|3 Months Ended|
May 04, 2019
Long-term debt consists of the following (in thousands):
Revolving Credit Facility
As of May 4, 2019 and May 5, 2018, the borrowing base under our senior secured asset-based revolving credit facility was $784.3 million and $770.7 million, respectively, of which Michaels Stores, Inc. (“MSI”) had unused borrowing capacity of $677.1 million and $674.0 million, respectively. As of May 4, 2019 and May 5, 2018, outstanding standby letters of credit, which reduce our borrowing base, totaled $107.2 million and $96.7 million, respectively.
Interest Rate Swaps
In April 2018, we executed two interest rate swaps with an aggregate notional value of $1.0 billion associated with our outstanding Amended and Restated Term Loan Credit Facility. The interest rate swaps have a maturity date of April 30, 2021 and were executed for risk management and are not held for trading purposes. The objective of the interest rate swaps is to hedge the variability of cash flows resulting from fluctuations in the one-month LIBOR. The swaps replaced the one-month LIBOR with a fixed interest rate of 2.7765% and payments are settled monthly. The swaps qualify as cash flow hedges and changes in the fair values are recorded in accumulated other comprehensive income in the consolidated balance sheet. The changes in fair value are reclassified from accumulated other comprehensive income to interest expense in the same period that the hedged items affect earnings. Amounts reclassified from accumulated other comprehensive income to interest expense during the first quarters of fiscal 2019 and fiscal 2018 were not material.
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.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef