Baskin Robbins 2012 Annual Report Download - page 59

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-49-
Interest rate risk
We are subject to interest rate risk in connection with our long-term debt. Our principal interest rate exposure mainly relates to
a portion of the term loans outstanding under our senior credit facility. We have a $1.90 billion term loan facility bearing
interest at variable rates. In September 2012, we entered into variable-to-fixed interest rate swap agreements to hedge the
floating interest rate on $900.0 million notional amount of our outstanding term loan borrowings. These swaps are scheduled to
mature in November 2017. We are required to make quarterly payments on the notional amount at a fixed average interest rate
of approximately 1.37%. In exchange, we receive interest on the notional amount at a variable rate based on three-month
LIBOR spot rate, subject to a 1.0% floor. Based on the principal amount of term loan borrowings outstanding at December 29,
2012 and considering the interest rate swaps, each eighth of a percentage point change in interest rates above the minimum
interest rate specified in the senior credit facility would result in a $1.2 million change in annual interest expense on our term
loan facility. We also have a revolving credit facility, which provides for borrowings of up to $100.0 million and bears interest
at variable rates. Assuming the revolver is fully drawn, each eighth of a percentage point change in interest rates above the
minimum interest rate specified in the senior credit facility would result in a $0.1 million change in annual interest expense on
our revolving loan facility. There was no material impact to our interest rate risk as a result of the February 2013 amendment to
our senior credit facility.
In the future, we may enter into additional hedging instruments, involving the exchange of floating for fixed rate interest
payments, to reduce interest rate volatility.