El Pollo Loco 2016 Annual Report Download - page 48

Early Extinguishment of Debt
TheproceedsfromourIPOinJuly2014wereprimarilyusedtorepaythe2013SecondLienTermLoan.Inconjunctionwiththisrepayment,weincurred,infiscal
2014,anextinguishmentofdebtchargeof$5.1million,consistingof$1.5millionincallpremium,$2.7millionrelatedtothewrite-offofremainingunamortized
deferredfinancecosts,and$0.9millionrelatingtothewrite-offofunamortizeddiscount.InDecember2014,inconjunctionwithour2014Refinancing,the2013
FirstLienTermLoanwasrepaidinfull,whichresultedina$4.6millionextinguishmentofdebtcharge,consistingof$3.9millionrelatedtothewrite-offof
deferredfinancingcostsand$0.7millionrelatedtothewrite-offofunamortizeddiscount.
Expenses Related to Selling Shareholders
Inthesecondquarterof2015,LLC,ourlargestshareholder,whichwasatthattimeourmajorityshareholder,sold5.4millionsharesofcommonstockinablock
tradetovariousinvestors,pursuanttoRule144undertheSecuritiesAct.LLCownsstockinusnotregisteredundertheSecuritiesAct.Underourstockholders
agreement,LLCmayrequireustoregisterstockinusthatitowns,undertheSecuritiesAct.Inthatevent,weareresponsibleforallregistrationexpenses.Inlieuof
LLC’sexerciseofitsregistrationrights,weagreedtobeartheexpensesincidenttoLLC’ssaleofthesesharesusingRule144.Asaresultofthistransaction,we
incurred$0.1millioninprofessionalfees.AfterourIPOinJuly2014,wehadafollow-onofferingofsharesonNovember25,2014.Inconjunctionwiththis
secondaryoffering,weincurredapproximately$0.7millioninchargesforunderwritingdiscounts,commissions,andprofessionalfeesandexpensesrelatedtothis
transaction.
Income Tax Receivable Agreement
OnJuly30,2014,weenteredintotheTRA.TheTRAcallsforustopaytoourpre-IPOstockholders85%ofthesavingsincashthatwerealizeinourtaxesasa
resultofutilizingournetoperatinglossesandothertaxattributesattributabletoprecedingperiods.InconnectionwiththeTRA,weamendedthe2013FirstLien
CreditAgreementtopermitdividendpaymentstousbyoursubsidiariesinamountsupto$11millionperfiscalyear,nottoexceed$33millionintheaggregate,
whilethe2013FirstLienCreditAgreementwasoutstanding.Infiscal2014,weincurredchargestotalingapproximately$41millionrelatingtothepresentvalueof
ourtotalestimatedTRApayments.Infiscal2015,weincurredincometaxreceivableagreementexpenseof$0.2million,resultingfromtheamortizationofinterest
expenserelatedtoourtotalexpectedTRApayments,changesinestimatesforactualtaxreturnsfiledandanadjustmenttotheexpectedTRAliability,duetothe
expectedrealizationofvariouspre-IPOtaxcredits.WearepermittedtomakeTRApaymentsunderthe2014Revolver.
(Provision) Benefit for Income Taxes
Infiscal2015,werecordedanincometaxprovisionof$20.9million,comparedtoanincometaxbenefitof$63.0millioninfiscal2014.Afterevaluatingallofthe
positiveandnegativeevidence,includingourcontinuedprofitabilityandthereductionininterestexpenseresultingfromthe2013Refinancingandfromour
completedIPOandtheresultantrepaymentofthe2013SecondLienTermLoan,weconcludedthatitwasmorelikelythannotthatourdeferredtaxassetswould
berealized.Asaresult,infiscal2014,wereleasedourvaluationallowanceofapproximately$65million.Inaddition,weappliedforvarioustaxcreditsthat
resultedin$6.7millionofadditionaldeferredtaxassetsandtaxbenefits.Thefiscal2015provisionincludesa$2.9millionvaluationallowanceagainstourdeferred
taxassetresultingfromcertaintaxcreditsthatmaynotberealizablepriortothetimethecreditsexpire.
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