Harris Teeter 2009 Annual Report Download - page 50

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46
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
INTEREST RATE SWAP AGREEMENTS
During fiscal 2009, the Company entered into two separate three-year interest rate swap agreements
with an aggregate notional amount of $80 million. The swap agreements effectively fixed the interest rate on
$80 million of the Company’s term loan, of which $40 million is at 1.81% and $40 million is at 1.80%, excluding
the applicable margin and associated fees. Both interest rate swaps were designated as cash flow hedges.
The following tables present the required quantitative disclosures under ASC paragraph 820-10-50-1, on a
combined basis, for the Company’s financial instruments, designated as cash flow hedges (in thousands):
Fair Value Measurements at September 27, 2009
Carrying
Value
Quoted Prices in
Active Markets
for Identical
Instruments
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Interest rate swaps (included with
Other Long-Term Liabilities on
the balance sheet) . . . . . . . . . . . . . . . . . . . $585 $— $585 $—
The pre-tax unrealized loss associated with the cash flow hedges for the fiscal years was as follows (in
thousands):
2009 2008 2007
Unrealized loss included with other comprehensive income ................ $585 $— $—
FINANCIAL INSTRUMENTS
Financial instruments which potentially subject the Company to concentration of credit risk consist
principally of cash equivalents and notes receivables. The Company limits the amount of credit exposure to
each individual financial institution and places its temporary cash into investments of high credit quality.
Concentrations of credit risk with respect to receivables are limited due to their dispersion across various
companies and geographies.
The carrying amounts for certain of the Company’s financial instruments, including cash and cash
equivalents, accounts and notes receivable, accounts payable and other accrued liabilities approximate fair value
because of their short maturities. The fair value of variable interest debt is equal to its carrying amount. The
estimated fair value of the Company’s Senior Notes due at various dates through 2017 (which accounts for 99%
of the Company’s fixed interest debt obligations) is computed based on borrowing rates currently available to
the Company for loans with similar terms and maturities. The estimated fair value of the Company’s Senior
Notes and its carrying amount outstanding as of September 27, 2009 and September 28, 2008 is as follows (in
thousands):
2009 2008
Senior Notes – estimated fair value . . . . . . . . . . . . . . . . . . . . . . $ 134,322 $ 127,053
Senior Notes – carrying amount ......................... 114,285 121,428