CITP » Topics » ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This excerpt taken from the CITP 10-Q filed May 12, 2006.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Because our borrowings have variable interest rates, we have historically been subject to market risk on all or a part of our borrowings under our credit agreements. Effective February 22, 2005, we entered into an interest rate swap and an interest rate cap. The swap agreement and cap agreement are contracts to effectively exchange variable interest rate payments for fixed rate payments of the life of the instrument. The notional amount is used to measure interest to be paid or received and does not represent the exposure to credit loss. The purpose of the swap and cap is to limit our exposure to increases in interest rates on the notional amount of bank borrowings over the term of the cap and swap. The swap is based on a $20.0 million notional amount at a rate of 4.59% and the cap is based on a $20.0 million notional amount at a rate of 4.50%.

The interest rate swap and cap are recorded at fair value, based on an amount estimated by Merrill Lynch Capital, which represents the amount that Merrill Lynch Capital would have paid us at April 2, 2006 if the swap and cap had been terminated at that date. The combined net fair value at April 2, 2006 was approximately $898,000, which is included in our consolidated balance sheet in noncurrent assets. Effective with the repayment of our debt on December 14, 2005, the expected cash flows that the swap and cap were designated to hedge against were no longer probable. As a result, the swap and the cap are no longer designated as cash flow hedges for accounting purposes. As a result, amounts previously recorded in accumulated other comprehensive income associated with changes in fair value of the hedges were reversed to interest expense. Changes in fair value of the swap and cap are recorded in the statement of operations subsequent to December 14, 2005. The Company recorded $396,000 as a reduction of interest expense in the first quarter of 2006.

Outstanding debt under our senior and term loan credit agreements at April 2, 2006 was $148.1 million. Interest on these borrowings is based on the prime rate or LIBOR plus a variable margin. Based on the outstanding balance at April 2, 2006, a change of 1% in the interest rate would cause a change in net interest expense of approximately $1.1 million on an annual basis.

This excerpt taken from the CITP 10-K filed Mar 17, 2006.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Outstanding debt under our 2005 senior and term loan credit agreements at January 1, 2006 was $142.3 million. Interest on borrowings under the facility is based on the prime rate or LIBOR plus a variable margin. Based on the outstanding balance at January 1, 2006, a change of 1% in the interest rate would cause a change in interest expense of approximately $1.4 million on an annual basis.

Because our borrowings have variable interest rates, we have historically been subject to market risk on all or a part of our borrowings under our credit agreements. Effective February 22, 2005, we entered into an interest rate swap and an interest rate cap. The swap agreement and cap agreement are contracts to effectively exchange variable interest rate payments for fixed rate payments of the life of the instrument. The notional amount is used to measure interest to be paid or received and does not represent the exposure to credit loss. The purpose of the

 

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swap and cap is to limit our exposure to increases in interest rates on the notional amount of bank borrowings over the term of the cap and swap. The swap is based on a $20.0 million notional amount at a rate of 4.59% and the cap is based on a $20.0 million notional amount at a rate of 4.50%.

The interest rate swap and cap are recorded at fair value, based on an amount estimated by Merrill Lynch Capital, which represents the amount that Merrill Lynch Capital would have paid us at January 1, 2006 if the swap and cap had been terminated at that date. The combined net fair value at January 1, 2006 is $502,000, which is included in our consolidated balance sheet in noncurrent assets. Effective with the repayment of our debt on December 14, 2005, the expected cash flows that the swap and cap were designated to hedge against were no longer probable. As a result, the swap and the cap are no longer designated as cash flow hedges for accounting purposes. As a result, amounts previously recorded in accumulated other comprehensive income associated with changes in fair value of the hedges were reversed to interest expense. Changes in fair value of the swap and cap are recorded in the statement of operations subsequent to December 14, 2005. The Company recorded $502,000 as a reduction of interest expense in the fourth quarter of 2005.

This excerpt taken from the CITP 10-Q filed Nov 16, 2005.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Outstanding debt under our senior and term loan credit agreements at October 2, 2005 was $144.4 million. Interest on borrowings under these facilities is based on the prime rate or LIBOR plus a variable margin. Based on the outstanding balance at October 2, 2005, a change of 1% in the interest rate would cause a change in interest expense of approximately $1.44 million on an annual basis.

 

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We have historically been subject to market risk on all or a part of our borrowings under bank credit lines, which have variable interest rates. Effective February 22, 2005, we entered into an interest rate swap and an interest rate cap. The swap agreement and cap agreement are contracts to effectively exchange variable interest rate payments for fixed rate payments over the life of the instrument. The notional amount is used to measure interest to be paid or received and does not represent the exposure to credit loss. The purpose of the swap and cap is to limit our exposure to increases in interest rates on the notional amount of bank borrowings over the term of the swap and cap. The swap is based on a $20.0 million notional amount at a rate of 4.59% and the cap is based on a $20.0 million notional amount at a rate of 4.50%.

 

The interest rate swap and cap are recorded at fair value, based on an amount estimated by Merrill Lynch Capital, which represents the amount that Merrill Lynch Capital would have paid us at October 2, 2005 if the swap and cap had been terminated at that date. The combined net fair value at October 2, 2005 is $324,000, which is included in our consolidated balance sheet in noncurrent assets, with an offset to accumulated other comprehensive income.

 

This excerpt taken from the CITP 10-Q filed Aug 17, 2005.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Outstanding debt under our senior and term loan credit agreements at July 3, 2005 was $143.0 million. Interest on borrowings under these facilities is based on the prime rate or LIBOR plus a variable margin. Based on the outstanding balance at July 3, 2005, a change of 1% in the interest rate would cause a change in interest expense of approximately $1.43 million on an annual basis.

 

We have historically been subject to market risk on all or a part of our borrowings under bank credit lines, which have variable interest rates. Effective February 22, 2005, we entered into an interest rate swap and an interest rate cap. The swap agreement and cap agreement are contracts to effectively exchange variable interest rate payments for fixed rate payments over the life of the instrument. The notional amount is used to measure interest to be paid or received and does not represent the exposure to credit loss. The purpose of the swap and cap is to limit our exposure to increases in interest rates on the notional amount of bank borrowings over the term of the swap and cap. The swap is based on a $20.0 million notional amount at a rate of 4.59% and the cap is based on a $20.0 million notional amount at a rate of 4.50%.

 

The interest rate swap and cap are recorded at fair value, based on an amount estimated by Merrill Lynch Capital, which represents the amount that Merrill Lynch Capital would have paid us at July 3, 2005 if the swap and cap had been terminated at that date. The combined net fair value at July 3, 2005 is $4,000, which is included in our consolidated balance sheet in noncurrent assets, with an offset to accumulated other comprehensive income.

 

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This excerpt taken from the CITP 10-Q filed May 6, 2005.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Outstanding debt under our senior and term loan credit agreements at April 3, 2005 was $148.4 million. Interest on borrowings under these facilities is based on the prime rate or LIBOR plus a variable margin. Based on the outstanding balance at April 3, 2005, a change of 1% in the interest rate would cause a change in interest expense of approximately $1.48 million on an annual basis.

 

We have historically been subject to market risk on all or a part of our borrowings under bank credit lines, which have variable interest rates. Effective February 22, 2005, we entered into an interest rate swap and an interest rate cap. The swap agreement and cap agreement are contracts to effectively exchange variable interest rate payments for fixed rate payments over the life of the instrument. The notional amount is used to measure interest to be paid or received and does not represent the exposure to credit loss. The purpose of the swap and cap is to limit our exposure to increases in interest rates on the notional amount of bank borrowings over the term of the swap and cap. The swap is based on a $20.0 million notional amount at a rate of 4.59%, and the cap is based on a $20.0 million notional amount at a rate of 4.50%.

 

The interest rate swap and cap are recorded at fair value, based on an amount estimated by Merrill Lynch Capital, which represents the amount that Merrill Lynch Capital would have paid us at April 3, 2005 if the swap and cap had been terminated at that date. The combined net fair value at April 3, 2005 is $319,000, which is included in our consolidated balance sheet in noncurrent assets, with an offset to accumulated other comprehensive income.

 

This excerpt taken from the CITP 10-K filed Apr 1, 2005.

Quantitative and Qualitative Disclosures About Market Risk

 

Outstanding debt under our senior and term loan credit agreements at January 2, 2005 was $140.1 million. Interest on borrowings under these facilities is based on the prime rate or LIBOR plus a variable margin. Based on the outstanding balance at January 2, 2005, a change of 1% in the interest rate would cause a change in interest expense of approximately $1.4 million on an annual basis.

 

Effective February 22, 2005, we entered into an interest rate swap and an interest rate cap that together effectively convert $40.0 million of variable rate debt to modified fixed rate debt through September 30, 2009, thus potentially reducing the impact of changes in interest rates on future interest expense. The swap and the cap are designated as cash flow hedges and, as such, are carried at fair value. The swap is based on a $20.0 million notional amount at a rate of 4.59%, and the cap is based on a $20.0 million notional amount at a rate of 4.50%.

 

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