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FORM 10-K
The Credit Agreement contains certain covenants, including limitations on indebtedness, a minimum consolidated fixed charge coverage
ratio of 2.50 times, and a maximum consolidated leverage ratio of 3.00 times. The consolidated leverage ratio includes a calculation of
adjusted debt to earnings before interest, taxes, depreciation, amortization, rent and non-cash share-based compensation expense
("EBITDAR"). Adjusted debt includes outstanding debt, outstanding stand-by letters of credit and similar instruments, six-times rent
expense and excludes any premium or discount recorded in conjunction with the issuance of long-term debt. In the event that we should
default on any covenant contained within the Credit Agreement, certain actions may be taken, including, but not limited to, possible
termination of commitments, immediate payment of outstanding principal amounts plus accrued interest and other amounts payable under
the Credit Agreement and litigation from our lenders. We had a consolidated fixed charge coverage ratio of 5.99 times and 5.36 times
as of December 31, 2015 and 2014, respectively, and a consolidated leverage ratio of 1.52 times and 1.72 times as of December 31, 2015
and 2014, respectively, remaining in compliance with all covenants related to the borrowing arrangements. Under our current financing
plan, we have targeted an adjusted debt to EBITDAR ratio range of 2.00 times to 2.25 times.
The table below outlines the calculations of the consolidated fixed charge coverage ratio and consolidated leverage ratio covenants, as
defined in the Credit Agreement governing the Revolving Credit Facility, for the years ended December 31, 2015 and 2014 (dollars in
thousands):
For the Year Ended
December 31,
2015 2014
GAAP net income $ 931,216 $ 778,182
Add: Interest expense 57,129 53,290
Rent expense 273,259 263,028
Provision for income taxes 529,150 444,000
Depreciation expense 203,388 193,418
Amortization expense 6,868 787
Non-cash share-based compensation 21,899 23,095
Non-GAAP EBITDAR $ 2,022,909 $ 1,755,800
Interest expense $ 57,129 $ 53,290
Capitalized interest 7,423 11,480
Rent expense 273,259 263,028
Total fixed charges $ 337,811 $ 327,798
Consolidated fixed charge coverage ratio 5.99 5.36
GAAP debt (1) $ 1,390,018 $ 1,388,422
Add: Stand-by letters of credit 37,536 47,861
Discount on senior notes 2,877 3,385
Debt issuance costs 7,105 8,218
Six-times rent expense 1,639,554 1,578,168
Non-GAAP adjusted debt $ 3,077,090 $ 3,026,054
Consolidated leverage ratio 1.52 1.72
(1) Prior period amount has been reclassified to conform to current period presentation, due to the Company's adoption of new accounting standards
during the fourth quarter ended December 31, 2015. See Note 1 "Summary of Significant Accounting Policies" to the Consolidated Financial
Statements for more information.
Free cash flow, the consolidated fixed charge coverage ratio and consolidated leverage ratio discussed and presented in the tables above
are not derived in accordance with United States generally accepted accounting principles ("GAAP"). We do not, nor do we suggest
investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, GAAP financial information. We
believe that the presentation of our free cash flow, consolidated fixed charge coverage ratio and consolidated leverage ratio provides
meaningful supplemental information to both management and investors and reflects the required covenants under our Credit Agreement.
We include these items in judging our performance and believe this non-GAAP information is useful to investors as well. Material