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Note 8 - Real Estate Notes Payable and Revolving Credit Facility
9 Months Ended
Aug. 27, 2011
Debt Disclosure [Text Block]
8. Real Estate Notes Payable and Revolving Credit Facility

Certain of our retail real estate properties have been financed through commercial mortgages with interest rates ranging from 6.73% to 8.21%. These mortgages are collateralized by the respective properties with net book values totaling approximately $8,473 and $21,721 at August 27, 2011 and November 27, 2010, respectively. The current portion of these mortgages, $1,955 and $9,521 as of August 27, 2011 and November 27, 2010, respectively, has been included as a current liability in the accompanying condensed consolidated balance sheets. The long-term portion, $4,181 and $4,295 as of August 27, 2011 and November 27, 2010, respectively, is presented as real estate notes payable in the condensed consolidated balance sheets.  At the end of the first quarter of 2011, we entered into Discounted Payoff Agreements (“DPOs”) with the lenders on two mortgages which were subsequently paid off during the second quarter of 2011. Under the terms of these DPOs the remaining balance owed was reduced, resulting in a $436 gain on the settlement of these mortgages.  In addition, at the end of the third quarter of 2011, we entered into a DPO with another lender on one mortgage which was subsequently paid off during the first part of the fourth quarter of 2011 for $1,800.  Under the terms of this DPO the remaining balance owed was reduced, resulting in an $869 gain on the settlement of the mortgage. The gains of $869 and $1,305 for the three and nine months ended August 27, 2011, respectively, are included in other income (loss), net, in our condensed consolidated statements of operations and retained earnings.

The fair value of these mortgages was $5,836 and $13,556 at August 27, 2011 and November 27, 2010, respectively.  In determining the fair value the Company utilized current market interest rates for similar instruments.  The inputs into these fair value calculations reflect our market assumptions and are not observable.  Consequently, the inputs are considered to be Level 3 as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurements and Disclosures. See Note 14.

With our current level of liquidity, we have substantially reduced the size of our line of credit with our bank.  On July 5, 2011, we entered into a temporary renewal agreement with our bank for a $10,000 revolving line of credit that matured September 5, 2011.  On September 28, 2011, we received a commitment letter from our bank offering a $3,000 line of credit which will be used primarily to back our outstanding letters of credit. This new credit facility will contain covenants requiring us to maintain certain key financial ratios, however there will be no requirement to pledge assets as collateral.

At August 27, 2011, we had $3,321 outstanding under standby letters of credit.