Einstein Bros 2009 Annual Report Download - page 45

Form 10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312510040721/d10k.htm[9/11/2014 10:09:50 AM]
Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Long-term deferred franchise and license revenue is included in other liabilities on the balance sheet and was $250,000 and $465,000 as of
December 30, 2008 and December 29, 2009, respectively.
7. LONG-TERM DEBT
Our debt is composed of a credit facility that had an original principal amount of $90 million term loan and a $20 million revolver. We may
prepay amounts outstanding under the credit facility and may terminate commitments in whole at any time without penalty or premium upon prior
written notice. The credit facility has a five-year term and is secured by substantially all of our assets and guaranteed by our subsidiaries.
Borrowings under this credit facility bear interest at a rate equal to an applicable margin plus, at our option, either a variable base rate or a
Eurodollar rate. As of December 30, 2008 and December 29, 2009, the weighted-average interest rate under the credit facility was 2.65% and
2.24%, respectively. The credit facility contains usual and customary covenants including consolidated leverage ratios, fixed charge coverage
ratios, limitations on capital expenditures, etc. As of December 30, 2008 and December 29, 2009 we were in compliance with all our financial and
operating covenants.
Letters of credit reduce our availability under our revolver. As of December 29, 2009, we had $7.2 million in letters of credit outstanding
under this facility. The letters of credit expire on various dates during 2010, are generally automatically renewable for one additional year and are
payable upon demand in the event that we fail to pay the underlying obligation. Our availability under the revolver was $12.8 million as of
December 29, 2009.
The credit facility requires mandatory prepayments of:
• 50% of excess cash flow (as defined in the debt agreement) subject to the ability to retain at least $5 million in cash and cash
equivalents;
• 100% of net cash proceeds of asset sales by us above a threshold and subject to the ability to reinvest under certain circumstances;
• 100% of net cash proceeds of any debt issued by us, subject to certain exceptions; and
• 50% of the net cash proceeds of any equity issued by us, subject to certain exceptions.
The credit facility contains a commitment for an incremental term loan in the aggregate amount of up to $57.0 million to be used by us, if
needed, solely for the purpose of redeeming the mandatorily redeemable Series Z Preferred Stock. Availability of the incremental term loan is
subject to customary borrowing conditions, including absence of any default or material adverse change, and to a requirement of successful
syndication of such incremental term loan.
Debt issuance costs were capitalized as part of our credit agreement and are being amortized over a period of 5 years on a straight-line basis
for the revolver and on the effective interest rate method for the term loan. In the event that the debt is retired prior to the maturity date, debt
issuance costs will be expensed in the period that the debt is retired.
As of December 30, 2008 and December 29, 2009, debt issuance costs, net of amortization of approximately $2.1 million and $1.5 million,
respectively, have been capitalized in other assets for the credit facility. The amortization of debt issuance costs of $0.6 million, $0.5 million and
$0.6 million for the fiscal years ended 2007, 2008, and 2009, respectively, is included in interest expense in the consolidated statements of
operations.
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Table of Contents
EINSTEIN NOAH RESTAURANT GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
In 2010, we will make a $4.3 million prepayment related to the excess cash flow provision in our debt agreement. For all subsequent years
we have included the minimum contractual amounts as these future pre-payments cannot be estimated. Our obligations on our term loan for the
five years following December 29, 2009 are as follows:
Fiscal year (in thousands of dollars):
2010 $ 5,234
2011 $ 1,125