El Pollo Loco 2015 Annual Report Download - page 74

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Table of Contents
EL POLLO LOCO HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Company’
s ability to make payments on its indebtedness and to fund planned capital expenditures will depend on available cash and its ability to
generate adequate cash flows in the future, which, to a certain extent, is subject to general economic, financial, competitive, legislative,
regulatory and other factors that are beyond the Company’s control. Based on current operations, the Company believes that its cash flows from
operations, available cash of $11.5 million at December 31, 2014 and available borrowings under the 2014 Revolver (which availability was
$27.6 million at December 31, 2014) will be adequate to meet the Company’s liquidity needs for the next 12 months.
Basis of Presentation
The Company uses a 52- or 53-week fiscal year ending on the last Wednesday of the calendar year. In a 52-week fiscal year, each quarter
includes 13 weeks of operations; in a 53-week fiscal year, the first, second and third quarters each include 13 weeks of operations and the fourth
quarter includes 14 weeks of operations. Every six or seven years a 53-week fiscal year occurs. Fiscal 2014 was a 53-week year, ended on
December 31, 2014. Fiscal 2013 and 2012 were 52-week years, ended December 25, 2013 and December 26, 2012, respectively.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Holdings and its wholly owned subsidiaries. All intercompany
balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the consolidated financial statements and revenue and expenses during the period reported. Actual results
could materially differ from those estimates. The Company’s significant estimates include estimates for impairment of goodwill, intangible
assets and property and equipment, insurance reserves, lease termination liabilities, stock-based compensation, income tax receivable agreement
liability, and income tax valuation allowances.
Cash and Cash Equivalents
The Company considers all highly-liquid instruments with a maturity of three months or less at the date of purchase to be cash equivalents.
Restricted Cash
The Company’s restricted cash represents cash collateral to one commercial bank for Company credit cards.
Concentration of Risk
Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally-insured limits. The Company has
never experienced any losses related to these balances.
The Company had two suppliers for which amounts due at December 31, 2014 totaled 6% and 5% of the Company’s accounts payable. As of
December 25, 2013, the Company had two different suppliers for which amounts totaled 45% and 11% of the Company’s accounts payable.
Purchases from the Company’s two largest suppliers totaled 36% and 3% in fiscal 2014 and 2013, and 35% and 3% in 2012, of the Company’s
purchases. In fiscal 2014, 2013, and 2012, Company-operated and franchised restaurants in the greater Los Angeles area generated, in the
aggregate, approximately 80%, 80%, and 81% of total revenue.
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