El Pollo Loco 2016 Annual Report Download - page 51

Secondary Offering Expense
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stockholders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.WearepermittedtomakeTRApaymentsunderthe2014Revolver.
Benefit (Provision) for Income Taxes
Infiscal2014,werecordedanincometaxbenefitof$63.0million,comparedtoanincometaxprovisionof$1.4millioninfiscal2013.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.
Liquidity and Capital Resources
Ourprimarysourcesofliquidityandcapitalresourceshavebeencashprovidedfromoperations,cashandcashequivalents,andoursecuredrevolvingcredit
facility.Ourprimaryrequirementsforliquidityandcapitalarenewrestaurants,existingrestaurantcapitalinvestments(remodelsandmaintenance),interest
paymentsonourdebt,leaseobligations,andworkingcapitalandgeneralcorporateneeds.Ourworkingcapitalrequirementsarenotsignificant,sinceourcustomers
payfortheirpurchasesincashorbypaymentcard(creditordebit)atthetimeofsale.Thus,weareabletosellmanyofourinventoryitemsbeforewehavetopay
oursuppliersforthem.Ourrestaurantsdonotrequiresignificantinventoriesorreceivables.Webelievethatthesesourcesofliquidityandcapitalaresufficientto
financeourcontinuedoperationsandexpansionplansforatleastthenext12months.
InOctober2013,werefinancedthe2011FinancingAgreementsbyenteringintothe2013CreditAgreements.Theseseniorsecuredcreditfacilitiescarriedlonger
maturitiesandlowerinterestratesthantheindebtednessthattheyreplaced.
OnJuly30,2014,weclosedourIPO,themajorityoftheproceedsofwhichwereusedtorepayour2013SecondLienTermLoan.
InDecember2014,werefinancedthe2013FirstLienCreditAgreementbyenteringintothe2014Revolver,whichcarriedalongermaturityandalowerinterest
ratethantheindebtednessthatitreplaced.
Thefollowingtablepresentssummarycashflowinformationfortheyearsindicated(inthousands).

 Fiscal Year
(Amounts in thousands) 2015 2014 2013
Netcashprovidedby(usedin)         
Operatingactivities  $ 57,971  $ 26,085  $ 19,700
Investingactivities   (30,835)   (21,401)   (13,787)
Financingactivities   (32,534)   (10,200)   (10,385)
Net(decrease)incashandcashequivalents  $ (5,398)  $ (5,516)  $ (4,472)

Operating Activities
Infiscal2015,netcashprovidedbyoperatingactivitiesincreasedby$31.9millioncomparedtofiscal2014.Thiswasdueprimarilyto(i)lowerinterestpayments,
duetoourIPOinJuly2014,themajorityoftheproceedsofwhichwereusedtorepaythe2013SecondLienTermLoan,the2014refinancing,whichcarriedlower
interestratesandthepre-paymentin2015of$42.0millionoftheoutstandingdebtonthe2014Revolverand(ii)thetimingofpaymentsin2015comparedto2014
relatedtorent,advertisingandpaymentstoourprimary
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