Supercuts 2009 Annual Report Download - page 74

Table of Contents
expected (contractual) maturity dates. Notional amounts are used to calculate the contractual payments to be exchanged under the contract.
**
Expected maturity date as of June 30, 2009 June 30, 2009
June 30,
2008
2010
2011
2012
2013
2014
Thereafter
Total
Fair Value
Fair Value
Liabilities
(U.S.$ equivalent in thousands)
Long
-
term debt:
Fixed rate (U.S.$)
$
55,454
$
93,860
$
96,307
$
56,270
$
18,845
$
123,571
$
444,307
$
461,878
$
531,924
Average interest rate
6.3
%
6.1
%
7.0
%
5.6
%
6.2
%
5.6
%
6.3
%
Variable rate (U.S.$)
—
—
90,000
70,000
—
30,000
190,000
190,000
239,100
Average interest rate
2.0
%
1.1
%
1.2
%
1.5
%
Total liabilities
$
55,454
$
93,860
$
186,307
$
126,270
$
18,845
$
153,571
$
634,307
$
651,878
$
771,024
Interest rate derivatives
(U.S.$ equivalent in thousands)
Pay fixed/receive variable (U.S.$)
—
—
40,000
35,000
—
$
15,000
$
90,000
$
5,786
$
1,366
Average pay rate**
3.2
%
4.8
%
4.9
%
Average receive rate**
0.3
%
0.6
%
0.6
%
Represents the average expected cost of borrowing for outstanding derivative balances as of June 30, 2009.
Foreign Currency Exchange Risk:
The majority of the Company's revenue, expense and capital purchasing activities are transacted in United States dollars. However, because
a portion of the Company's operations consists of activities outside of the United States, the Company has transactions in other currencies,
primarily the Canadian dollar, British pound and Euro. In preparing the Consolidated Financial Statements, the Company is required to translate
the financial statements of its foreign subsidiaries from the currency in which they keep their accounting records, generally the local currency,
into United States dollars. Different exchange rates from period to period impact the amounts of reported income and the amount of foreign
currency translation recorded in accumulated other comprehensive income. As part of its risk management strategy, the Company frequently
evaluates its foreign currency exchange risk by monitoring market data and external factors that may influence exchange rate fluctuations. As a
result, the Company may engage in transactions involving various derivative instruments to hedge assets, liabilities and purchases denominated
in foreign currencies. As of June 30, 2009, the Company has entered into the following financial instruments to manage its foreign currency
exchange risk:
Hedge of the Net Investment in Foreign Subsidiaries:
The Company has numerous investments in foreign subsidiaries, and the net assets of these subsidiaries are exposed to exchange rate
volatility. The Company frequently evaluates its foreign currency exchange risk by monitoring market data and external factors that may
influence exchange rate fluctuations. As a result, the Company may engage in transactions involving various derivative instruments to hedge
assets, liabilities and purchases denominated in foreign currencies.
During September 2006, the Company's cross-currency swap (which had a notional amount of $21.3 million and hedged a portion of the
Company's net investment in its foreign operations) was settled, resulting in a cash outlay of $8.9 million. This cash outlay was recorded within
investing activities within the Consolidated Statement of Cash Flows. The related cumulative tax-effected net loss of $7.9 million was recorded
in accumulated other comprehensive income (AOCI) in fiscal year 2007. This amount will remain deferred within AOCI indefinitely, as the
event which would trigger its release from AOCI and recognition in earnings is the sale or liquidation of the Company's international operations
that the cross-currency swap hedged. The Company currently has no intent to sell or liquidate this portion of its business operations.
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