|12 Months Ended|
Sep. 30, 2011
|LONG-TERM DEBT [Abstract]|
Long-term debt at September 30, 2011 and 2010 consisted of the following:
In December 2010, the Company entered into a new domestic Revolving Credit Facility with a syndicate of financial institutions. The maximum amount of borrowings available under the new facility is $300,000 and borrowings under the facility bear interest at LIBOR plus a factor ranging from 1.00% to 1.50% based on the Company's leverage ratio. The facility's maturity is December 2015. The new facility replaced the Company's $225,000 Revolving Credit Facility. 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 .20% to .30% (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 $25,000) is available for the issuance of trade and standby letters of credit. Outstanding borrowings on the Revolving Credit Facility at September 30, 2011 and 2010 were $250,000 and $187,000, respectively. The weighted-average interest rate on outstanding borrowings at September 30, 2011 and 2010 was 2.59% and 2.69%, respectively.
The Company has entered into the following interest rate swaps:
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 of $7,161 ($4,368 after tax) at September 30, 2011 that is included in shareholders' equity as part of accumulated other comprehensive loss (“AOCL”). Assuming market rates remain constant with the rates at September 30, 2011, approximately $1,257 of the $4,368 loss included in AOCL is expected to be recognized in earnings as an adjustment to interest expense over the next twelve months.
At September 30, 2011 and 2010, the interest rate swap contracts were reflected as a liability on the balance sheets. The following derivatives are designated as hedging instruments:
The income recognized on derivatives was as follows:
The Company recognized the following gains or losses in AOCL:
The Company, through certain of its German subsidiaries, has a credit facility with a European bank. The maximum amount of borrowings available under this facility is 25.0 million Euros ($33,468). Outstanding borrowings under the credit facility totaled 23.6 million Euros ($31,593) and 12.0 million Euros ($16,400) at September 30, 2011 and 2010, respectively. The weighted-average interest rate on outstanding borrowings under the facility at September 30, 2011 and 2010 was 2.38% and 1.58%, respectively. The facility's maturity is September 2012. The Company has the ability and intent to renew this borrowing upon maturity.
The Company, through its German subsidiary, Saueressig GmbH & Co. KG (“Saueressig”), has several loans with various European banks. Outstanding borrowings on these loans totaled 8.3 million Euros ($11,159) and 7.9 million Euros ($10,816) at September 30, 2011 and 2010, respectively. The weighted-average interest rate on outstanding borrowings of Saueressig at September 30, 2011 and 2010 was 6.05% and 6.18%, respectively.
The Company, through its wholly-owned subsidiary, Matthews International S.p.A., has several loans with various Italian banks. Outstanding borrowings on these loans totaled 8.7 million Euros ($11,611) and 12.1 million Euros ($16,543) at September 30, 2011 and 2010, respectively. Matthews International S.p.A. also has three lines of credit totaling 11.4 million Euros ($15,221) with the same Italian banks. Outstanding borrowings on these lines were 493,000 Euros ($661) and 2.1 million Euros ($2,834) at September 30, 2011 and 2010, respectively. The weighted-average interest rate on outstanding Matthews International S.p.A. borrowings at September 30, 2011 and 2010 was 3.11% and 3.47%, respectively.
The Company, through its Turkish subsidiary, Kroma Pre-Press Preparation Systems Industry & Trade, Inc. (“Kroma”), acquired in July 2011, has several loans with various Turkish banks. Outstanding borrowings on these loans totaled 13.3 million Turkish Lira ($7,184) at September 30, 2011. The weighted-average interest rate on outstanding borrowings of Kroma was 9.27% at September 30, 2011.
As of September 30, 2011 and 2010, the fair value of the Company's long-term debt, including current maturities, approximated carrying value.
Aggregate maturities of long-term debt, including short-term borrowings and capital leases, follows:
The entire disclosure for short-term and long-term debt arrangements, and disclosure of the entity's derivative instruments and hedging activities.