Note 8 - Real Estate Notes Payable and Bank Credit Facility

9 Months Ended

Aug. 25, 2012

8. Real Estate Notes Payable and Bank Credit Facility

Real Estate Notes Payable

The real estate notes payable are summarized as follows:

	August 25, 2012			November 26, 2011
Real estate notes payable	$	3,714		$	3,864
Less:
Current portion of real estate notes payable		(212	)		(202	)
	$	3,502		$	3,662

Certain of our retail real estate properties have been financed through commercial mortgages with interest rates of 6.73%. These mortgages are collateralized by the respective properties with net book values totaling approximately $6,431 and $6,558 at August 25, 2012 and November 26, 2011, respectively. The portion of these mortgages due within one year, $212 and $202 as of August 25, 2012 and November 26, 2011, respectively, has been presented as current portion of real estate notes payable in the accompanying condensed consolidated balance sheets. The long-term portion, $3,502 and $3,662 as of August 25, 2012 and November 26, 2011, respectively, is presented as real estate notes payable in the condensed consolidated balance sheets. During the nine months ended August 27, 2011, we entered into Discounted Payoff Agreements (“DPOs”) with the lenders on three mortgages which were subsequently paid off during fiscal 2011. Under the terms of these DPOs, the remaining balance owed was reduced, resulting in a $1,305 gain on the settlement of these mortgages, of which $869 was recognized during the quarter ended August 27, 2011. This gain is included in other income (loss), net, in our condensed consolidated statement of income and retained earnings for the three and nine months ended August 27, 2011.

The fair value of these mortgages was $3,720 and $3,804 at August 25, 2012 and November 26, 2011, respectively. In determining the fair value, we 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.

Bank Credit Facility

On December 9, 2011, we entered into a new credit agreement with our bank which extends a $3,000 line of credit which is used primarily to back our outstanding letters of credit. This credit facility contains covenants requiring us to maintain certain key financial ratios, however, there is no requirement to pledge assets as collateral. We were in compliance with all covenants under the agreement and expect to remain in compliance for the foreseeable future.

At August 25, 2012 and November 26, 2011, we had $1,966 and $2,318, respectively, outstanding under standby letters of credit, leaving availability under the line of $1,034 and $682, respectively.

See Note 19 – Subsequent Events, regarding a commitment by our bank to increase our line of credit.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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