement. During the six months ended September 30, 2018, the Company made $62,000 of borrowings and $10,000 of repayments under the Primary Credit Facility. As of September 30, 2018, the Company had an outstanding balance of $52,000 under the Primary Credit Facility and had outstanding letters of credit of $549. As of September 30, 2018, available borrowings under the Primary Credit Facility were $347,451. Subsequent to September 30, 2018 through November 2, 2018, the Company borrowed $54,000 and made repayments of $12,000 under the Primary Credit Facility. At November 2, 2018, the Company had an outstanding balance of $94,000, outstanding letters of credit of $549, and available borrowings of $305,451 under the Primary Credit Facility. Deferred Financing Costs. In connection with entering into the Primary Credit Facility, the Company paid certain commitment, arrangement and other fees to JPMorgan, Comerica and other parties to the Primary Credit Facility, and reimbursed certain of the parties’ expenses, which totaled approximately $1,300, and were recorded in prepaid expenses and other assets. These costs will be amortized on a straight-line basis over the term of the Primary Credit Facility. Deferred financing costs associated with the Prior Credit Agreement had a remaining unamortized balance in prepaid expenses of approximately $400, and, on the date of refinancing the Primary Credit Facility, were written off to interest expense during the quarterly period ended September 30, 2018. China Credit Facility In August 2013, Deckers (Beijing) Trading Co., LTD (DBTC), a wholly-owned subsidiary of the Company, entered into a revolving credit facility agreement in China (as amended, the China Credit Facility) that provided for an uncommitted revolving line of credit. In October 2016, the China Credit Facility was amended to include an increase in the uncommitted revolving line of credit of up to CNY 300,000, or $43,667, and to remove the sublimit of CNY 50,000, or $7,278, for the Company's wholly-owned subsidiary, Deckers Footwear (Shanghai) Co., LTD (DFSC). In March 2017, the China Credit Facility was amended to remove DFSC, leaving DBTC as the only remaining borrower, and to add an overdraft facility sublimit of CNY 100,000, or $14,556. The China Credit Facility is payable on demand and subject to annual review with a defined aggregate period of borrowing of up to 12 months. The obligations under the China Credit Facility are guaranteed by the Company for 108.5% of the facility amount in US dollars. Interest is based on the People’s Bank of China (PBOC) market rate, which was 4.35%, and is multiplied by a variable liquidity factor. As of September 30, 2018, the effective interest rate was 4.57%. During the six months ended September 30, 2018, the Company made borrowings of $18,881 and no repayments under the China Credit Facility. As of September 30, 2018, the Company had an outstanding balance of $18,881 and available borrowings of $24,786 under the China Credit Facility. Subsequent to September 30, 2018 through November 2, 2018, the Company made no additional borrowings or repayments, had an outstanding balance of $18,881, and available borrowings of approximately $24,786 under the China Credit Facility. Japan Credit Facility In March 2016, Deckers Japan, G.K., a wholly-owned subsidiary of the Company, entered into a revolving credit facility agreement in Japan (as amended, the Japan Credit Facility) that provides for an uncommitted revolving line of credit of up to JPY 5,500,000, or $48,365, for a maximum term of six months for each draw on the facility. The Japan Credit Facility renews annually, and is guaranteed by the Company. The Company has renewed the Japan Credit Facility through January 31, 2019 under the terms of the original agreement. Interest is based on the Tokyo Interbank Offered Rate (TIBOR) for three months plus 0.40%. As of September 30, 2018, TIBOR for three months was 0.06% and the effective interest rate was 0.46%. During the six months ended September 30, 2018, the Company made no borrowings or repayments under the Japan Credit Facility. As of September 30, 2018, the Company had no outstanding balance under the Japan Credit Facility and available borrowings of $48,365. Subsequent to September 30, 2018 through November 2, 2018, the Company made no additional borrowings, had no outstanding balance, and available borrowings of approximately $48,365 under the Japan Credit Facility. Mortgage In July 2014, the Company obtained a mortgage secured by the property on which its corporate headquarters is located for approximately $33,900. As of September 30, 2018, the outstanding principal balance under the mortgage was $31,803, which includes $592 in short-term borrowings and $31,210 in mortgage payable in the condensed consolidated balance sheets. The mortgage has a fixed interest rate of 4.928%. Payments include interest and principal in an amount that amortizes the principal balance over a 30-year period; however, the loan will mature and requires a balloon payment of approximately $23,700, in addition to any then-outstanding balance, on July 1, 2029. Debt Covenants Under the Primary Credit Facility, the Company is subject to usual and customary representations and warranties, and usual and customary affirmative and negative covenants, which include: limitations on liens, additional indebtedness, investments, restricted payments and transactions with affiliates. Financial covenants (as defined in the Credit Agreement), include:
• | the total adjusted leverage ratio must not be greater than 3:75 to 1:00;
• | the sum of the consolidated annual earnings before interest, taxes, depreciation, and amortization and annual rental expense, divided by the sum of the annual interest expense and the annual rental expense must be greater than 2:25 to 1:00; and
• | no limits on shares repurchases if the total adjusted leverage ratio does not exceed 3:50 to 1:00.
Under the Primary Credit Facility, the Company is also subject to other customary limitations as well as usual and customary events of default, which include: non-payment of principal, interest, fees and other amounts; breach of a representation or warranty; non-performance of covenants and obligations; default on other material debt; bankruptcy or insolvency; material judgments; incurrence of certain material ERISA liabilities; and a change of control of the Company (as defined in the Credit Agreement). Subsequent to the quarter ending September 30, 2018, and in connection with entering into the Primary Credit Facility, the Company amended the debt covenants associated with its mortgage to mirror the debt covenants defined in the Credit Agreement. As of September 30, 2018, the Company was in compliance with all debt covenants under the revolving credit facilities and the mortgage, discussed above. Foreign Currency Exchange Rates The amounts disclosed above for the China Credit Facility and Japan Credit Facility have been translated into US dollars using applicable foreign currency exchange spot rates in effect as of September 30, 2018. As a result, there are differences between the net borrowing and repayment amounts within this footnote disclosure and those same amounts presented in the condensed consolidated statements of cash flows. Any amounts outstanding are recorded in short-term borrowings in the condensed consolidated balance sheets.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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