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Long-Term Debt | 12 Months Ended
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May 30, 2013
Debt Disclosure [Abstract] |
Long-Term Debt |
5. Long-Term Debt Long-term debt is summarized as follows:
|  | May 30, 2013 |  | May 31, 2012 |
|  | (in thousands, except payment data) |
Mortgage notes |  | $ | 71,747 |  | $ | 57,207 |
Senior notes |  |  | 60,649 |  |  | 71,753 |
Unsecured term note due February 2025, with monthly principal and interest payments of $39,110, bearing interest at 5.75% |  |  | 4,002 |  |  | 4,234 |
Revolving credit agreement |  |  | 57,000 |  |  | 71,000 |
Unsecured term loan |  |  | 49,375 |  |  | — |
|  |  | 242,773 |  |  | 204,194 |
Less current maturities |  |  | 11,193 |  |  | 97,918 |
|  | $ | 231,580 |  | $ | 106,276 |
The mortgage notes, both fixed rate and adjustable, bear interest from 3.0% to 5.9% at May 30, 2013, and mature in fiscal years 2015 through 2043. The mortgage notes are secured by the related land, buildings and equipment. During the third quarter of fiscal 2013, the Company refinanced the debt related to The Skirvin Hilton hotel in Oklahoma City (the Company owns a 60% interest in this hotel). In conjunction with that refinancing, approximately $9,753,000 of debt originally issued as part of a new markets tax credit structure was cancelled in December 2012 after certain time-related conditions related to the tax credits were met. As a result, the Company recognized income from the extinguishment of debt of $6,008,000 during the third quarter of fiscal 2013, representing cancellation of the $9,753,000 of debt less approximately $3,745,000 of deferred fees related to the issuance of the debt. This extinguishment of debt income did not impact the Company’s reported net earnings attributable to The Marcus Corporation because, pursuant to the terms of the operating agreement with the Company’s 40% joint venture partner, the Company allocated 100% of this income to the noncontrolling interest. The Company also refinanced a $15,093,000 mortgage note related to this hotel and replaced it with a new $14,350,000 mortgage note that extended the maturity date an additional three years, with an option to extend the maturity date for an additional two one-year periods. The $60,649,000 of senior notes maturing in 2014 through 2020 require annual principal payments in varying installments and bear interest payable semi-annually at fixed rates ranging from 5.89% to 6.82%, with a weighted-average fixed rate of 6.45% and 6.47% at May 30, 2013 and May 31, 2012, respectively. The Company has the ability to issue commercial paper through an agreement with a bank, up to a maximum of $35,000,000. The agreement requires the Company to maintain unused bank lines of credit at least equal to the principal amount of outstanding commercial paper. During fiscal 2013, the Company replaced its existing $175,000,000 credit facility with a new five-year $225,000,000 credit agreement. The new credit agreement includes a five-year, $50,000,000 term loan and a $175,000,000 revolving credit facility and matures in January 2018. There were borrowings of $57,000,000 outstanding on the revolving credit facility bearing interest at LIBOR plus a margin which adjusts based on the Company’s borrowing levels, effectively 1.425% at May 30, 2013. The term loan had a balance of $49,375,000 at May 30, 2013, requires quarterly principal payments in varying installments, bears interest at LIBOR plus a margin, which also adjusts based on the Company’s borrowing levels, and was 1.625% at May 30, 2013. The revolving credit facility requires an annual facility fee of 0.20% on the total commitment. Based on borrowings outstanding, availability under the line at May 30, 2013, totaled $118,000,000. The Company’s loan agreements include, among other covenants, maintenance of certain financial ratios, including a debt-to-capitalization ratio and a fixed charge coverage ratio. The Company is in compliance with all financial debt covenants at May 30, 2013. Scheduled annual principal payments on long-term debt for the years subsequent to May 30, 2013, are:
Fiscal Year |  | (in thousands) |
2014 |  | $ | 11,193 |
2015 |  |  | 27,723 |
2016 |  |  | 31,671 |
2017 |  |  | 42,671 |
2018 |  |  | 99,305 |
Thereafter |  |  | 30,210 |
|  | $ | 242,773 |
Interest paid, net of amounts capitalized, in fiscal 2013, 2012, and 2011 totaled $9,093,000, $9,177,000, and $10,221,000, respectively. The Company utilizes derivatives principally to manage market risks and reduce its exposure resulting from fluctuations in interest rates. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions. The Company entered into an interest rate swap agreement on February 28, 2013 covering $25,000,000 of floating rate debt, which expires January 22, 2018, and requires the Company to pay interest at a defined rate of 0.96% while receiving interest at a defined variable rate of one-month LIBOR (0.25% at May 30, 2013). The Company recognizes derivatives as either assets or liabilities on the consolidated balance sheets at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. Derivatives that do not qualify for hedge accounting must be adjusted to fair value through earnings. The Company’s interest rate swap agreement is considered effective and qualifies as a cash flow hedge. For derivatives that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. As of May 30, 2013, the interest rate swap was considered effective and had no effect on earnings. The notional amount of the swap was $25,000,000 and the fair value of the interest rate swap was $30,000 as of May 30, 2013, and was included in other (long-term assets). The Company does not expect the interest rate swap to have any material effect on earnings within the next 12 months. From February 1, 2008 through February 1, 2011, the Company had an interest rate swap agreement covering $25,170,000 of floating rate debt, which required the Company to pay interest at a defined rate of 3.24% while receiving interest at a defined variable rate of one-month LIBOR. The increase in fair value of the interest rate swap of $488,000 ($293,000 net of tax) was included in other comprehensive loss in fiscal 2011. The notional amount of the swap was $25,170,000 throughout the life of the swap. On February 29, 2008, the Company also entered into an interest rate swap agreement covering $25,000,000 of floating rate debt, which required the Company to pay interest at a defined rate of 3.49% while receiving interest at a defined variable rate of three-month LIBOR. The interest rate swap agreement was considered effective and qualified as a cash flow hedge. On March 19, 2008, the Company terminated the swap, at which time cash flow hedge accounting ceased. The fair value of the swap on the date of termination was a liability of $567,000 ($338,000 net of tax). In fiscal 2013, 2012 and 2011, the Company reclassified $99,000 ($58,000 net of tax), $113,000 ($68,000 net of tax) and $113,000 ($68,000 net of tax), respectively from accumulated other comprehensive loss to interest expense.

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 22 -Article 5 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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