Chili's 2014 Annual Report Download - page 65

A reconciliation of unrecognized tax benefits for the fiscal years ended June 25, 2014 and June 26, 2013 are
as follows (in thousands):
2014 2013
Balance at beginning of year .................................... $6,388 $7,336
Additions based on tax positions related to the current year ........ 1,582 754
Additions based on tax positions related to prior years ............ 347 7
Settlements with tax authorities .............................. (339) (930)
Expiration of statute of limitations ............................ (603) (779)
Balance at end of year ......................................... $7,375 $6,388
The total amount of unrecognized tax benefits that would favorably affect the effective tax rate if resolved
in our favor due to the effect of deferred tax benefits was $4.9 million and $4.3 million as of June 25, 2014 and
June 26, 2013, respectively. During the next twelve months, we anticipate that it is reasonably possible that the
amount of unrecognized tax benefits could be reduced by approximately $0.5 million ($0.3 million of which
would affect the effective tax rate due to the effect of deferred tax benefits) either because our tax position will
be sustained upon audit or as a result of the expiration of the statute of limitations for specific jurisdictions.
We recognize accrued interest and penalties related to unrecognized tax benefits in income tax
expense. During fiscal 2014, we recognized a benefit of approximately $0.3 million in interest. During fiscal
2013 and 2012, we recognized an expense of approximately $0.5 million and a benefit of $0.3 million,
respectively, in interest due to the reduction of accrued interest from statute expirations and settlements, net of
accrued interest for remaining positions. As of June 25, 2014, we had $2.5 million ($1.7 million net of a
$0.8 million Federal deferred tax benefit) of interest and penalties accrued, compared to $2.1 million
($1.5 million net of a $0.6 million Federal deferred tax benefit) at June 26, 2013.
8. DEBT
Long-term debt consists of the following (in thousands):
2014 2013
3.88% notes ............................................. $299,736 $299,707
2.60% notes ............................................. 249,864 249,829
Term loan ............................................... 187,500 212,500
Revolving credit facility .................................... 80,000 0
Capital lease obligations (see Note 9) ......................... 43,086 45,681
860,186 807,717
Less current installments ................................... (27,884) (27,596)
$832,302 $780,121
Our credit facility, which matures in August 2016, includes a $250 million revolver and a $250 million term
loan. During fiscal 2014, $120.0 million was drawn from the revolver to fund share repurchases. We repaid
$40.0 million of the outstanding balance leaving $170 million of credit available under the revolver as of
June 25, 2014. During fiscal 2014, we paid the required term loan installments totaling $25.0 million bringing the
outstanding balance to $187.5 million.
The term loan and revolving credit facility bear interest at LIBOR plus an applicable margin, which is a
function of our credit rating and debt to cash flow ratio, but is subject to a maximum of LIBOR plus 2.50%.
Based on our current credit rating, we are paying interest at a rate of LIBOR plus 1.63%. One month LIBOR at
June 25, 2014 was approximately 0.15%.
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