XML 23 R12.htm IDEA: XBRL DOCUMENT
v3.4.0.3

Debt | 6 Months Ended
--- | ---
Mar. 31, 2016
Debt [Abstract] |
Debt | Note 5. Debt The Company has a domestic revolving credit facility with a syndicate of financial institutions. The maximum amount of borrowings available under the facility is $900,000 and borrowings under the facility bear interest at LIBOR plus a factor ranging from .75% to 2.00% (1.75% at March 31, 2016) based on the Company's leverage ratio. The leverage ratio is defined as net indebtedness divided by EBITDA (earnings before interest, taxes, depreciation and amortization). The Company is required to pay an annual commitment fee ranging from .15% to .25% (based on the Company's leverage ratio) of the unused portion of the facility. The revolving credit facility requires the Company to maintain certain leverage and interest coverage ratios. A portion of the facility (not to exceed $30,000) is available for the issuance of trade and standby letters of credit. Outstanding borrowings on the revolving credit facility at March 31, 2016 and September 30, 2015 were $859,425 and $857,425, respectively. The weighted-average interest rate on outstanding borrowings at March 31, 2016 and March 31, 2015 was 2.52% and 2.50%, respectively. On April 26, 2016, subsequent to the date of the consolidated balance sheet, the Company amended and restated its domestic loan agreement with a syndicate of financial institutions to increase its total borrowing capacity from $900,000 to $1,150,000. The amended and restated loan agreement includes a $900,000 senior secured revolving credit facility ("Revolving Credit Facility") and a $250,000 senior secured term loan ("Term Loan"). The Term Loan requires scheduled principal payments of 5.0% of the outstanding principal in year 1, 7.5% in year 2, and 10.0% in years 3 through 5, payable in quarterly installments. The balance of the Revolving Credit Facility and the Term Loan are due on the maturity date of April 26, 2021. Borrowings under both the Revolving Credit Facility and the Term Loan bear interest at LIBOR plus a factor ranging from .75% to 2.00% based on the Company's leverage ratio. The leverage ratio is defined as net indebtedness divided by adjusted EBITDA (earnings before interest, taxes, depreciation and amortization). The Company is required to pay an annual commitment fee ranging from .15% to .25% (based on the Company's leverage ratio) of the unused portion of the Revolving Credit Facility. The amended and restated loan agreement will provide the Company with additional liquidity to support ongoing growth and share repurchases. The Company incurred debt issuance costs in connection with the amended and restated loan agreement, which will be deferred and amortized over the term of the facility. The Company has entered into the following interest rate swaps:
Effective Date |  | Amount |  |  | Fixed Interest Rate |  |  | Interest Rate Spread at March 31, 2016 |  |  | Maturity Date
June 2012 |  | $ | 40,000 |  |  |  | 1.88% |  |  |  | 1.75% |  |  | June 2022
August 2012 |  |  | 35,000 |  |  |  | 1.74% |  |  |  | 1.75% |  |  | June 2022
September 2012 |  |  | 25,000 |  |  |  | 1.24% |  |  |  | 1.75% |  |  | March 2017
May 2014 |  |  | 25,000 |  |  |  | 1.35% |  |  |  | 1.75% |  |  | May 2018
November 2014 |  |  | 25,000 |  |  |  | 1.26% |  |  |  | 1.75% |  |  | June 2018
March 2015 |  |  | 25,000 |  |  |  | 1.49% |  |  |  | 1.75% |  |  | March 2019
September 2015 |  |  | 25,000 |  |  |  | 1.39% |  |  |  | 1.75% |  |  | September 2020
November 2015 |  |  | 25,000 |  |  |  | 1.32% |  |  |  | 1.75% |  |  | November 2020
December 2015 |  |  | 25,000 |  |  |  | 1.59% |  |  |  | 1.75% |  |  | December 2020
February 2016 |  |  | 25,000 |  |  |  | 0.99% |  |  |  | 1.75% |  |  | February 2020
February 2016 |  |  | 25,000 |  |  |  | 1.03% |  |  |  | 1.75% |  |  | February 2022
The Company enters into interest rate swaps in order to achieve a mix of fixed and variable rate debt that it deems appropriate. The interest rate swaps have been designated as cash flow hedges of the future variable interest payments under the revolving credit facility, which are considered probable of occurring. Based on the Company's assessment, all of the critical terms of each of the hedges matched the underlying terms of the hedged debt and related forecasted interest payments, and as such, these hedges were considered highly effective. The fair value of the interest rate swaps reflected an unrealized loss, net of unrealized gains, of $5,746 ($3,505 after tax) at March 31, 2016 and an unrealized loss, net of unrealized gains, of $3,686 ($2,248 after tax) at September 30, 2015. The net unrealized gain and loss are included in shareholders' equity as part of accumulated other comprehensive income ("AOCI"). Assuming market rates remain constant with the rates at March 31, 2016, a loss (net of tax) of approximately $878 included in AOCI is expected to be recognized in earnings over the next twelve months. At March 31, 2016 and September 30, 2015, the interest rate swap contracts were reflected in the consolidated balance sheets as follows:
Derivatives |  | March 31, 2016 |  |  | September 30, 2015 |
Current assets: |  |  |  |  |  |
Other current assets |  | $ | 26 |  |  | $ | - |
Long-term assets: |  |  |  |  |  |  |  |
Other assets |  |  | 126 |  |  |  | - |
Current liabilities: |  |  |  |  |  |  |  |
Other current liabilities |  |  | (1,465 | ) |  |  | (1,165 | )
Long-term liabilities: |  |  |  |  |  |  |  |
Other liabilities |  |  | (4,433 | ) |  |  | (2,521 | )
Total derivatives |  | $ | (5,746 | ) |  | $ | (3,686 | )
The loss recognized on derivatives was as follows:
Derivatives in Cash Flow Hedging Relationships | Location of Loss Recognized in Income on Derivative |  | Amount of |  |  | Amount of |
| Loss Recognized |  |  | Loss Recognized |
| in Income |  |  | in Income |
| on Derivatives |  |  | on Derivatives |
|  |  | Three Months ended March 31, |  |  | Six Months ended March 31, |
|  |  | 2016 |  |  | 2015 |  |  | 2016 |  |  | 2015 |
Interest rate swaps | Interest expense |  | $ | (746 | ) |  | $ | (996 | ) |  | $ | (1,576 | ) |  | $ | (2,073 | )
The Company recognized the following gains or losses in AOCI:
| Amount of Loss |
|  |  |  |  |  | Reclassified from |
|  | Amount of |  |  |  | AOCI into |
|  | Loss Recognized in |  | Location of Gain or (Loss) Reclassified From AOCI into Income (Effective Portion*) |  | Income |
Derivatives in Cash Flow Hedging Relationships |  | AOCI on Derivatives |  |  |  | (Effective Portion*) |
|  | March 31, 2016 |  |  | March 31, 2015 |  |  |  |  | March 31, 2016 |  |  | March 31, 2015 |
Interest rate swaps |  | $ | (2,218 | ) |  | $ | (3,212 | ) | Interest expense |  | $ | (961 | ) |  | $ | (1,265 | )
*There is no ineffective portion or amount excluded from effectiveness testing. |
The Company, through certain of its European subsidiaries, has a credit facility with a European bank. The maximum amount of borrowing available under this facility is 35.0 million Euros ($39,744). Outstanding borrowings under the credit facility totaled 9.5 million Euros ($10,773) and 23.9 million Euros ($26,829) at March 31, 2016 and September 30, 2015, respectively. The weighted-average interest rate on outstanding borrowings under this facility at March 31, 2016 and 2015 was 1.75% and 1.74% respectively. The Company, through its German subsidiary, Saueressig GmbH & Co. KG ("Saueressig"), has several loans with various European banks. Outstanding borrowings under these loans totaled 651,780 Euros ($740) and 734,452 Euros ($824) at March 31, 2016 and September 30, 2015, respectively. The weighted-average interest rate on outstanding borrowings of Saueressig at March 31, 2016 and 2015 was 4.16% and 4.05%, respectively. The Company, through its German subsidiary, Wetzel GmbH ("Wetzel"), has several loans with various European banks. Outstanding borrowings under these loans totaled 1.2 million Euros ($1,329) and 1.9 million Euros ($2,110) at March 31, 2016 and September 30, 2015, respectively. The weighted-average interest rate on outstanding borrowings of Wetzel at March 31, 2016 and 2015 was 6.11% and 5.84%, respectively. The Company, through its Italian subsidiary, Matthews International S.p.A., has several loans with various Italian banks. Outstanding borrowings on these loans totaled 4.4 million Euros ($4,953) and 4.3 million Euros ($4,772) at March 31, 2016 and September 30, 2015, respectively. Matthews International S.p.A. also has four lines of credit totaling 11.3 million Euros ($12,866) with the same Italian banks. Outstanding borrowings on these lines were 4.9 million Euros ($5,511) and 4.6 million Euros ($5,166) at March 31, 2016 and September 30, 2015, respectively. The weighted-average interest rate on outstanding Matthews International S.p.A. borrowings at March 31, 2016 and 2015 was 3.47% and 3.18%, respectively. In September 2014, a claim seeking to draw upon a letter of credit issued by the Company of $12,925 was filed with respect to a project for a customer in Saudi Arabia. In January 2015, the Company made payment on the draw to the financial institution for the letter of credit and the Company was recently advised that the funds were ultimately received by the customer. Pursuant to an action initiated by the Company, a court order was issued requiring these funds to be remitted to the court pending resolution of the dispute between the parties. Management has assessed the customer's claim to be without merit and, based on information available as of this filing, expects that the courts will ultimately rule in favor of Matthews. However, as the customer has not yet remitted the funds to the court, it is possible the resolution of this matter could have an unfavorable financial impact on Matthews' results of operations. As of March 31, 2016 and September 30, 2015, the Company has presented the funded letter of credit within other current assets on the Consolidated Balance Sheet. As of March 31, 2016 and September 30, 2015, the fair value of the Company's long-term debt, including current maturities, approximated the carrying value included in the Consolidated Balance Sheet.

X
- References No definition available. + Details
Name: | us-gaap_DebtDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: 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 + Details
Name: | us-gaap_DebtDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration