Papa Johns 2012 Annual Report Download - page 79

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73
9. Debt and Credit Arrangements (continued)
In August 2011, we entered into a new interest rate swap agreement that provides for a fixed rate of
0.53%, as compared to LIBOR, with a notional amount of $50.0 million. Subsequent to year end
(effective December 31, 2012), we amended our interest rate swap agreement with a notional amount of
$50.0 million to extend the maturity date through December 30, 2015. The amendment resulted in a
change to the fixed rate of interest (to 0.55% from 0.53%) but did not impact the notional amount of the
interest rate swap agreement. Previously, we had two interest rate swap agreements that expired in
January 2011. The previous swap agreements provided for fixed rates of 4.98% and 3.74%, as compared
to LIBOR, with each having a notional amount of $50.0 million.
Our swaps are derivative instruments that are designated as cash flow hedges because the swaps provide a
hedge against the effects of changes in our variable interest rates on borrowings. The effective portion of
the gain or loss on the swap is reported as a component of accumulated other comprehensive income and
reclassified into earnings in the same period or periods during which the swap affects earnings. Gains or
losses on the swap representing either hedge ineffectiveness or hedge components excluded from the
assessment of effectiveness are recognized in current earnings. Amounts payable or receivable under the
swap are accounted for as adjustments to interest expense. As of December 30, 2012, the swap is a highly
effective cash flow hedge.
The following tables provide information on the location and amounts of our swaps in the accompanying
consolidated financial statements (in thousands):
Fair Values of Derivative Instruments
Derivatives designated as hedging instruments:
Balance Sheet Location
Fair Value
Dec. 30, 2012
Balance Sheet Location
Fair Value
Dec. 25, 2011
Interest rate swaps Other long-term liabilities 104$
Other long-term assets 11$
There were no derivatives that were not designated as hedging instruments.
Liability Derivatives
Asset Derivatives