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Financing Arrangements | 6 Months Ended
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Nov. 30, 2011
Financing Arrangements |
Financing Arrangements |
Note 7 — Financing Arrangements A summary of our recourse and non-recourse debt is as follows:
|  | November 30, |  | May 31, |
|  | 2011 |  | 2011 |
Recourse debt: |  |  |  |  |
Revolving credit facility expiring April 12, 2016 with interest payable monthly (see Note 8) |  | $ | 150,000 |  | $ | 100,000 |
Revolving credit facility (secured by aircraft and related engines and components) due May 1, 2015 with floating interest rate, payable monthly |  | 63,296 |  | 54,940 |
Note payable due July 19, 2012 with interest at 7.22%, payable monthly |  | 9,421 |  | 2,217 |
Mortgage loan (secured by Wood Dale, Illinois facility) due August 1, 2015 with interest at 5.01% |  | 11,000 |  | 11,000 |
Convertible notes payable due March 1, 2014 with interest at 1.625% payable semi-annually on March 1 and September 1 |  | 75,237 |  | 73,418 |
Convertible notes payable due March 1, 2016 with interest at 2.25% payable semi-annually on March 1 and September 1 |  | 52,485 |  | 51,309 |
Convertible notes payable due February 1, 2026 with interest at 1.75% payable semi-annually on February 1 and August 1 |  | 110,927 |  | 107,420 |
Industrial revenue bond (secured by trust indenture on property, plant and equipment) due August 1, 2018 with floating interest rate, payable monthly |  | 25,000 |  | 25,000 |
Total recourse debt |  | 497,366 |  | 425,304 |
Current maturities of recourse debt |  | (70,586 | ) | (111,323 | )
Long-term recourse debt |  | $ | 426,780 |  | $ | 313,981 |
Non-recourse debt: |  |  |  |  |
Non-recourse note payable due December 8, 2011 with interest at 13.0% |  | $ | 6,545 |  | $ | — |
Non-recourse note payable due July 19, 2012 with interest at 7.22% |  | — |  | 8,201 |
Non-recourse note payable due April 3, 2015 with interest at 8.38% |  | — |  | 3,654 |
Total non-recourse debt |  | 6,545 |  | 11,855 |
Current maturities of non-recourse debt |  | (6,545 | ) | (823 | )
Long-term non-recourse debt |  | $ | — |  | $ | 11,032 |
On April 12, 2011, we entered into an agreement with various financial institutions, as lenders and Bank of America, N.A., as administrative agent for the lenders (as amended on October 13, 2011, the “Credit Agreement”) providing for an unsecured revolving credit facility that we can draw upon for general corporate purposes. The revolving commitment was originally $400,000 and on October 13, 2011 was increased to $580,000. Under certain circumstances, we may request an increase to the revolving commitment by an aggregate amount of up to $100,000, not to exceed $680,000 in total. The Credit Agreement expires on April 12, 2016. Borrowings under the Credit Agreement bear interest at the offered Eurodollar Rate (defined as the British Bankers Association LIBOR Rate) plus 125 to 225 basis points based on certain financial measurements if a Eurodollar Rate loan, or at the offered fluctuating Base Rate plus 25 to 125 basis points based on certain financial measurements if a Base Rate loan. During the second quarter of fiscal 2012, we sold an aircraft and the associated non-recourse debt of $3,252, which was due April 3, 2015, was assumed by the purchaser. Also during the second quarter of fiscal 2012, we purchased our joint venture partner’s interest in a narrow-body aircraft. In connection with this acquisition, we assumed $6,545 of non-recourse debt, which was paid in full on December 8, 2011. During the first quarter of fiscal 2012, the non-recourse note due July 19, 2012 became fully recourse to the Company and is presented in the recourse portion of the table above. During the six-month period ended November 30, 2010, we repurchased $6,000 par value of our 2.25% convertible notes due March 1, 2016. The notes were repurchased for $4,667 cash, and the gain of $97, after consideration of unamortized discount and debt issuance costs, is recorded in Gain on extinguishment of debt on the condensed consolidated statements of income. At November 30, 2011, the face value of our long-term recourse debt was $456,511 and the estimated fair value was approximately $438,000. The fair value was estimated using available market information. Convertible Notes On June 1, 2009, we adopted a new accounting standard that clarifies the accounting for convertible debt instruments that may be settled wholly or partly in cash when converted, and requires convertible debt to be accounted for as two components: (i) a debt component which is recorded upon issuance at the estimated fair value of a similar straight-debt instrument without the debt-for-equity conversion feature; and (ii) an equity component that is included in capital surplus and represents the estimated fair value of the conversion feature at issuance. The bifurcation of the debt and equity components results in a discounted carrying value of the debt component compared to the principal amount. The discount is accreted to the carrying value of the debt component through interest expense over the expected life of the debt using the effective interest method. As of November 30, 2011 and May 31, 2011, the long-term debt and equity component (recorded in capital surplus, net of income tax benefit) consisted of the following:
|  | November 30, |  | May 31, |
|  | 2011 |  | 2011 |
Long-term debt: |  |  |  |  |
Principal amount |  | $ | 268,380 |  | $ | 268,380 |
Unamortized discount |  | (29,731 | ) | (36,233 | )
Net carrying amount |  | $ | 238,649 |  | $ | 232,147 |
Equity component, net of tax |  | $ | 74,966 |  | $ | 74,966 |
The discount on the liability component of long-term debt is being amortized using the effective interest method based on an effective rate of 8.48% for our 1.75% convertible notes; 6.82% for our 1.625% convertible notes and 7.41% for our 2.25% convertible notes. For our 1.75% convertible notes, the discount is being amortized through February 1, 2013, which is the first put date for those notes. For our 1.625% and 2.25% convertible notes, the discount is being amortized through their respective maturity dates of March 1, 2014 and March 1, 2016. As of November 30, 2011 and 2010, for each of our convertible note issuances, the “if converted” value does not exceed its principal amount. The interest expense associated with the convertible notes was as follows:
|  | Three Months Ended |  | Six Months Ended |
|  | November 30, |  | November 30, |
|  | 2011 |  | 2010 |  | 2011 |  | 2010 |
Coupon interest |  | $ | 1,228 |  | $ | 1,228 |  | $ | 2,456 |  | $ | 2,475 |
Amortization of deferred financing fees |  | 188 |  | 188 |  | 376 |  | 377 |
Amortization of discount |  | 3,282 |  | 3,040 |  | 6,502 |  | 6,051 |
Interest expense related to convertible notes |  | $ | 4,698 |  | $ | 4,456 |  | $ | 9,334 |  | $ | 8,903 |

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 129 -Paragraph 2, 4 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 19, 20, 22 -Article 5 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 + Details
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