Chili's 2005 Annual Report Download - page 49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
21
6. DEBT
Long-term debt consists of the following (in thousands):
2005 2004
5.75% notes................................................. $ 298,598 $ 298,449
Credit facilities.............................................. 62,900 —
Capital lease obligations (see Note 8) .......................... 35,022 35,926
Mortgage loan obligations.................................... 11,790 38,931
Convertible debt............................................. — 269,233
Senior notes ................................................ — 14,851
408,310 657,390
Less current installments ..................................... (1,805 ) (18,099)
$ 406,505 $ 639,291
In May 2004, the Company issued $300.0 million of 5.75% notes and received proceeds totaling
approximately $298.4 million prior to debt issuance costs. The Notes require semi-annual interest payments and
mature in June 2014.
The Company has credit facilities aggregating $375.0 million at June 29, 2005. A revolving credit facility of
$300.0 million bears interest at LIBOR (3.34% at June 29, 2005) plus a maximum of 1.5% (0.625% at
June 29, 2005) and expires in October 2009. At June 29, 2005, $15.0 million was outstanding under this facility.
The remaining credit facility is an uncommitted obligation giving the lenders the option not to extend funding
and bears interest based upon a negotiated rate (federal funds rate plus 0.5% or 3.75% as of June 29, 2005). At
June 29, 2005, $47.9 million was outstanding under the uncommitted facility. Unused credit facilities available to
the Company totaled $312.1 million at June 29, 2005. Obligations under the Company’s credit facilities, which
require short-term repayments, have been classified as long-term debt, reflecting the Company’s intent and
ability to refinance these borrowings through the existing credit facilities.
The unsecured senior notes required semi-annual interest payments at an annual rate of 7.8%. The
remaining principal balance of $14.9 million was paid in April 2005.
The mortgage loan obligations require monthly principal and interest payments, mature on various dates
through March 2020, and bear interest at rates ranging from 9.00% to 10.75% per year. The obligations are
collateralized by the underlying restaurant properties.
In October 2001, the Company issued $431.7 million of zero coupon convertible senior debentures (the
“Debentures”), maturing on October 10, 2021, and received proceeds totaling approximately $250.0 million prior
to debt issuance costs. The Debentures required no interest payments and were issued at a discount representing
a yield to maturity of 2.75% per annum. The Debentures became redeemable at the Company’s option on
October 10, 2004. On December 22, 2004, the Company exercised its right to redeem all of the Debentures.
Holders had the option to convert the Debentures into shares of the Company’s common stock or cash until the
close of business on January 20, 2005. Holders chose to convert a total of $10.8 million of the accreted debenture
value into 308,092 shares of common stock and the remaining accreted debenture value of $262.7 million was
redeemed for cash on January 24, 2005.
The Company’s debt agreements contain various financial covenants that, among other things, require the
maintenance of certain leverage and fixed charge coverage ratios. The Company is currently in compliance with
all financial covenants.