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Interest Rate Risk
−Removed: We are exposed to market risk from changes in the interest rate on our debt, which bears interest, at our option, at rates based on LIBOR or a base rate, plus, for each rate, a margin determined in accordance with the terms of the 2018 Credit Agreement.
−Removed: For LIBOR loans, the margin is in the range of 1.25% and 2.25%.
−Removed: As of September 23, 2020, we had outstanding borrowings of $83.8 million under our 2018 Revolver, $8.4 million of letters of credit in support of our insurance programs, and the applicable margin on outstanding borrowings under 2018 Revolver was 1.5%.
−Removed: In addition, there is currently uncertainty around whether LIBOR will continue to exist after 2021.
−Removed: If LIBOR ceases to exist, we may need to enter into an amendment to the 2018 Credit Agreement and we cannot predict what alternative index would be negotiated with our lenders.
−Removed: If our lenders have increased costs due to changes in LIBOR, we may experience potential increases in interest rates on our variable rate debt, which could adversely impact our interest expense, results of operations and cash flows.
−Removed: After giving effect to the $40.0 million of interest rate swaps described below, we effectively had $43.8 million of long-term debt subject to variations in interest rates as of September 23, 2020 and a one percent increase in the variable rate of interest would increase annual interest expense by $0.4 million.
+Added: We are exposed to market risk from changes in interest rates on our debt, which bears interest, at USD LIBOR plus a margin between 1.25% and 2.25%.
+Added: As of March 31, 2021, we had outstanding borrowings of $53.8 million under our 2018 Revolver, $8.4 million of letters of credit in support of our insurance programs, and the applicable margin on outstanding borrowings under 2018 Revolver was 1.5%.
+Added: In addition, LIBOR is expected to be phased out beginning after 2021.
+Added: Organizations are currently working on industry wide and company specific transition plans as it relates to financial and other derivative contracts exposed to LIBOR .
+Added: When LIBOR ceases to exist, we may need to enter into an amendment to the 2018 Credit Agreement and we cannot predict what alternative index would be negotiated with our lenders.
+Added: If future rates based upon a successor rate are higher than LIBOR rates as currently determined or if our lenders have increased costs due to changes in LIBOR, we may experience potential increases in interest rates on our variable rate debt, which could adversely impact our interest expense, results of operations and cash flows.
+Added: After giving effect to the $40.0 million of interest rate swaps described below, we effectively had $13.8 million of long-term debt subject to variations in interest rates as of March 31, 2021 and a one percent increase in the variable rate of interest would increase annual interest expense by $0.1 million.
We manage our interest rate risk through normal operating and financing activities and, when determined appropriate, through the use of derivative financial instruments.
−Removed: To balance our portfolio, we entered into an interest rate swap with a notional amount of $40.0 million, related to the outstanding borrowings under our 2018 Revolver.
−Removed: The interest rate swap was designated as a cash flow hedge and effectively converted a portion of our outstanding borrowings to a fixed rate of 1.31%, plus applicable margin, which is currently 1.5%.
+Added: To balance our portfolio, we entered into an interest rate swap during the year ended December 25, 2019 with a notional amount of $40.0 million, related to the outstanding borrowings under our 2018 Revolver.
+Added: The interest rate swap was designated as a cash flow hedge and effectively converted a portion of our outstanding borrowings to a fixed rate of 1.31%, plus applicable margin, which was 1.5% for the thirteen weeks ended March 31, 2021.
The interest rate swap matures in June 2023.
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We have a substantial number of hourly employees who are paid wage rates at or based on the applicable federal, state, or local minimum wage, and increases in the minimum wage will increase our labor costs.
−Removed: In general, we have been able to substantially offset cost increases resulting from inflation by increasing menu prices, managing menu mix, improving productivity, or making other adjustments.
+Added: In general, we have been able to substantially offset cost increases resulting from inflation
+Added: by increasing menu prices, managing menu mix, improving productivity, or making other adjustments.
We may not be able to offset cost increases in the future.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.