Papa Johns 2010 Annual Report Download - page 59

Download and view the complete annual report

Please find page 59 of the 2010 Papa Johns annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 110

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110

52
Liquidity and Capital Resources
Debt and credit arrangements consist of the following (in thousands):
2010 2009
Revolving line of credit 99,000$ 99,000$
Other 17 50
Total long-term debt 99,017$ 99,050$
In September 2010, we entered into a five-year, unsecured Revolving Credit Facility (“New Credit
Facility”) totaling $175.0 million that replaced a $175.0 million unsecured Revolving Credit Facility
(“Old Credit Facility”). Under the New Credit Facility, outstanding balances accrue interest at 100.0 to
175.0 basis points over the London Interbank Offered Rate (LIBOR) or other bank-developed rates, at
our option. The commitment fee on the unused balance ranges from 17.5 to 25.0 basis points. The
increment over LIBOR and the commitment fee are determined quarterly based upon the ratio of total
indebtedness to earnings before interest, taxes, depreciation and amortization (EBITDA), as defined by
the New Credit Facility. Outstanding balances under the Old Credit Facility accrued interest at 50.0 to
100.0 basis points over LIBOR or other bank developed rates, at our option. The commitment fee on the
unused balance ranged from 12.5 to 20.0 basis points.
Our New Credit Facility contains customary affirmative and negative covenants, including the following
financial covenants, as defined by the New Credit Facility (the covenants exclude the impact of
consolidating BIBP’s operations):
Permitted Ratio
Actual Ratio for the
Year Ended
December 26, 2010
Leverage Ratio Not to exceed 2.5 to 1.0 1.0 to 1.0
Interest Coverage Ratio Not less than 3.5 to 1.0 4.5 to 1.0
Our leverage ratio is defined as outstanding debt divided by consolidated EBITDA for the most recent
four fiscal quarters. Our interest coverage ratio is defined as the sum of consolidated EBITDA and
consolidated rental expense for the most recent four fiscal quarters divided by the sum of consolidated
interest expense and consolidated rental expense for the most recent four fiscal quarters. We were in
compliance with all covenants at December 26, 2010 and December 27, 2009.
Cash flow provided by operating activities was $89.1 million for the full-year 2010 as compared to
$100.1 million in 2009. The consolidation of BIBP increased cash flow from operations by
approximately $6.8 million in 2010 and $22.5 million in 2009 (as reflected in the net income and
deferred income taxes captions in the accompanying “Consolidated Statements of Cash Flows”).
Excluding the impact of the consolidation of BIBP, cash flow was $82.3 million in 2010, as compared to
$77.5 million in 2009, primarily due to higher net income.
Cash flow provided by operating activities increased to $100.1 million in 2009 from $73.2 million in
2008. The consolidation of BIBP increased cash flow from operations by approximately $22.5 million in
2009 and decreased cash flow from operations by approximately $10.5 million in 2008. Excluding the