9. Long-Term Debt and Lines of Credit

A summary of long-term debt follows:


(dollars in thousands)	February 1, 2015			January 26, 2014			April 27, 2014
Unsecured senior term notes	$	2,200		$	4,400		$	4,400
Current maturities of long-term debt		(2,200	)		(2,200	)		(2,200	)
Long-term debt, less current maturities of long-term debt	$	-		$	2,200		$	2,200

Unsecured Senior Term Notes

We entered into a note agreement dated August 11, 2008 that provided for the issuance of $11.0 million of unsecured senior term notes with a fixed interest rate of 8.01% and a term of seven years. Principal payments of $2.2 million per year are due on the notes beginning August 11, 2011. The remaining principal payments are payable over an average term of 0.5 years through August 11, 2015. Any principal pre-payments would be assessed a penalty as defined in the agreement. The agreement contains customary financial and other covenants as defined in the agreement.

As of February 1, 2015, we have one remaining annual payment of $2.2 million due on August 11, 2015.

Revolving Credit Agreement – United States

We have an unsecured credit agreement with Wells Fargo Bank, N.A. (“Wells Fargo”) that provides for an unsecured revolving loan commitment of $10.0 million to be used to finance working capital and general corporate purposes. The amount of borrowings that were outstanding under the credit agreement with Culp Europe at January 26, 2014 and April 27, 2014, noted below decreased the $10.0 million available. Interest is charged at a rate (applicable interest rate of 1.77%, 1.76%, and 1.75% at February 1, 2015, January 26, 2014, and April 27, 2014, respectively) equal to the one-month LIBOR rate plus a spread based on our ratio of debt to EBITDA as defined in the agreement. The credit agreement contains customary financial and other covenants as defined in the agreement and expires on August 31, 2015.

At February 1, 2015, there was a $250,000 outstanding letter of credit (all of which related to workers compensation). At January 26, 2014, and April 27, 2014, there was a $195,000 outstanding letter of credit (all of which related to workers compensation). At February 1, 2015, January 26, 2014, and April 27, 2014, there were no borrowings outstanding under the credit agreement.

Our credit agreement with Wells Fargo contains a financial covenant that limits our capital expenditures to $10 million in any fiscal year. In the fourth quarter of fiscal 2015, we expect our capital expenditures to exceed $10 million for fiscal 2015 as a result of the capital expansion project associated with our mattress fabrics segment. As a result, effective March 3, 2015, Wells Fargo increased our capital expenditure limit from $10 million to $12 million for fiscal 2015.

Revolving Credit Agreement – China

We have an unsecured credit agreement associated with our operations in China that provides for a line of credit of up to 40 million RMB (approximately $6.4 million USD at February 1, 2015), expiring on May 9, 2015. This agreement has an interest rate determined by the Chinese government. There were no borrowings outstanding under the agreement as of February 1, 2015, January 26, 2014, and April 27, 2014.

Revolving Credit Agreement – Europe

At January 26, 2014 and April 27, 2014, we had an unsecured credit agreement with Wells Fargo that incurred interest at WIBOR (Warsaw Interbank Offered Rate) plus 2% (applicable interest rate of 4.5% and 4.38% at January 26, 2014 and April 27, 2014, respectively). There was $573,000 and $586,000 (1.8 million Polish Zloty) in borrowings outstanding under the agreement at January 26, 2014 and April 27, 2014, respectively.

Effective May 2, 2014, we converted our 1.8 million Polish Zloty denominated borrowings under the credit agreement to EURO denominated borrowings totaling €424,000 ($569,000 USD). In addition, the applicable interest rate was converted to EURO LIBOR plus 2%.

At February 1, 2015, no borrowings were outstanding under this agreement, as the outstanding balance was paid in full during the second quarter of fiscal 2015.

Overall

Our loan agreements require, among other things, that we maintain compliance with certain financial covenants. At February 1, 2015, the company was in compliance with these financial covenants.

The fair value of the company’s long-term debt is estimated by discounting the future cash flows at rates currently offered to the company for similar debt instruments of comparable maturities. At February 1, 2015, the carrying value of our long-term debt was $2.2 million and the fair value was $2.3 million. At January 26, 2014, the carrying value of the company’s long-term debt was $4.4 million and the fair value was $4.7 million. At April 27, 2014, the carrying value of the company’s long-term debt was $4.4 million and the fair value was $4.6 million.