HSIC » Topics » Interest Rate Swap Agreements

These excerpts taken from the HSIC 10-K filed Feb 24, 2009.

Interest Rate Swap Agreements

 

We have fixed rate senior notes of $130.0 million at 6.9% and $40.0 million at 6.7%. During 2003, we entered into interest rate swap agreements to exchange these fixed interest rates for variable interest rates. The variable rates are comprised of LIBOR plus spreads and reset on the interest due dates for the senior notes. As a result of these interest rate swap agreements, as well as our existing variable rate credit lines and loan agreements, we are exposed to risk from changes in interest rates. A hypothetical 100 basis point increase in interest rates would increase our annual interest expense by approximately $1.7 million.

 

As of December 27, 2008, the fair value of our interest rate swap agreements recorded in other current and non-current assets in our consolidated balance sheet was $2.5 million, which represented the amount that would be received upon unwinding the interest rate swap agreements based on market conditions at that time. Changes in the fair value of these interest rate swap agreements are reflected as an adjustment to current and non-current assets or liabilities with an offsetting adjustment to the carrying value of the $170.0 million notes as such hedges are deemed fully effective.

 

Interest Rate Swap Agreements



 



We have fixed rate senior notes of $130.0 million at 6.9% and $40.0 million at 6.7%. During 2003, we entered into interest rate swap agreements to exchange these fixed interest rates for variable interest rates. The variable rates are comprised of LIBOR plus spreads and reset on the interest due dates for the senior notes. As a result of these interest rate swap agreements, as well as
our existing variable rate credit lines and loan agreements, we are exposed to risk from changes in interest rates. A hypothetical 100 basis point increase in interest rates would increase our annual interest expense by approximately $1.7 million.



 



As of December 27, 2008, the fair value of our interest rate swap agreements recorded in other current and non-current assets in our consolidated balance sheet was $2.5 million, which represented the amount that would be received upon unwinding the interest rate swap agreements based on market conditions at that time. Changes in the fair value of these interest rate swap agreements are
reflected as an adjustment to current and non-current assets or liabilities with an offsetting adjustment to the carrying value of the $170.0 million notes as such hedges are deemed fully effective.



 



EXCERPTS ON THIS PAGE:

10-K (2 sections)
Feb 24, 2009
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