Long-Term Debt

9 Months Ended

Sep. 01, 2012

Long-Term Debt

Long-Term Debt

9.Long-Term Debt

Long-term debt includes:

	September 1, 2012			December 3, 2011
Nonrecourse mortgages:
6.30%, due May 1, 2014	$	335		$	453
5.73%, due August 1, 2015	19,115			19,368
8.13%, due April 1, 2016	4,024			4,232
7.0%, due October 1, 2017	6,073			6,220
Variable rate mortgage, due October 2, 2017*	6,756			6,926
Variable rate mortgage, due February 1, 2019*	11,455			11,609
Variable rate mortgage, due August 1, 2019*	8,074			8,176
5.25%, due January 28, 2020	4,090			4,151
Total nonrecourse mortgages	59,922			61,135
Revolving line of credit	—			—
Capital leases	80			46
Total	60,002			61,181
Less: current portion	(1,860		)	(1,700		)
Total long-term debt	$	58,142		$	59,481

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

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 originally 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 was fixed at 6.08% through September 30, 2012, changed, 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.  As of September 1, 2012, the principal balance of the Webster Mortgage was $6,756.

Griffin is a party to three interest rate swap agreements related to nonrecourse mortgages on certain of its real estate assets.  Griffin accounts for its interest rate swap agreements as effective cash flow hedges (see Note 4).  No ineffectiveness on the cash flow hedges was recognized as of September 1, 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.  The interest rate swap agreements do not contain any credit risk related contingent features.  In the 2012 and 2011 nine month periods, Griffin recognized losses (included in other comprehensive income) before taxes, of $781 and $878, respectively, 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 39 Weeks Ended,
	September 1, 2012			August 27, 2011			September 1, 2012			August 27, 2011
Loss on swap agreements	$	(166	)	$	(170	)	$	(495	)	$	(505	)

As of September 1, 2012, $654 is expected to be reclassified over the next twelve months from other comprehensive income (loss) to interest expense.  As of September 1, 2012, the liability for Griffin’s interest rate swap agreements was $3,196 and is included in other noncurrent liabilities on Griffin’s consolidated balance sheet.