Annual Rept 2015.publisher. full report

Frenchman’s Creek, Inc. and Subsidiary

Notes to Consolidated Financial Statements

Note 7.

Long-Term Debt and Line of Credit (Continued)

Estimated minimum principal payments required on this line of credit as of April 30, 2014 are as follows:

On May 26, 2010, the Association entered into, in conjunction with the new aforementioned non-revolving credit agreement, an interest rate swap agreement with the bank to limit the impact of changes in interest rates on the $3,300,000 line of credit. Under this agreement on January 1, 2011, the original notional principal amount of debt is $2,800,000, which reduces as debt principal payments are made, with a maturity of May 1, 2024. Under the agreement, the fixed interest rate on those borrowings is 4.00% and the floating rate on the borrowings is equal to the one-month LIBOR plus 2.0% (2.15% as of April 30, 2014). However, the expense to the Association under both the swap and the non-revolving credit agreement is fixed at 6% unless the Association elects to terminate the agreements before maturity. As of April 30, 2014 and 2013, the fair value of the interest rate swap agreement was a liability of $245,499 and $401,138, re- spectively, as estimated by the financial institution using a proprietary model, and is included on the statements of financial position. The Association has recognized a financing income of $155,639 and $6,906 for the years ended April 30, 2014 and 2013, respectively. Maintenance Contract: On July 1, 2008 the association renewed the landscape maintenance contract for a period of five years through June 30, 2013. The agreed cost was $131,796 per month through June 30, 2011 and $134,391 per month through June 30, 2013. In July 2013, the parties agreed to a cost of $174,767 per month through April 30, 2014. The new agreement included the extra expenses, previously paid separately, in the contract price and the year over year increase was 2.7%. The total expense related to this vendor for the year ended April 30, 2014 and 2013 was approximately $2,137,000 and $2,080,000, respectively, of which approximately $2,092,000 and $1,613,000 of expenses related to the contract. For the year ending June 2013 the difference between the contract and the total expense is the separately paid other expenses of $467,000. On May 2, 2014, the association renewed the landscape maintenance contract for a period of three years through April 30, 2017 at a cost of $179,166 per month through April 30, 2016 and $184,541 per month through April 30, 2017. The Association has two renewal options, as more fully described in the documents. Security Contract: On July 1, 2013, the Association entered into a renewable nine-year security contract. The fees for the security con- tract are based upon the actual hours worked at hourly rates as outlined in the contract. For the years ended April 30, 2014 and 2013, the security fee was approximately $1,981,000 and $2,024,000, respectively, of which approximately $1,868,000 and $1,889,000 was directly related to the contract with the remaining expense for additional security functions. Note 8. Commitments

2014/2015 Annual Report Page 41