Can Someone Take a Look at My Model (Especially the Debt Model)

Hey guys, having some trouble with a model. This is just for practice; I'm modeling The Cooper Companies. In their 2015 10k, they mention they have "890.8 million available from Revolving Credit Agreement". Is this supposed to be their revolver? I'm not sure how to model this into my debt/revolver schedule. Other companies have a line item on their balance sheet called "Borrowings from Revolving Credit Facility", so I just use that number for my revolver. But in this case, The Cooper Companies does NOT have this item on their BS.

Just a little confused. Also, in the year 2020, my cash balance shoots up from 10K to +300K. Not sure what I did wrong...any help and feed back would be appreciated!

 
Best Response

Revolving credit facility would be their revolver. They are saying that they have $890.8mm available to borrow on that facility. You may want to look up their SEC filings for when they were issued it to determine what the borrowing limit is based on - is it a set amount or is it variable (based on some financial metric)? Did the revolver have a balance at year end?

Your cash balance shoots up in the final year of your model because you paid off the debt in prior years, which brought your cash flows down. Look at your CF statement: you're generating $500-700mm (I am assuming that figures are actually in thousands, so that would make these millions) in cash flows from operations each year. CapEx is $250-320mm. The only significant difference remaining is your CFs from financing. Every year you pay down long-term debt or the revolver by more than $200mm. Since most of those are paid off by the final year (that's your assumption), you really don't have debt remaining to pay off, so you have more cash from financing. Make sense?

 

Hey Robber, thanks for taking the time to look over my model.

Is there a specifi report where I'll be able to find more info on the revolver, or do I just need to dig through the 10& further?

Yes, your explanation makes sense. I used the info in their 10k regarding future debt obligations. I didn't assume anything about the revolver. It just happens to be paid off in full in the final year of the projection period.

Is there anything alarming that stands out to you?

 

Quite honestly, I forget what the specific filing type is - I rarely look them up. I'd appreciate it if someone let's me know as well. In the past, I've used the 10-k to read about the given company's debt. They will usually mention when they issued the debt or secured refinancing, which I then dig through Edgar around that given date to find those filings.

 

I'm looking through the company's investor relations page, and there are 10k, 10q, Proxy and Other filings...could it be in one of these by any chance?

One more thing if you don't mind. From their 10K, "Current period debt outstanding includes $200.0 million on two uncommitted revolving lines of credit, entered into on March 24, 2015, the $700.0 million term loan, entered into on August 4, 2014, the $300.0 million term loan, entered into on September 12, 2013, as well as about $109.2 million drawn on our revolving Credit Agreement." Can any of this information be used for my debt and/or revolver model?

 

Sorry, I am knee deep in some work of my own, so I am not going to reopen your model now. I am only responding now in case your question is time sensitive.

It depends. I've seen some companies post on their website just the more significant filings (10-q, 10-k, 8-k) while others post literally everything. Your best bet is to go to EDGAR.

What was their total debt at the end of the year? $1.31 billion? I'm not sure why they use different terms for lines of credit, but it sounds like they have three (i.e., what's the difference between "revolving lines of credit" and "revolving credit agreement"). I don't think there is a substantial difference between the two terms, but someone could correct me.

As long as you account for the debt in your model, you should be fine. Your balance sheet balanced, so that's good. The paydown on each respective debt instrument is based on your assumptions unless the Company indicates in a filing when specific payments are due (term loan should have that info). If you don't have access to a database, you may check FINRA - they have some bond search that may tell you when interest payments are due.

 

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