Note 3: Long-Term Debt

Long-term debt consists of the following as of:

 

		May 1, 2016				January 31, 2016
Credit Facility - term		$	144,375			$	146,250
Credit Facility - revolver			156,000				192,000
Total debt outstanding			300,375				338,250
Less:
Current installments			7,500				7,500
Debt issuance costs - term			780				834
Long-term debt, net		$	292,095			$	329,916

Credit facility — On May 15, 2015, we entered into a senior secured credit facility that provides a $150,000 term loan facility and a $350,000 revolving credit facility (the “Credit Facility”) with a maturity date of May 15, 2020. The $350,000 revolving credit facility includes a $20,000 letter of credit sub-facility and a $10,000 swingline sub-facility. The revolving credit facility is available to provide financing for general purposes. The term loan facility requires quarterly principal payments of $1,875 which began in the third quarter of fiscal 2015 through maturity, when the remaining balance is due. The Credit Facility is secured by the assets of D&B Inc and is unconditionally guaranteed by D&B Holdings and each of its direct and indirect domestic wholly-owned subsidiaries.

As of May 1, 2016, we had letters of credit outstanding of $5,016 and $188,984 of borrowing available under our Credit Facility. We believe that the carrying amount of the Credit Facility approximates its fair value because the interest rates are adjusted regularly based on current market conditions. The fair value of the Company’s Credit Facility was determined to be a Level Two instrument as defined by GAAP.

 

The interest rates per annum applicable to loans, other than swingline loans, under the Credit Facility are currently set based on a defined LIBOR rate plus an applicable margin. Swingline loans bear interest at a base rate plus an applicable margin. The loans bear interest subject to a pricing grid based on a total leverage ratio, at LIBOR plus a spread ranging from 1.50% to 2.25% for the term loans and the revolving loans. The stated weighted average interest rate on the Credit Facility at May 1, 2016 was 2.19%. The weighted average effective interest rate incurred on our borrowings under the Credit Facility was 2.60%. The weighted average effective rate includes amortization of debt issuance costs, commitment and other fees.

Our Credit Facility contains restrictive covenants that, among other things, places certain limitations on our ability to: incur additional indebtedness, make loans or advances to subsidiaries and other entities, pay dividends, acquire other businesses or sell assets. In addition, our Credit Facility requires us to maintain certain financial ratio covenants. As of May 1, 2016, we were in compliance with the restrictive and financial ratio covenants under the Credit Facility.

Future debt obligations — The following table sets forth our future debt principal payment obligations as of:

 

		May 1, 2016
1 year or less		$	7,500
2 years			7,500
3 years			7,500
4 years			7,500
5 years			270,375
Thereafter			—
Total future payments		$	300,375

The following tables set forth our recorded interest expense, net for the periods indicated:

 

		Thirteen Weeks				Thirteen Weeks
		Ended				Ended
		May 1, 2016				May 3, 2015
Credit facility interest expense		$	1,932			$	4,701
Amortization of issuance cost and discount			169				333
Interest income			(66	)			(67	)
Less capitalized interest			(131	)			(317	)
Change in fair value of interest rate cap			206				—
Total interest expense, net		$	2,110			$	4,650

We are exposed to interest rate risk arising from changes in interest rates due to the variable rate indebtedness under our Credit Facility. In October 2015, the Company purchased an interest rate cap agreement for $920 with a notional amount of $200,000 to manage our exposure to interest rate movements on our variable rate Credit Facility when one-month LIBOR exceeds 3.0%. The effective date of the interest rate cap agreement is October 7, 2015, and the agreement matures on October 7, 2019. The derivative is not designated as a hedge and does not qualify for hedge accounting. Accordingly, changes in the fair value of the interest rate cap are recognized as interest expense. The Company’s investment in the interest rate cap, with a fair value of $239 at May 1, 2016, is included in “Other assets and deferred charges” in the Consolidated Balance Sheets and was valued using an analysis based on market observable inputs, representing Level Two assets as defined by GAAP. The fair value of the Company’s interest rate cap represents the amount the Company would receive to terminate the contract. For the thirteen weeks ending May 1, 2016, interest expense includes $206 related to the change in the fair value of the interest rate cap since the end of fiscal 2015.