Popeye's 2014 Annual Report Download - page 73

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Popeyes Louisiana Kitchen, Inc.
Notes to Consolidated Financial Statements
For Fiscal Years 2014, 2013, and 2012 — (Continued)
55
Quoted Prices in
Active
Markets for
Identical
Asset or Liability
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Carrying
Value
December 29, 2013
Financial Assets
Cash equivalents $ 10.6 $ — $ — $ 10.6
Restricted cash (advertising cooperative assets) 4.3 — — 4.3
Total assets at fair value $ 14.9 $ — $ — $ 14.9
Financial Liabilities
Long term debt and other borrowings $ — $ 72.2 $ — $ 67.2
Total liabilities at fair value $ — $ 72.2 $ — $ 67.2
At December 28, 2014 and December 29, 2013, the fair value of the Company’s current assets and current liabilities approximates
carrying value because of the short-term nature of these instruments.
The fair value of the Company's long-term debt was approximately $115.7 million and $72.2 million on December 28, 2014
and December 29, 2013, respectively. The carrying value of our long-term debt, as discussed in Note 9, was $109.9 million and
$67.2 million on December 28, 2014 and December 29, 2013, respectively. The fair value of each of the Company's long-term
debt instruments is based on the amount of future cash flows associated with each instrument, discounted using the Company's
current borrowing rate for a similar debt instrument of comparable maturity and is considered a Level 2 valuation.
The fair value of the Company’s interest rate swap at December 28, 2014 was based on the sum of all future net present value
cash flows. The future cash flows are derived based on the terms of our interest rate swap, as well as considering published discount
factors, and projected London Interbank Offered Rates (“LIBOR”). The fair values of each of the Company’s long-term debt
instruments are based on the amount of future cash flows associated with each instrument, discounted using the Company’s current
borrowing rate for similar debt instruments of comparable maturity. The interest rate swap agreement is presented as a level 2
assets when amounts are significant.
Note 9 — Long-Term Debt and Other Borrowings
(in millions) 2014 2013
2013 Credit Facility:
Revolving credit facility $ 106.0 $ 63.0
Capital lease obligations 2.2 2.2
Other notes 1.7 2.0
109.9 67.2
Less current portion (0.3)(0.3)
$ 109.6 $ 66.9
2013 Credit Facility. On December 18, 2013, the Company entered into a bank credit facility with a group of lenders consisting
of a five year $125.0 million dollar revolving credit facility. The Company drew $63.0 million under the revolving credit facility
which was used to retire the Company's 2010 Credit Facility.
Outstanding balances accrue interest at a margin of 125 to 250 basis points over the London Interbank Offered Rate (“LIBOR”)
or other alternative indices plus an applicable margin as specified in the facility. The commitment fee on the unused balance under
the facility ranges from 15 to 40 basis points. The increment over LIBOR and the commitment fee are determined quarterly based
upon the Consolidated Total Leverage Ratio. As of December 28, 2014 and December 29, 2013, the Company’s weighted average
interest rates for all outstanding indebtedness under its credit facilities were 1.7% and 1.5% respectively.
Under the terms of the 2013 Credit Facility, the Company can request additional revolving loan commitments of up to $115.0
million. During the second quarter 2014, the Company increased its revolving credit capacity by $10.0 million, to $135.0 million,
and borrowed $43.0 million.