Papa Johns 2012 Annual Report Download - page 78

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72
8. Restaurant Impairment and Dispositions
The following table summarizes restaurant impairment and disposition losses (gains) included in other
general expenses in the accompanying consolidated statements of income during 2012, 2011 and 2010
(in thousands):
2012 2011 2010
Net book value of divested restaurants 1,219$ -$ 2,828$
Cash proceeds received 908 - 1,397
Fair value of notes receivable (1) 160 - 1,431
Total consideration at fair value (1) 1,068 - 2,828
Loss on restaurants sold 151 - -
Loss (gain) on domestic restaurant closures 125 (203) 95
Adjustment to long-lived asset impairment reserves - 117 158
Total restaurant impairment and disposition losses (gains) 276$ (86)$ 253$
(1) We sold 12 Company-owned restaurants to franchisees in both 2012 and 2010 (none in 2011). As a
part of the agreements to sell the restaurants, we received notes totaling $160,000 in 2012 and $1.4
million in 2010.
9. Debt and Credit Arrangements
Our long-term debt is comprised entirely of the outstanding balance under our revolving line of credit.
The balance was $88.3 million as of December 30, 2012 and $51.5 million as of December 25, 2011.
In September 2010, we entered into a five-year, $175.0 million unsecured revolving credit facility
(“Credit Facility”) that replaced a $175.0 million unsecured Revolving Credit Facility (“Old Credit
Facility”). The Credit Facility was amended in November 2011 (the “Amended Credit Facility”), which
extended the maturity date of the Credit Facility to November 30, 2016. Under the Amended Credit
Facility, outstanding balances accrue interest at 75 to 150 basis points over the London Interbank Offered
Rate (“LIBOR”) or other bank developed rates at our option (previously interest accrued at 100 to 175
basis points over LIBOR). The commitment fee on the unused balance under the Amended Credit Facility
ranges from 17.5 to 25.0 basis points. The increment over LIBOR and the commitment fee are determined
quarterly based upon the ratio of total indebtedness to earnings before interest, taxes, depreciation and
amortization (“EBITDA”), as defined by the Amended Credit Facility. 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. The remaining availability under the Amended Credit Facility, reduced for
outstanding letters of credit, approximated $66.8 million as of December 30, 2012. The fair value of the
outstanding debt approximates the carrying value since the debt agreements are variable-rate instruments.
The Amended Credit Facility contains customary affirmative and negative covenants, including financial
covenants requiring the maintenance of specified fixed charges and leverage ratios. At December 30,
2012, we were in compliance with these covenants.