El Pollo Loco 2016 Annual Report Download - page 54

terminatingonDecember1,2016.AsofDecember31,2014,andDecember30,2015,theamountsincludedinotherassetsinourconsolidatedbalancesheets,
relatedtotheseinterestratecaps,werenotmaterialtoourfinancialpositionorresultsofoperations.
Contractual Obligations
Thefollowingtablerepresentsourcontractualcommitments(whichincludeexpectedinterestexpense,calculatedbasedoncurrentinterestrates)tomakefuture
paymentspursuanttoourdebtandotherobligationsdisclosedaboveandpursuanttoourrestaurantoperatingleasesoutstandingasofDecember30,2015:

 Payments Due by Period
(Amounts in thousands) Total 2016
2017-
2018
2019-
2020
2021 and
thereafter
Operatingleases  $ 247,182  $ 21,588  $ 42,833  $ 37,193  $ 145,568
Capitalleases   879   259   372   149   99
Long-termdebt   133,539   5,167   5,248   123,124   —
Incometaxreceivableagreement   43,711   4,197   33,195   3,684   2,635
Purchasingcommitments—beverage   13,851   6,925   6,926   —   —
Purchasingcommitments—chicken   4,238   4,238   —   —   —
Total  $ 443,400  $ 42,374  $ 88,574  $ 164,150  $ 148,302
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Off-Balance Sheet and Other Arrangements
AtDecember30,2015,December31,2014,andDecember25,2013,wehad$7.2million,$7.6million,and$7.7million,respectively,ofborrowingcapacityon
the2014RevolverandEPL’sformerrevolvingcreditfacilitiespledgedascollateraltosecureoutstandinglettersofcredit.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Weareexposedtomarketriskfromchangesininterestratesonourdebt,whichbearsinterestataUSDLIBORplusamarginbetween1.75%and2.50%.Asof
December30,2015,wehadoutstandingborrowingsof$123.0millionandanother$7.2millionoflettersofcreditinsupportofourinsuranceprograms.A1.00%
increaseintheeffectiveinterestrateappliedtotheseborrowingswouldresultinapre-taxinterestexpenseincreaseof$1.3milliononanannualizedbasis.
Wemanageourinterestrateriskthroughnormaloperatingandfinancingactivitiesand,whendeterminedappropriate,throughtheuseofderivativefinancial
instruments.
Tomitigateexposuretofluctuationsininterestrates,weenteredintotwointerestratecaps,asdiscussedaboveunderItem7,“Management’sDiscussionand
AnalysisofFinancialConditionandResultsofOperations—LiquidityandCapitalResources—DebtandOtherObligations—HedgingArrangements.”
Inflation
Inflationhasanimpactonfood,paper,construction,utility,laborandbenefits,generalandadministrative,andothercosts,allofwhichcanmateriallyimpactour
operations.Wehaveasubstantialnumberofhourlyemployeeswhoarepaidwageratesatorbasedontheapplicablefederal,state,orstateminimumwage,and
increasesintheminimumwagewillincreaseourlaborcosts.SinceJanuary1,2016,theStateofCalifornia(wheremostofourrestaurantsarelocated)hashada
minimumwageof$10.00perhour.FromJanuary1,2008toJune30,2014,ithadbeen$8.00perhourandfromJuly1,2014toDecember31,2015,ithadbeen
$9.00perhour.WealsodosubstantialbusinessinlocalessuchastheCityofLosAngelesandtheCountyofLosAngelesthatmayhavehigherminimumwages.
Fordetails,seeItem1A.”RiskFactors-RisksRelatedtoOurBusinessandIndustry-Ifweorourfranchiseesfacelaborshortagesorincreasedlaborcosts,ourresults
ofoperationsandgrowthcouldbeadverselyaffected.”Ingeneral,wehavebeenabletosubstantiallyoffsetcostsincreasesresultingfrominflationbyincreasing
menuprices,managingmenumix,improvingproductivity,orotheradjustments.Wemayormaynotbeabletooffsetcostincreasesinthefuture.
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