Papa Johns 2015 Annual Report Download - page 84

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71
8.
Goodwill (continued)
For fiscal year 2015, we performed a qualitative analysis for our domestic Company-owned restaurants
and our PJUK reporting unit and a quantitative analysis for our China reporting unit. For fiscal year 2014,
we performed a quantitative analysis on each reporting unit. For fiscal year 2013, we performed a
qualitative analysis for our domestic Company-owned restaurants and our China reporting unit and a
quantitative analysis for our PJUK reporting unit. No impairment charges were recorded upon the
completion of our goodwill impairment tests in 2013, 2014 and 2015.
9. Debt and Credit Arrangements
Our debt is comprised entirely of an unsecured revolving credit facility (“Credit Facility”). The
outstanding balance was $256.0 million as of December 27, 2015 and $230.5 million as of December 28,
2014.
On October 31, 2014, we amended our Credit Facility to increase the amount available from $300 million
to $400 million and to extend the maturity date from April 30, 2018 to October 31, 2019. Additionally,
we have the option to increase the Credit Facility an additional $100 million. The interest rate charged on
outstanding balances is LIBOR plus 75 to 175 basis points. The commitment fee on the unused balance
ranges from 15 to 25 basis points. The remaining availability under the Credit Facility, reduced for
outstanding letters of credit, was approximately $120.2 million as of December 27, 2015.
The Credit Facility contains customary affirmative and negative covenants, including financial covenants
requiring the maintenance of specified fixed charges and leverage ratios. At December 27, 2015, we were
in compliance with these covenants.
We use interest rate swaps to hedge against the effects of potential interest rate increases on borrowings
under our Credit Facility. In 2015, we executed three additional forward starting swaps for $125.0 million
that become effective in 2018 upon expiration of the two existing swaps for $125.0 million. As of
December 27, 2015, we have the following interest rate swap agreements:
Effective Dates Debt Amount
Fixed
Rates
July 30, 2013 through April 30, 2018 $75 million 1.42%
December 30, 2014 through April 30, 2018 $50 million 1.36%
April 30, 2018 through April 30, 2023 $55 million 2.33%
April 30, 2018 through April 30, 2023 $35 million 2.36%
April 30, 2018 through April 30, 2023 $35 million 2.34%
Our swaps are derivative instruments that are designated as cash flow hedges because the swaps provide a
hedge against the effects of rising interest rates on borrowings. The newly executed forward starting
swaps are also deemed cash flow hedges based on our intent to replace the existing facility that matures in
2019 with new variable rate debt. The swaps are highly effective cash flow hedges with no
ineffectiveness for all periods presented. The newly executed forward starting swaps are deemed effective
given the probability of future forecasted interest payments.