Long-Term Debt

6 Months Ended

Jun. 02, 2012

Long-Term Debt

Long-Term Debt

9.     Long-Term Debt

Long-term debt includes:

	June 2, 2012			December 3, 2011
Nonrecourse mortgages:
6.08%, due January 1, 2013	$	6,799		$	6,926
6.30%, due May 1, 2014	365			453
5.73%, due August 1, 2015	19,179			19,368
8.13%, due April 1, 2016	4,105			4,232
7.0%, due October 1, 2017	6,110			6,220
Variable rate mortgage, due February 1, 2019*	11,495			11,609
Variable rate mortgage, due August 1, 2019*	8,100			8,176
5.25%, due January 28, 2020	4,077			4,151
Total nonrecourse mortgages	60,230			61,135
Revolving line of credit	—			—
Capital leases	87			46
Total	60,317			61,181
Less: current portion	(1,683		)	(1,700		)
Total long-term debt	$	58,634		$	59,481

* Griffin entered into interest rate swap agreements effectively to fix the interest rates on these loans (see below).

As of June 2, 2012 Griffin was a party to two interest rate swap agreements related to nonrecourse mortgages on certain of its real estate assets.  Griffin accounts for both of its interest rate swap agreements as effective cash flow hedges (see Note 4).  No ineffectiveness on the cash flow hedges was recognized as of June 2, 2012 and none is anticipated over the term of the agreements.  Amounts in other comprehensive income (loss) will be reclassified into interest expense over the term of the swap agreements to achieve fixed rates on each mortgage.  Neither of the interest rate swap agreements contains any credit risk related contingent features.  In the 2012 six month period, Griffin recognized a loss (included in other comprehensive income) of $553, before taxes, and in the 2011 six month period, Griffin recognized a gain (included in other comprehensive income) of $188, before taxes, on its interest rate swap agreements.  The amounts of loss recognized on the effective portion of the interest rate swap agreements were as follows:

	For the 13 Weeks Ended,						For the 26 Weeks Ended,
	June 2, 2012			May 28, 2011			June 2, 2012			May 28, 2011
Loss on swap agreements	$	(163	)	$	(165	)	$	(329	)	$	(335	)

As of June 2, 2012, $598 is expected to be reclassified over the next twelve months from other comprehensive income (loss) to interest expense.  As of June 2, 2012, the liability for Griffin’s interest rate swap agreements was $2,968 and is included in other noncurrent liabilities on Griffin’s consolidated balance sheet.

On June 15, 2012, Griffin and two of its wholly-owned subsidiaries entered into the Third Modification Agreement (the “Modification Agreement”) to the mortgage loan due January 1, 2013 with Webster Bank (the “Webster Mortgage”).  The Modification Agreement extends the maturity of the Webster Mortgage to October 2, 2017.  In accordance with the Modification Agreement, the interest rate under the Webster Mortgage, which currently is fixed at 6.08%, will change, effective October 1, 2012, to a floating rate of the one month LIBOR plus 2.75%.  In anticipation of entering into the Modification Agreement, on June 7, 2012, Griffin entered into an interest rate swap agreement with Webster Bank to effectively fix the interest rate on the Webster Mortgage at 3.86% from October 1, 2012 through the maturity of the Webster Mortgage.  Pursuant to the Modification Agreement, effective on October 1, 2012, principal payments on the Webster Mortgage will be based on a twenty-five year amortization schedule.  The Webster Mortgage is collateralized by Griffin Land’s two multi-story office buildings in Windsor, Connecticut.  The Modification Agreement did not alter the collateral for the Webster Mortgage.