Einstein Bros 2012 Annual Report Download - page 55

10-K
http://www.sec.gov/Archives/edgar/data/949373/000119312513085036/d445565d10k.htm[9/11/2014 10:07:50 AM]
InterBank Offered Rates (“LIBOR”)). The applicable margin for Eurodollar rate loans ranges from 2.5% to 4.0% and for base rate loans ranges
from 1.5% to 3.0%, depending on the level of the Company’ s consolidated leverage ratio (as defined in the Senior Credit Facility). Upon the
occurrence of a payment event of default which is continuing, all amounts due under the Senior Credit Facility will bear interest at 2.0% above the
interest rate otherwise applicable.
The Senior Credit Facility matures on December 6, 2017 (the “Maturity Date”). Commencing March 31, 2013, quarterly payments on the
term loan, ranging in value between $1.25 million and $2.50 million over the term of the Senior Credit Facility, are due on the last day of each
calendar quarter, with any remaining amounts due and payable upon maturity. The Term Loan also requires mandatory prepayments of:
• 100% of net cash proceeds of asset sales and insurance and condemnation proceeds above a threshold and subject to the ability to
reinvest under certain circumstances; and
• 100% of net cash proceeds of any debt issued by the Company, subject to certain exceptions.
The Senior Credit Facility contains a number of negative covenants that will limit the Company from taking certain actions. The Company is
also required to maintain:
• a minimum consolidated fixed charge coverage ratio ranging from 1.30x to 1.35x; and
• a maximum consolidated leverage ratio ranging from 2.75x to 3.50x.
The Senior Credit Facility limits annual capital expenditures to $32.0 million, but allows, subject to certain conditions, for a percentage of
any unused portion of the capital expenditure limit to be carried forward into the following year.
The Senior Credit Facility contains customary events of default. In addition, the Senior Credit Facility provides for (i) an incremental term
loan (the “Incremental Term Loan”) and (ii) an increase in the Revolving Facility (the “Revolving Facility Increase” and together with the
Incremental Term Loan, the “Incremental Facilities”) of up to $50 million to be used by the Company, if needed, solely for the purpose of making
acquisitions permitted under the Senior Credit Facility. If the Company chooses to draw down the Incremental Facilities, the outstanding amount of
the Incremental Facilities must be repaid in equal quarterly installments on the last day of each calendar quarter, with any remaining amounts due
and payable on the Maturity Date. Borrowings under the Incremental Facilities, if any, will bear interest at the same rate schedule as other
borrowings under the Senior Credit Facility. Availability of the Incremental Facilities is subject to customary borrowing conditions, including
absence of any default or material adverse change, and to a requirement of advanced successful syndication of the Incremental Facilities.
As of January 1, 2013, the Company had $6.7 million in letters of credit outstanding on its Senior Credit Facility. The letters of credit expire
on various dates during 2013, are generally automatically renewable for one additional year and are payable upon demand in the event that the
Company fails to pay the underlying
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obligation. Letters of credit reduce the Company’ s availability under its Revolving Facility. The Company’ s availability under its Revolving
Facility was $31.6 million as of January 1, 2013.
The Company may make dividends and repurchases of its common stock using excess cash flow (as defined in the Senior Credit Facility).
The Company may prepay amounts outstanding under the Senior Credit Facility and may terminate commitments in whole at any time
without penalty or premium upon prior written notice.
On December 20, 2010, as a condition to the effectiveness of the Senior Credit Facility, the Company entered into a guaranty and security
agreement with Bank of America (the “Guaranty”). The Guaranty is secured by a first priority security interest in all the assets of the Company,
including a pledge of 100% of the Company’ s interest in all shares of capital stock (or other ownership or equity interests) of each material
subsidiary.
The weighted-average interest rate under the Senior Credit Facility, excluding the amortization of debt issuance costs and other fees, was
3.1% and 3.4% for fiscal 2011 and fiscal 2012, respectively. The weighted-average interest rate under the Senior Credit Facility, excluding the
amortization of debt issuance costs and other fees, was 4.3% on January 1, 2013. Excluding the amortization of debt issuance costs and other fees,
the Company incurred $2.5 million and $2.5 million of interest expense in fiscal 2011 and 2012, respectively. As of January 1, 2013, the Company
was in compliance with all financial and operating covenants.
The Company’ s obligations on its Senior Credit Facility are as follows:
Fiscal year (in thousands)
2013 $ 5,000