2018 SEP Reviewed Financial Statements

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) SOUTHEASTERN PRINTING COMPANY, INC. AND SUBSIDIARY December 31, 2018 (See Independent Accountant's Review Report) - 10 - NOTE I - LONG-TERM DEBT Following is a summary of long-term debt at December 31, 2018: Installment Note Payable, $786 per month including interest at 4.89% through July 2019, collateralized by a vehicle 5,284$ JPMorgan Chase Bank - Note Payable, $4,040 monthly principal payments plus interest equal to LIBOR plus 2.45% for 119 months with a balloon payment payment due November 29, 2026, collateralized by real estate and other specific assets of the Company 1,905,300 Peoples Capital Loan - Note Payable, $29,762 monthly prinicpal payments plus interest equal to LIBOR plus 2.40% through December 2023, collateralized by specific assets of the Company 1,785,714 3,696,298 Less principal due within one year 410,904 TOTAL LONG-TERM DEBT 3,285,394$ The Company's debt agreements contain certain financial covenants that require specific debt service coverage and leverage, and financial guarantees. In addition, the notes have restrictions on indebtedness, business combinations and other related items. As of December 31, 2018, the Company is in compliance with all covenants. Principal due on long-term debt for the five years following December 31, 2018 and thereafter is as follows: 2019 410,904$ 2020 408,038 2021 410,383 2022 412,798 2023 415,570 Thereafter 1,638,605 TOTAL 3,696,298$ The JPMorgan Chase Bank note bears interest at LIBOR plus 2.45%. However, the Company entered into an interest rate swap contract that effectively converts the interest rate on the note to 2.35% plus 2.45%. Under the swap contract, the Company pays interest at 2.45% and receives interest at LIBOR. The notional amount under the swap decreases as principal payments are made on the note so that the notional amount equals the principal outstanding under the note.