Dunkin' Donuts 2012 Annual Report Download - page 53

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capital additions to property and equipment. Net cash used in financing activities was $125.6 million during fiscal year 2012,
driven primarily by the repurchase of common stock of $450.4 million and dividend payments of $70.1 million, offset by net
proceeds from the issuance of long-term debt of $380.6 million and additional tax benefits of $12.0 million realized from the
exercise of stock options. The cash used for the repurchase of common stock was related to 15.0 million shares of common
stock repurchased directly from certain shareholders in a private, non-underwritten transaction in August 2012. In connection
with that repurchase, we borrowed an additional $400.0 million, less original issue discount of $4.0 million, under our existing
term loan facility.
Net cash provided by operating activities of $162.7 million during fiscal year 2011 was primarily driven by net income of $34.4
million, increased by depreciation and amortization of $52.5 million and $35.5 million of other net non-cash reconciling
adjustments, $32.9 million of changes in operating assets and liabilities, and dividends received from joint ventures of $7.4
million. During fiscal year 2011, we invested $18.6 million in capital additions to property and equipment. Net cash used in
financing activities was $30.1 million during fiscal year 2011, driven primarily by the repayment of long-term debt, net of
proceeds from additional borrowings under the term loans, totaling $404.6 million and costs associated with the term loan re-
pricing and upsize transactions of $20.1 million, offset by proceeds from our initial public offering, net of offering costs paid,
of $390.0 million and proceeds from other issuances of common stock of $3.2 million.
Our senior credit facility is guaranteed by certain of Dunkin’ Brands, Inc.’s wholly-owned domestic subsidiaries and includes a
term loan facility and a revolving credit facility. The aggregate borrowings available under the senior secured credit facility are
approximately $2.00 billion, consisting of a fully-drawn approximately $1.90 billion term loan facility and an undrawn $100.0
million revolving credit facility under which there was $88.5 million in available borrowings and $11.5 million of letters of
credit outstanding as of December 29, 2012.
In February 2013, we amended the senior credit facility to extend the maturity of the term loan facility and revolving credit
facility to February 2020 and February 2018, respectively. Considering the February 2013 amendment to the senior credit
facility, principal amortization repayments are required to be made on term loan borrowings equal to approximately $19.0
million per calendar year, payable in quarterly installments through December 2019. The final scheduled principal payment on
the outstanding borrowings under the term loan, as amended, is due in February 2020. Additionally, following the end of each
fiscal year, the Company is required to prepay an amount equal to 25% of excess cash flow (as defined in the senior credit
facility) for such fiscal year. If DBI’s leverage ratio, which is a measure of DBI’s outstanding debt to earnings before interest,
taxes, depreciation, and amortization, adjusted for certain items (as specified in the senior credit facility), is less than 4.75x, no
excess cash flow payments are required. Based on fiscal year 2012 excess cash flow and leverage ratio requirements,
considering all payments made, the excess cash flow payment required in the first quarter of 2013 will be $21.7 million, which
may be applied to future minimum required principal payments. However, the Company intends on making quarterly payments
of $5.0 million.
Borrowings under the term loan bear interest, payable at least quarterly. Borrowings under the revolving credit facility
(excluding letters of credit) bear interest, payable at least quarterly. We also pay a 0.5% commitment fee per annum on the
unused portion of the revolver. As of December 29, 2012, the fee for letter of credit amounts outstanding was 3.0%. As of
December 29, 2012, borrowings under the senior credit facility bear interest at a rate per annum equal to an applicable margin
plus, at our option, either (1) a base rate determined by reference to the highest of (a) the Federal Funds rate plus 0.5%, (b) the
prime rate, (c) the LIBOR rate plus 1.0%, and (d) 2.0% or (2) a LIBOR rate provided that LIBOR shall not be lower than 1.0%.
As of December 29, 2012, the applicable margin under the senior credit facility was 2.0% for loans based upon the base rate
and 3.0% for loans based upon the LIBOR rate.
As a result of the February 2013 amendment to the senior credit facility, the applicable margin for the term loan facility was
reduced to 1.75% for loans based upon the base rate and 2.75% for loans based upon the LIBOR rate. Subsequent to the
amendment to the senior credit facility, borrowings under the revolving credit facility bear interest at a rate per annum equal to
an applicable margin plus, at our option, either (1) a base rate determined by reference to the highest of (a) the Federal Funds
rate plus 0.5%, (b) the prime rate, and (c) the LIBOR rate plus 1.0%, or (2) a LIBOR rate. The applicable margin under the
amended revolving credit facility is 1.5% for loans based upon the base rate and 2.5% for loans based upon the LIBOR rate. In
addition, we are required to pay a 0.5% commitment fee per annum on the unused portion of the revolver and a fee for letter of
credit amounts outstanding of 2.5%.
In September 2012, we entered into variable-to-fixed interest rate swap agreements to hedge the floating interest rate on $900.0
million notional amount of our outstanding term loan borrowings. We are required to make quarterly payments on the notional
amount at a fixed average interest rate of approximately 1.37%. In exchange, we receive interest on the notional amount at a
variable rate based on three-month LIBOR spot rate, subject to a 1.0% floor. The February 2013 amendment to the senior credit
facility had no impact on our interest rate swap agreements.
The senior credit facility requires us to comply on a quarterly basis with certain financial covenants, including a maximum ratio
(the “leverage ratio”) of debt to adjusted earnings before interest, taxes, depreciation, and amortization (“EBITDA”) and a