Harris Teeter 2011 Annual Report Download - page 40

2011 2010 2009
Minimum, net of sublease income $94,901 $94,336 $92,145
Contingent 1,252 1,401 1,688
Total $96,153 $95,737 $93,833
Future minimum lease commitments (excluding leases assigned - see below) and total minimum sublease rental income
to be received under non-cancelable subleases at October 2, 2011 were as follows (in thousands):
Operating Capital
Fiscal Year Leases Subleases Leases
2012 $ 97,621 $(1,063) $ 11,965
2013 99,860 (925) 11,980
2014 99,786 (849) 12,016
2015 100,786 (484) 12,004
2016 96,175 (203) 12,053
Later years 968,554 (126) 143,665
Total minimum lease obligations (receivables) $1,462,782 $(3,650) 203,683
Amount representing interest (99,358)
Present value of net minimum obligation (included with long-term debt) $104,325
In connection with the closing of certain store locations, Harris Teeter has assigned leases to several sub-tenants with
recourse. These leases expire over the next 10 years and the future minimum lease payments totaling $38,001,000 over this
period have been assumed by these sub-tenants.
7. LONG-TERM DEBT
On December 20, 2007, the Company and eleven banks entered into a credit agreement that provides for a five-year
revolving credit facility in the aggregate amount of up to $350 million and a non-amortizing term loan of $100 million due
December 20, 2012 ($20 million of which has been prepaid). The credit agreement also provides for an optional increase of
the revolving credit facility by an additional amount of up to $100 million and two one-year maturity extension options, both
of which require consent of the lenders. Outstanding borrowings under the credit agreement bear interest at a variable rate based
on a reference to: rates on federal funds transactions with members of the Federal Reserve System or the prime rate in effect
on the interest determination date; the LIBOR Market Index Rate; or, the LIBOR Rate, each plus an applicable margin. The
amount which may be borrowed from time to time and the applicable margin to the referenced interest rate are each dependent
on a leverage factor. The leverage factor is based on a ratio of rent-adjusted consolidated funded debt divided by earnings before
interest, taxes, depreciation, amortization and operating rents, as set forth in the credit agreement. The more significant of the
financial covenants which the Company must meet during the term of the credit agreement include a maximum leverage ratio
and a minimum fixed charge coverage ratio. Issued letters of credit reduce the amount available for borrowings under the
revolving credit facility and amounted to $28,252,000 as of October 2, 2011. The Company is charged a variable commitment
fee on the amount available for borrowings, which was $321,748,000 as of October 2, 2011. The commitment fee rate applied
to the net unused balance was 0.090%, per annum for fiscal 2011 and fiscal 2010, and 0.120% for fiscal 2009.
Covenants in certain of the Company’s long-term debt agreements limit the total indebtedness that the Company may incur.
The most restrictive of these covenants is a consolidated maximum leverage ratio and a minimum fixed charge coverage ratio
as defined in the Company’s credit agreement. As of October 2, 2011, the amount of additional debt that could be incurred within
the limitations of the debt covenants exceeded the additional borrowings available under the revolving credit facility. As such,
management believes that the limit on indebtedness does not restrict the Company’s ability to meet future liquidity requirements
through borrowings available under the Company’s revolving credit facility, including any liquidity requirements expected in
connection with the Company’s expansion plans for the foreseeable future.
Long-term debt as of October 2, 2011 and October 3, 2010 was as follows (in thousands):
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
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