Einstein Bros 2013 Annual Report Download - page 56

10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312514073832/d629623d10k.htm[9/11/2014 10:05:27 AM]
without penalty or premium upon prior written notice.
The Senior Credit Facility is secured by a first priority security interest in all the assets of the Company, including a pledge of 100% of the
Company’ s interest in all shares of capital stock (or other ownership or equity interests) of each material subsidiary.
The weighted-average interest rate under the Senior Credit Facility, excluding the amortization of debt issuance costs and other fees, was
3.4% and 3.8% for fiscal 2012 and fiscal 2013, respectively. The weighted-average interest rate under the Senior Credit Facility, excluding the
amortization of debt issuance costs and other fees, was 3.1% on December 31, 2013. Excluding the amortization of debt issuance costs and other
fees, the Company incurred $2.5 million, $2.5 million and $4.8 million of interest expense in fiscal 2011, 2012 and 2013, respectively. As of
December 31, 2013, the Company was in compliance with all financial and operating covenants.
The Company’ s obligations on its Senior Credit Facility are as follows:
Fiscal year (in thousands)
2014 $ 3,750
2015 6,875
2016 11,875
2017 10,000
2018 74,500
$ 107,000
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Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Debt Issuance Costs
Debt issuance costs, which are reported as a component of other current assets and other assets, are summarized as follows:
January 1, December 31,
2013 2013
(in thousands)
Debt issuance costs-current $ 570 $ 650
Debt issuance costs-long-term 2,370 2,316
Total $ 2,940 $ 2,966
The Company capitalized an additional $1.6 million of debt issuance costs in connection with amending and restating the Senior Credit
Facility on December 6, 2012 and an additional $0.6 million of debt issuance costs in connection with the amendment of the Senior Credit Facility
on June 27, 2013. Amortization expense relating to debt issuance costs was $0.4 million, $0.5 million and $0.6 million for the fiscal years 2011,
2012 and 2013, respectively, and is included in interest expense in the accompanying consolidated statements of income and comprehensive
income.
9. DERIVATIVES
For fiscal 2012, unrealized losses of approximately $51,000 relating to expiring cash flow hedges, net of taxes, were realized as interest
expense on the Company’ s consolidated statements of income and comprehensive income.
On March 4, 2013, the Company entered into an interest rate swap agreement relating to its Senior Credit Facility for two years, effective
March 7, 2013. The Company will be required to make payments based on a fixed interest rate of 0.395% calculated on an initial notional amount
of $50.0 million. In exchange, the Company will receive interest on $50.0 million notional amount at a variable rate. The variable rate interest the
Company will receive is based on the one-month London InterBank Offered Rate (“LIBOR”). The net effect of the interest rate swap agreement
will be to fix the interest rate on $50.0 million of the Company’ s Term Loan at 0.395% plus an applicable margin (as defined by the Senior Credit
Facility). The Company has determined that this interest rate swap agreement qualifies as a cash flow hedge.
On December 10, 2013, the Company entered into an interest rate swap agreement relating to its Senior Credit Facility effective March 9,
2015 through June 6, 2018. The Company will be required to make payments based on a fixed interest rate of 1.535% calculated on an initial
notional amount of $88.1 million. In exchange, the Company will receive interest on $88.1 million notional amount at a variable rate. The variable
rate interest the Company will receive is based on the one-month LIBOR. The net effect of the interest rate swap agreement will be to fix the
interest rate on $88.1 million of the Company’ s Term Loan at 1.535% plus an applicable margin (as defined by the Senior Credit Facility). The