Papa Johns 2011 Annual Report Download - page 51

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46
income tax rates were 32.6% in 2010 compared to 32.1% in 2009 (32.3% in 2010 and 31.1% in 2009,
excluding BIBP).
Liquidity and Capital Resources
Debt and credit arrangements consist of the following (in thousands):
2011 2010
Revolving line of credit 51,489$ 99,000$
Other - 1 7
Total long-term debt 51,489$ 99,017$
In September 2010, we entered into a five-year, $175.0 million unsecured Revolving Credit Facility
(“New Credit Facility”) that replaced a $175.0 million unsecured Revolving Credit Facility (“Old Credit
Facility”). The New Credit Facility was amended in November 2011 (the “Amended Credit Facility”),
which extended the maturity date of the New Credit Facility to November 30, 2016. Under the Amended
Credit Facility, outstanding balances are charged interest at 75 basis points to 150 basis points over
LIBOR or other bank developed rates at our option (previously charged 100 basis points to 175 basis
points above LIBOR). Outstanding balances under the Old Credit Facility were charged interest at 50 to
100 basis points over LIBOR or other bank developed rates, at our option.
We have used interest rate swaps to hedge against the effects of potential interest rate increases on
borrowings under our revolving credit facility. We currently have a swap with a fixed rate of 0.53%, as
compared to LIBOR, with a notional amount of $50.0 million. See “Note 7” of “Notes to Consolidated
Financial Statements” for additional information.
The New Credit Facility, as amended, contains customary affirmative and negative covenants, including
the following financial covenants, as defined by the New Credit Facility (the covenants exclude the
impact of consolidating BIBP’s operations):
Permitted Ratio
Actual Ratio for the
Year Ended
December 25, 2011
Leverage Ratio Not to exceed 2.5 to 1.0 0.5 to 1.0
Interest Coverage Ratio Not less than 3.5 to 1.0 5.4 to 1.0
Our leverage ratio is defined as outstanding debt divided by consolidated EBITDA for the most recent
four fiscal quarters. Our interest coverage ratio is defined as the sum of consolidated EBITDA and
consolidated rental expense for the most recent four fiscal quarters divided by the sum of consolidated
interest expense and consolidated rental expense for the most recent four fiscal quarters. We were in
compliance with all covenants at December 25, 2011.
Cash flow provided by operating activities was $101.0 million for the full-year 2011 as compared to
$92.6 million in 2010. The consolidation of BIBP increased cash flow from operations by approximately
$6.8 million in 2010. Excluding the impact of the consolidation of BIBP, cash flow from operations was
$101.0 million in 2011, as compared to $85.8 million in 2010, primarily due to higher net income and
favorable working capital changes, including deferred income taxes.