Jamba Juice 2013 Annual Report Download - page 53

TABLE OF CONTENTS
which we may utilize as described below. In the future, we may enter equipment leasing arrangements and incur additional indebtedness as
necessary and as permitted under our credit agreement. We cannot assure, however, that such financing will be available on favorable terms
or at all.
We expect that our cash on hand and future cash flows provided by operating activities will be sufficient to fund our working capital
and general corporate needs and the non-discretionary capital expenditures for the foreseeable future. Our primary liquidity and capital
requirements are for working capital and general corporate needs and the planned fiscal 2014 capital expenditures. The use of cash to fund
discretionary capital expenditures will be based on the need to conserve our capital.
On February 14, 2012, we entered into a Credit Agreement with Wells Fargo Bank, National Association (the “Lender”) which, as
amended on November 1, 2012, July 22, 2013 and November 4, 2013 (as amended, the “Credit Agreement”) makes available to the
Company a revolving line of credit in the amount of $15.0 million. The outstanding balance under the Credit Agreement bears interest at a
LIBOR Market Index Rate based upon the rate for one month U.S. dollar deposits, plus 2.50% per annum. Under the terms of the Credit
Agreement, the Company is required to maintain maximum consolidated leverage ratios, minimum levels of tangible net worth and a
minimum fixed charge coverage ratio. The Credit Agreement terminates July 22, 2016, or may be terminated earlier by us or by the Lender.
This credit facility is subject to customary affirmative and negative covenants for credit facilities of this type, including limitations on us
with respect to liens, indebtedness, guaranties, investments, distributions, mergers and acquisitions and dispositions of assets. The credit
facility is evidenced by a revolving note made by us in favor of the Lender, is guaranteed by us and is secured by substantially all of our
assets including the assets of our subsidiaries and a pledge of stock of our subsidiaries. In addition, the Credit Agreement replaced restricted
cash requirements established in prior periods, as the line of credit also collateralizes our outstanding letters of credit of $0.9 million.
During fiscal 2013, there were no borrowings under the Credit Agreement. To acquire the credit facility, we incurred upfront fees which
are being amortized over the term of the Credit Agreement. As of December 31, 2013, the unamortized commitment fee amount was less than
$0.1 million and is recorded in prepaid expenses and other current assets on the balance sheet. As of December 31, 2013, we were in
compliance with all related covenants and the unused borrowing capacity under the agreement was $14.1 million.
The adequacy of our available funds will depend on many factors, including the macroeconomic environment, the operating
performance of our Company Stores, the successful expansion of our franchise and licensing programs and the successful rollout and
consumer acceptance of our new beverage and food initiatives. Given these factors, our foremost priorities for the near term continue to be
preserving and generating cash sufficient to fund our liquidity needs.
Operating Activities
Net cash provided by operating activities was $10.5 million in fiscal 2013, compared to $17.6 million in fiscal 2012, reflecting a net
decrease in cash flows of $7.1 million. This decrease in cash provided by operating activities was primarily due to a net increase of cash
used in accounts payable and other liabilities and a net decrease in cash provided by accounts receivable and other assets (approximately
$6.3 million) and a decrease in net income after adjustments for noncash items (approximately $0.8 million). The increase in cash used
relate to various events that occurred at the end of fiscal 2013 and for which cash was received or expected to be received after year end
(approximately $2.0 million) and the timing of certain payments due to the fiscal year end coinciding with the calendar year end.
The amount of cash provided by our operating activities during any particular fiscal year is highly subject to variations in the seasons.
The first and fourth quarters of the fiscal year encompasses the winter and holiday season when we traditionally generate our lowest
revenue, and our second and third quarters of the fiscal year encompasses the warmer seasons where a significant portion of our revenue
and cash flows are realized. For more information on seasonality, refer to the section below entitled “Seasonality and Quarterly Results.”
We also expect to have increased expenditures during the first part of the fiscal year as we invest in product development and domestic
expansion with the goal to have new products released and new stores open by mid-year to take advantage of the busier summer months.
49