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฀
46
Our฀ credit฀ facility฀ contains฀ affirmative฀ and฀ negative฀ covenants,฀ including฀ the฀ following฀ financial฀
covenants,฀as฀defined฀by฀the฀credit฀facility:฀
฀
Permitted฀Ratio
Actual฀Ratio฀for฀the฀
Year฀Ended฀
December฀29,฀2013
Leverage฀Ratio Not฀to฀exceed฀3.0฀to฀1.0 1.2฀to฀1.0
Interest฀Coverage฀Ratio Not฀less฀than฀3.5฀to฀1.0 4.9฀to฀1.0
฀
฀
Our฀leverage฀ratio฀is฀defined฀as฀outstanding฀debt฀divided฀by฀consolidated฀earnings฀before฀interest,฀taxes,฀
depreciation฀and฀amortization฀(“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฀as฀ of฀December฀29,฀
2013.฀
฀
Cash฀flow฀provided฀by฀operating฀activities฀was฀$101.4฀million฀for฀2013฀as฀compared฀to฀$104.4฀million฀in฀
2012.฀ The฀ reduction฀ in฀ 2013,฀ as฀ compared฀ to฀ 2012,฀ is฀ primarily฀ due฀ to฀ working฀ capital฀ needs฀ offset฀
somewhat฀by฀higher฀net฀income.฀Cash฀flow฀provided฀by฀operating฀activities฀increased฀to฀$104.4฀million฀in฀
2012฀ from฀ $101.0฀ million฀ in฀ 2011,฀ primarily฀ due฀ to฀ higher฀ net฀ income฀ and฀ favorable฀ working฀ capital฀
changes,฀including฀deferred฀income฀taxes.฀
฀
The฀Company’s฀free฀cash฀flow฀for฀the฀last฀three฀years฀was฀as฀follows฀(in฀thousands):฀฀
Dec.฀29, Dec.฀30, Dec.฀25,
2013 2012 2011
Net฀cash฀provided฀by฀operating฀activities 101,360$฀฀฀ 104,379$฀฀฀ 101,008$฀฀฀
Purchase฀of฀property฀and฀equipment฀(a) (50,750)฀฀฀฀฀฀ (42,628)฀฀฀฀฀฀ (29,319)฀฀฀฀฀฀
Free฀cash฀flow฀(b) 50,610$฀฀฀฀฀ 61,751$฀฀฀฀฀ 71,689$฀฀฀฀฀
Year฀Ended
฀
(a)
The฀ increased฀ purchases฀ of฀ property฀ and฀ equipment฀ in฀ 2013฀ and฀ 2012฀ primarily฀ relate฀ to฀
expenditures฀on฀equipment฀for฀New฀Jersey฀dough฀production,฀technology฀investments,฀including฀
our฀new฀domestic฀POS฀system,฀(“FOCUS”),฀and฀China฀new฀store฀builds.
฀
(b)
We฀ define฀ free฀ cash฀ flow฀ as฀ net฀ cash฀ provided฀ by฀ operating฀ activities฀ (from฀ the฀ consolidated฀
statements฀ of฀ cash฀ flows)฀ less฀ the฀ purchases฀ of฀ property฀and฀equipment.฀ See฀ “Items฀ Impacting฀
Comparability;฀Non-GAAP฀Measures”฀for฀more฀information฀about฀this฀non-GAAP฀measure,฀its฀
limitations฀ and฀ why฀ we฀ present฀ free฀ cash฀ flow฀ alongside฀ the฀ most฀ directly฀ comparable฀ GAAP฀
measure.฀
฀฀
We฀require฀capital฀primarily฀for฀the฀development,฀acquisition,฀renovation฀and฀maintenance฀of฀restaurants,฀
the฀ development,฀ renovation฀ and฀ maintenance฀ of฀ commissary฀ facilities฀ and฀ equipment฀ and฀ the฀
enhancement฀ of฀ corporate฀ systems฀ and฀ facilities,฀ including฀ technological฀ enhancements.฀ Purchases฀ of฀
property฀and฀equipment฀amounted฀to฀$50.8฀million,฀$42.6฀million,฀and฀$29.3฀million฀in฀2013,฀2012฀and฀
2011,฀ respectively,฀ and฀ are฀ summarized฀ by฀ operating฀ segment฀ in฀ “Note฀ 20”฀ of฀ “Notes฀ to฀ Consolidated฀
Financial฀Statements.”฀