Cracker Barrel 2014 Annual Report Download - page 45

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43
plus the Company’s cash and cash equivalents on hand is
at least $100,000 (the “liquidity requirements”), the
Company may declare and pay cash dividends on shares of
its common stock and repurchase shares of its common
stock if the aggregate amount of dividends paid and shares
repurchased in any scal year is less than the sum of (1) 20%
of Consolidated EBITDA from continuing operations
(as dened in the Credit Facility) (the “20% limitation”) and
(2) provided the Company’s consolidated total leverage
ratio is 3.25 to 1.00 or less, $100,000 (less the amount of any
share repurchases during the current scal year) In any
event, as long as the liquidity requirements are met, dividends
may be declared and paid in any scal year up to the
amount of dividends permied and paid in the preceding
scal year without regard to the 20% limitation.
6 DERIVATIVE INSTRUMENTS AND
HEDGING ACTIVITIES
For each of the Company’s interest rate swaps, the Company
has agreed to exchange with a counterparty the dierence
between xed and variable interest amounts calculated by
reference to an agreed-upon notional principal amount.
e interest rates on the portion of the Company’s outstand-
ing debt covered by its interest rate swaps is xed at the
rates in the table below plus the Company’s credit spread.
e Company’s credit spread at August 1, 2014 and August 2,
2013 was 1.50%. All of the Company’s interest rate swaps
are accounted for as cash ow hedges.
A summary of the Company’s interest rate swaps at
August 1, 2014 is as follows:
Term Notional Fixed
Trade Date Eective Date (in Years) Amount Rate
August 10, 2010 May 3, 2013 2 $200,000 2.73%
July 25, 2011 May 3, 2013 2 50,000 2.00%
July 25, 2011 May 3, 2013 3 50,000 2.45%
September 19, 2011 May 3, 2013 2 25,000 1.05%
September 19, 2011 May 3, 2013 2 25,000 1.05%
December 7, 2011 May 3, 2013 3 50,000 1.40%
March 18, 2013 May 3, 2015 3 50,000 1.51%
April 8, 2013 May 3, 2015 2 50,000 1.05%
April 15, 2013 May 3, 2015 2 50,000 1.03%
April 22, 2013 May 3, 2015 3 25,000 1.30%
April 25, 2013 May 3, 2015 3 25,000 1.29%
June 18, 2014 May 3, 2015 4 40,000 2.51%
June 24, 2014 May 3, 2015 4 30,000 2.51%
July 1, 2014 May 5, 2015 4 30,000 2.43%
e notional amount for the interest rate swap entered into
on June 18, 2014 increases by $40,000 each May over the
four-year term of the interest rate swap beginning in May 2016
until the notional amount reaches $160,000 in May 2018.
e notional amounts for the interest rate swaps entered into
on June 24, 2014 and July 1, 2014 increase by $30,000
each May over the four-year terms of the interest rate swaps
beginning in May 2016 until the notional amounts each
reach $120,000 in May 2018.
e estimated fair values of the Company’s derivative
instruments were as follows:
(See Note 3) Balance Sheet Location August 1, 2014 August 2, 2013
Interest rate swaps Other assets $ 240 $ 883
Interest rate swaps Current interest rate $ 4,704 $ —
swap liability
Interest rate swaps Long-term interest rate 3,239 11,644
swap liability
Total liabilities $ 7,943 $ 11,644