El Pollo Loco 2016 Annual Report Download - page 72
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Netrentexpenseisasfollows(inthousands):
For the Years Ended
December 30,
2015
December 31,
2014
December 25,
2013
Baserent $ 19,944 $ 19,067 $ 18,732
Contingentrent 96 350 491
Less:subleaseIncome (2,620) (3,572) (3,602)
Netrentexpense $ 17,420 $ 15,845 $ 15,621
Baserentandcontingentrentareincludedinoccupancyandotheroperatingexpenses,whilesubleaseincomeisincludedinfranchiserevenueintheaccompanying
consolidatedstatementsofoperations.Subleaseincomeincludescontingentrentalincomeof$1.1million,$1.6million,and$1.7millionforfiscal2015,2014,and
2013,respectively.
TheCompanyisalessorforcertainproperty,facilitiesandequipmentownedbytheCompanyandleasedtoothers,principallyfranchisees,undernoncancelable
leaseswithinitialtermsrangingfromthreetonineyears.Theleaseagreementsgenerallyprovideforafixedbaserentand,insomeinstances,contingentrentbased
onapercentageofgrossoperatingprofitornetrevenues.Totalrentalincomeincludedinfranchiserevenueintheaccompanyingconsolidatedstatementsof
operationsforleasedpropertywas$424,000,$401,000and$377,000forfiscal2015,2014,and2013,respectively.
Minimumfuturerentalincomeforcompany-operatedpropertiesundernoncancelableoperatingleases,whichisrecordedonastraight-linebasis,ineffectasof
December30,2015,isasfollows(inthousands):
For the Years Ending
December28,2016 $ 224
December27,2017 210
December26,2018 210
December25,2019 120
December30,2020 124
Thereafter 616
Totalfutureminimumrentalincome $ 1,504
6. NEW CREDIT AGREEMENTS
OnDecember11,2014,theCompanyrefinanceditsdebt,withEPL,Intermediate,andHoldingsenteringintoacreditagreementwithBankofAmerica,N.A.,as
administrativeagent,swinglinelender,andletterofcreditissuer,thelenderspartythereto,andtheotherpartiesthereto,whichprovidesfora$200millionfive-year
seniorsecuredrevolvingfacility(the“2014Revolver”).The2014Revolverincludesasublimitof$15millionforlettersofcreditandasublimitof$15millionfor
swinglineloans.AtDecember30,2015,$7.2millionoflettersofcreditwereoutstandingand$69.8millionwasavailabletoborrowundertherevolvinglineof
credit.The2014RevolverwillmatureonoraboutDecember11,2019.
Borrowingsunderthe2014Revolver(otherthananyswinglineloans)bearinterest,attheborrower’soption,atratesbaseduponeitherLIBORorabaserate,plus,
foreachrate,amargindeterminedinaccordancewithalease-adjustedconsolidatedleverageratio-basedpricinggrid.Thebaserateiscalculatedasthehighestof
(a)thefederalfundsrateplus0.50%,(b)theprimerateofBankofAmerica,or(c)LIBORplus1.00%.ForLIBORloans,themarginisintherangeof1.75%to
2.50%,andforbaserateloansthemarginisintherangeof0.75%and1.50%.Themarginwasinitiallysetat2.00%forLIBORloansandat1.00%forbaserate
loansuntilthedeliveryoffinancialstatementsandacompliancecertificateforthefirstquarterof2015.Theinterestraterangewas1.94%to2.63%duringfiscal
2015andwas2.02%atDecember30,2015.
The2014Revolverincludesanumberofnegativeandfinancialcovenants,including,amongothers,thefollowing(allsubjecttocertainexceptions):amaximum
lease-adjustedconsolidatedleverageratiocovenant,aminimumconsolidatedfixedchargecoverageratio,andlimitationsonindebtedness,liens,investments,asset
sales,mergers,consolidations,liquidations,dissolutions,restrictedpayments,andnegativepledges.The2014Revolveralsoincludescertaincustomaryaffirmative
covenantsandeventsofdefault.TheCompanywasincompliancewithallsuchcovenantsatDecember30,2015.SeeNote1forrestrictionsonthepaymentof
dividendsunderthe2014Revolver.
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