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These excerpts taken from the DCP 10-K filed Jun 10, 2008. Interest
Rate Risk
We have interest rate risk relating to changes in interest rates
on our variable rate debt. Our policy is to manage interest rate
exposure through the use of a combination of fixed and floating
rate debt instruments. Borrowings under the Senior Secured
Credit Facility bear interest at a rate per annum equal to, at
our option, either (1) the Prime Rate or (2) LIBOR,
plus an applicable margin determined by reference to the
leverage ratio, as set forth in the debt agreement. The
applicable margins for the Prime Rate and LIBOR as of
March 28, 2008 were 1% and 2%, respectively. As of
March 28, 2008, we had $593.2 million of indebtedness,
including the senior subordinated notes and excluding accrued
interest thereon, of which $301.1 million was secured. On
the same date, we had approximately $96.7 million available
under our Senior Secured Credit Facility (which gives effect to
$23.3 million of outstanding letters of credit). Each
quarter point change in interest rates results in approximately
$0.8 million change in annual interest expense on the term
loan.
The table below provides information about our fixed rate and
variable rate long-term debt agreements, as of March 28,
2008.
Table of Contents
The fair value of our term loan borrowings under the Senior
Secured Credit Facility is approximately $281.6 million and
is based on quoted market values. The fair value of senior
subordinated notes is approximately $305.2 million based on
their quoted market value. The above table does not give effect
to $23.3 million of outstanding letters of credit as of
March 28, 2008.
During fiscal 2008, in order to mitigate interest rate risk
related to the term loans, the Company entered into interest
rate swap agreements with notional amounts totaling
$275 million. The interest rate swaps effectively fixed the
interest rate at 6.96%, including applicable margin of (2% at
March 28, 2008), on the first $275 million of our debt
indexed to LIBOR. The notional principal of $75 million is
protected through September 2008 and the remaining
$200 million is protected through May 2010. The Company
concluded that the interest rate swaps qualify as cash flow
hedges under the provisions of SFAS No. 133,
“Accounting for Derivative Instruments and Hedging
Activities.”
Interest Rate Risk We have interest rate risk relating to changes in interest rates on our variable rate debt. Our policy is to manage interest rate exposure through the use of a combination of fixed and floating rate debt instruments. Borrowings under the Senior Secured Credit Facility bear interest at a rate per annum equal to, at our option, either (1) the Prime Rate or (2) LIBOR, plus an applicable margin determined by reference to the leverage ratio, as set forth in the debt agreement. The applicable margins for the Prime Rate and LIBOR as of March 28, 2008 were 1% and 2%, respectively. As of March 28, 2008, we had $593.2 million of indebtedness, including the senior subordinated notes and excluding accrued interest thereon, of which $301.1 million was secured. On the same date, we had approximately $96.7 million available under our Senior Secured Credit Facility (which gives effect to $23.3 million of outstanding letters of credit). Each quarter point change in interest rates results in approximately $0.8 million change in annual interest expense on the term loan. The table below provides information about our fixed rate and variable rate long-term debt agreements, as of March 28, 2008.
Table of ContentsThe fair value of our term loan borrowings under the Senior Secured Credit Facility is approximately $281.6 million and is based on quoted market values. The fair value of senior subordinated notes is approximately $305.2 million based on their quoted market value. The above table does not give effect to $23.3 million of outstanding letters of credit as of March 28, 2008. During fiscal 2008, in order to mitigate interest rate risk related to the term loans, the Company entered into interest rate swap agreements with notional amounts totaling $275 million. The interest rate swaps effectively fixed the interest rate at 6.96%, including applicable margin of (2% at March 28, 2008), on the first $275 million of our debt indexed to LIBOR. The notional principal of $75 million is protected through September 2008 and the remaining $200 million is protected through May 2010. The Company concluded that the interest rate swaps qualify as cash flow hedges under the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This excerpt taken from the DCP 10-K filed Jun 18, 2007. Interest Rate Risk We have interest rate risk relating to changes in interest rates on our variable rate debt. Our policy is to manage interest rate exposure through the use of a combination of fixed and floating rate debt instruments. Borrowings under the Senior Secured Credit Facility bear interest at a rate per annum equal to, at our option, either (1) the Prime Rate or (2) LIBOR, plus an applicable margin determined by reference to the leverage ratio, as set forth in the debt agreement. The applicable margins for the Prime Rate and LIBOR as of March 30, 2007 were 1.25% and 2.25%, respectively. As of March 30, 2007, we had $631.0 million of indebtedness, including the senior subordinated notes and excluding interest thereon, of which $339.0 million was secured. On the same date, we had approximately $81.9 million available under our Senior Secured Credit Facility (which gives effect to $21.1 million of outstanding letters of credit). Each quarter point change in interest rates results in approximately $0.8 million change in annual interest expense on the term loan and, assuming the entire revolving loan was drawn, an approximately $0.3 million change in annual interest expense on the revolving loan. The table below provides information about our fixed rate and variable rate long-term debt agreements, as of March 30, 2007.
The carrying amount of our borrowings under the Senior Secured Credit Facility approximates fair value based on the variable interest rates of this debt. The fair value of senior subordinated notes is based on their quoted market value. The above table does not give effect to $21.1 million of outstanding letters of credit as of March 30, 2007. In April 2007, in order to mitigate interest rate risk related to the term loans, the Company entered into interest rate hedge agreements with notional amounts totaling $200.0 million, whereby the Company effectively fixed the interest rate at 4.975%, plus an applicable margin (2.25% at March 30, 2007) on the first $200.0 million of its debt indexed to LIBOR through May 22, 2010. The Company concluded that the interest rate swaps qualify as cash flow hedges under the provisions of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." | EXCERPTS ON THIS PAGE:
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