Under Armour 2014 Annual Report Download - page 50

The credit agreement contains negative covenants that, subject to significant exceptions, limit our ability to
,
among other things, incur additional indebtedness, make restricted payments, pledge our assets as security, make
investments, loans, advances, guarantees and acquisitions, undergo fundamental changes and enter int
o
transactions with affiliates. We are also re
q
uired to maintain a ratio of consolidated EBITDA, as defined in the
credit agreement, to consolidated interest expense of not less than 3.
5
0 to 1.00 and we are not permitted to allow
the ratio of consolidated total indebtedness to consolidated EBITDA to be greater than 3.2
5
to 1.00. As of
December 31, 2014, we were in compliance with these ratios. In addition, the credit agreement contains events of
default that are customary for a facility of this nature, and includes a cross default provision whereby an event of
default under other material indebtedness, as defined in the credit agreement, will be considered an event of
default under the credit agreement
.
Borrowings under the credit agreement bear interest at a rate per annum equal to, at our option, either (a) an
alternate base rate, or (b) the adjusted LIBOR rate, plus in each case an applicable margin. The applicable margin
f
or loans will be adjusted by reference to the Pricing Grid based on the consolidated leverage ratio and ranges
between 1.00% to 1.2
5
% for adjusted LIBOR rate loans and 0.00% to 0.2
5
% for alternate base rate loans. The
interest rate under both term loans was 1.2% during the year ended December 31, 2014. No balance was
o
utstanding under our revolving credit facility as of December 31, 2014. Additionally, we pay a commitment fee
o
n the average daily unused amount of the revolving credit facility, a ticking fee on the undrawn amounts under
the delayed draw term loan and certain fees with respect to letters of credit. As of December 31, 2014, th
e
commitment fee was 12.
5
basis
p
oints.
We used
$
100.0 million of the proceeds from the
$
150.0 million term loan to repay the
$
100.0 million
o
utstanding under our revolving credit facility. We incurred and capitalized
$
1.7 million in deferred financin
g
costs in connection with the credit facility.
O
ther Long Term Debt
We have long term debt agreements with various lenders to finance the acquisition or lease of qualifying
capital investments. Loans under these agreements are collateralized by a first lien on the related assets acquired
.
At December 31, 2014, 2013 and 2012, the outstanding principal balance under these agreements was
$
2.0 million,
$
4.9 million and
$
11.9 million, respectively. Currently, advances under these agreements bea
r
interest rates which are fixed at the time of each advance. The weighted average interest rates on outstandin
g
borrowings were 3.1%, 3.3% and 3.7% for the years ended December 31, 2014, 2013 and 2012, respectively.
I
n December 2012, we entered into a
$
50.0 million recourse loan collateralized by the land, buildings an
d
tenant improvements comprising our corporate headquarters. The loan has a seven year term and maturity date of
December 2019. The loan bears interest at one month LIBOR plus a margin of 1.
5
0%, and allows for prepayment
without penalty. The loan includes covenants and events of default substantially consistent with the new credi
t
agreement discussed above. The loan also requires prior approval of the lender for certain matters related to th
e
p
roperty, including transfers of any interest in the property. As of December 31, 2014, 2013 and 2012, th
e
o
utstanding balance on the loan was
$
46.0 million,
$
48.0 million and
$
50.0 million, respectively. The weighte
d
average interest rate on the loan was 1.7% for the years ended December 31, 2014, 2013 and 2012.
I
nterest expense, net was
$
5.3 million,
$
2.9 million and
$
5.2 million for the years ended December 31,
2014, 2013 and 2012, respectively. Interest expense includes the amortization of deferred financing costs an
d
interest expense under the credit and long term debt facilities.
We monitor the financial health and stability of our lenders under the credit and other long term debt
f
acilities, however during any period of significant instability in the credit markets lenders could be negativel
y
impacted in their ability to perform under these facilities.
40