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Credit Facility | 9 Months Ended
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Jul. 31, 2020
Debt Disclosure [Abstract] |
Credit Facility | 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, both of which are scheduled to mature on September 1, 2022. In accordance with the terms of the Credit Facility, the revolving line of credit was reduced to $800.0 million on September 1, 2018. In late March 2020, we borrowed approximately $300 million as a precautionary measure to provide increased liquidity and preserve financial flexibility in response to uncertainty resulting from the Pandemic. This represented all remaining amounts then available under the revolving line of credit. During the quarter ended July 31, 2020, the Company repaid substantially all of these amounts borrowed under the revolving line of credit without penalty. 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. To further enhance our financial flexibility as a precautionary measure in response to uncertainty arising from the Pandemic, we amended our Credit Facility (the “Amendment”) on May 28, 2020, as further described below. The Amendment modified the financial covenants under the Credit Facility, including: (i) replacing a maximum total leverage ratio with a maximum total net leverage ratio that varies on a quarterly basis and adjusts to 6.50 to 1.00 by the quarter ending October 31, 2020, and back to 4.00 to 1.00 by the quarter ending October 31, 2022; (ii) modifying the minimum fixed charge coverage ratio on a quarterly basis, which adjusts to 1.25 to 1.00 as of the quarter ending April 30, 2022; and (iii) adding a minimum liquidity (defined in the Amendment as domestic cash plus available revolving loans) of $250.0 million. These financial covenants were effective with the quarter ended April 30, 2020. Our borrowing capacity is subject to, and limited by, compliance with these covenants. The Amendment changed the interest rate, interest margins, and commitment fees applicable to loans and commitments under the Credit Facility. It also added a new anti-cash hoarding mandatory prepayment that requires us to repay outstanding revolving loans or swingline loans if at any time we have in excess of $250 million of cash and cash equivalents on our balance sheet. The Amendment made certain additional changes to the negative covenant restrictions under the Credit Facility, including, subject to certain exceptions, restrictions to our ability to make acquisitions, share repurchases, and other defined restricted payments, depending on our total net leverage ratio. At July 31, 2020, we were in compliance with these covenants. Prior to the Amendment, borrowings under the Credit Facility bore interest at a rate equal to 1-month LIBOR plus a spread that was based upon our leverage ratio. The spread ranged from 1.00% to 2.25% for Eurocurrency loans and 0.00% to 1.25% for base rate loans. We were also charged a commitment fee, which was paid quarterly in arrears and was based on our leverage ratio, that ranged from 0.200% to 0.350% on the average daily unused portion of the revolving 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 were included as outstanding under the line of credit. Subsequent to the Amendment, borrowings under the Credit Facility bear interest at a rate equal to 1-month LIBOR plus a spread that is based upon our total leverage ratio. The spread ranges from 1.00% to 2.75% for revolving Eurocurrency loans and 0.00% to 1.75% for revolving base rate loans. At July 31, 2020, the weighted average interest rate on our outstanding borrowings was 3.42%. We are also charged a commitment fee, which is paid quarterly in arrears and is based on our total leverage ratio, that ranges from 0.200% to 0.450% on the average daily unused portion of the revolving 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 revolving line of credit. The Credit Facility also includes customary events of default, such as: 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, 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 of $18.7 million, consisting of $13.4 million related to the term loan and $5.2 million related to the line of credit, are being amortized to interest expense over the term of the Credit Facility. We incurred total fees of $4.6 million in conjunction with the Amendment, the majority of which we capitalized in the quarter ended July 31, 2020, and are amortizing over the remaining term of the Credit Facility. Credit Facility Information
(in millions) |  | July 31, 2020 |  | October 31, 2019
Current portion of long-term debt |  |  |  |
Gross term loan |  | $ | 90.0 |  |  | $ | 60.0 |
Unamortized deferred financing costs |  | (3.4) |  |  | (2.8) |
Current portion of term loan |  | $ | 86.6 |  |  | $ | 57.2 |
Long-term debt |  |  |  |
Gross term loan |  | $ | 590.0 |  |  | $ | 680.0 |
Unamortized deferred financing costs |  | (3.0) |  |  | (4.1) |
Total noncurrent portion of term loan |  | 586.9 |  |  | 675.9 |
Revolving line of credit(1)(2) |  | 77.3 |  |  | 68.4 |
Long-term debt |  | $ | 664.2 |  |  | $ | 744.2 |
(1) Standby letters of credit amounted to $153.1 million at July 31, 2020. (2) At July 31, 2020, we had borrowing capacity of $563.7 million, reflecting covenant restrictions. Term Loan Maturities During the three and nine months ended July 31, 2020, we made principal payments under the term loan of $30.0 million and $60.0 million, respectively. As of July 31, 2020, the following principal payments are required under the term loan.
(in millions) |  | 2020 |  | 2021 |  | 2022
Debt maturities |  | $ | — |  |  | $ | 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 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 AOCL 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.
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 July 31, 2020 and October 31, 2019, amounts recorded in AOCL for interest rate swaps were a loss of $4.5 million, net of taxes of $1.3 million, and a gain of $2.2 million, net of taxes of $1.2 million, respectively. These amounts included the gain associated with the interest rate swaps we terminated in 2018, which is being amortized to interest expense as interest payments are made over the term of our Credit Facility. During the three and nine months ended July 31, 2020, we amortized $1.2 million, net of taxes of $0.5 million, and $3.6 million, net of taxes of $1.4 million, respectively, of this gain to interest expense. During the three and nine months ended July 31, 2019, we amortized $1.0 million, net of taxes of $0.4 million, and $3.1 million, net of taxes of $1.2 million, respectively. At July 31, 2020, the total amount expected to be reclassified from AOCL to earnings during the next twelve months is a loss of $4.1 million, net of a tax benefit of $1.4 million.

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- Definition The entire disclosure for the entity's debt and derivative instruments. Includes information about the amount of borrowings under the entity's line of credit and other matters important to the users of the financial statements and describes an entity's risk management strategies, derivatives in hedging activities and non-hedging derivative instruments, the assets, obligations, liabilities, revenues and expenses arising there from, and the amounts of and methodologies and assumptions used in determining the amounts of such items. + References No definition available. + Details
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