Einstein Bros 2005 Annual Report Download - page 18

http://www.sec.gov/Archives/edgar/data/949373/000110465906016136/a06-3178_110k.htm[9/11/2014 10:13:03 AM]
For the 2009 fiscal year ending December 29, 2009
$11.250 million
For the 2010 fiscal year ending December 28, 2010 $32.150 million
For the 2011 fiscal quarter ending March 29, 2011 $25.900 million
In addition to the repayment schedule discussed above, the First Lien Term Loan also requires additional principal reductions based upon a
percentage of excess cash flow as defined in the loan agreement in any fiscal year. The First Lien Term Loan also provides us the opportunity to
repay the Second Lien Term Loan or the Subordinated Loan with the proceeds of a capital stock offering provided that certain consolidated
leverage ratios are met.
In the event that we have not extended the maturity date of the Series Z to a date that is on or after July 26, 2012 or redeemed the Series Z by
December 30, 2008, then the Revolving Facility and the First Lien Term Loan will mature on December 30, 2008.
$65 Million Second Lien Term Loan—the Second Lien Term Loan has a maturity date of February 28, 2012 and provides for a floating
interest rate based upon the prime rate plus 5.75% or LIBOR plus 6.75%. Interest is payable in arrears on a quarterly basis. The Second Lien Term
Loan has a prepayment penalty of 2.0% and 1.0% of the amount of any such optional prepayment that occurs prior to the first or second
anniversary date, respectively. The Second Lien Term Loan requires principal reductions based upon a percentage of excess cash flow (as defined
in the credit agreement) in any fiscal year and is also subject to certain mandatory prepayment provisions. In the event that we have not extended
the maturity date of the Series Z to a date that is on or after July 26, 2012 or redeemed the Series Z by March 30, 2009, then the Second Lien Term
Loan will mature on March 30, 2009.
$25 Million Subordinated Term Loan—the Subordinated Term Loan has a maturity date of February 28, 2013, carries a fixed interest rate of
13.75% per annum and requires a quarterly cash interest payment in arrears at 6.5% and quarterly paid-in kind interest that is added to the
principal balance
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outstanding at 7.25%. The Subordinated Term Loan is held by affiliates of Greenlight Capital. Based on an original issue discount of 2.5%,
proceeds of approximately $24.4 million were loaned to the Company. The Subordinated Term Loan is subject to certain mandatory prepayment
provisions. In the event that we have not extended the maturity date of the Series Z to a date that is on or after July 26, 2013 or redeemed the
Series Z by June 29, 2009, then the Subordinated Term Loan will mature on June 29, 2009.
All the loans have usual and customary covenants including consolidated leverage ratios, fixed charge coverage ratios, limitations on capital
expenditures, etc. The loans are all guaranteed by our material subsidiaries. The Revolving Facility and the First Lien Term Loan and the related
guarantees are secured by a first priority security interest in all of our assets and our material subsidiaries, including a pledge of 100% of our
interest in all shares of capital stock (or other ownership or equity interests) of each material subsidiary. The Second Lien Term Loan and the
related guarantees are secured by a second priority security interest in all our assets and our material subsidiaries, including a pledge of 100% of
our interest in all shares of capital stock (or other ownership or equity interests) of each material subsidiary. The Subordinated Term Loan is
unsecured.
As a result of this refinancing, and based upon LIBOR rates in effect as of February 28, 2006, our average cash interest rate is expected to
improve to approximately 10.2% as compared with 13.0% on the debt it replaced. Cash flow savings from the refinancing is expected to result in
cash savings of approximately $5.2 million per year based upon LIBOR rates in effect as of February 28, 2006.
Trends and/or Uncertainties
The following factors represent currently known trends or uncertainties that may impact the comparability of operating performance or could
cause reported financial information not to be necessarily indicative of future operating results or future financial condition.
Revenue
We intend to emphasize our core strengths in bagels and the breakfast day-part and focus on quality, speed of service, order accuracy and
customer interaction. We also intend to expand our existing catering programs, increase customer awareness of our retail products, emphasize
bundling products such as “Sweeten the Deal,” (adding on a beverage and a bakery product, such as a cookie) and highlight favorite products such
as our egg sandwiches. We believe these initiatives will positively impact check averages and drive transaction counts in future periods.
Expenses
Our expenses are generally affected by the following major categories:
· Changing prices for agricultural commodities,
· Rising energy costs and increasing costs of other natural resources,