Supercuts 2007 Annual Report Download - page 57

discussed in the paragraph further below and in Note 3 to the Consolidated Financial Statements. The proceeds from the issuance of common
stock were related to the exercise of stock options.
The net borrowings on revolving credit facilities during fiscal year 2006 and of long-
term debt during fiscal year 2005 were primarily used
to fund acquisitions, and are discussed further below and in Note 4 to the Consolidated Financial Statements. The proceeds from the issuance
of common stock were related to the exercise of stock options. The excess tax benefit from stock-based employee compensation plans was
recorded in accordance with the provisions of SFAS No. 123R, as discussed above in conjunction with Operating Activities.
New Financing Arrangements
Fiscal Year 2007
During fiscal year 2007, we neither entered into new borrowing arrangements, nor were any significant amendments made to existing
agreements. On July 12, 2007 (fiscal year 2008), we refinanced our $350.0 million revolving credit facility. Among other changes, this
amendment extended the credit facility’s expiration date to July 2012, reduced the interest rate on borrowings under the credit facility and
modified certain financial covenants. Additionally, we borrowed $25.0 million, and amended the fixed charge coverage ratio under our Private
Shelf Agreement.
Under the terms of the April 7, 2005 amended and restated revolving credit agreement, our ratio of earnings before interest, taxes,
depreciation, amortization and rent expense (EBITDAR) to fixed charges (which includes rent and interest expenses) may not drop below 1.65
on a rolling four quarter basis. Under the terms of the July 12, 2007 revolving credit agreement, our ratio of earnings before interest, taxes,
depreciation, amortization and rent expense (EBITDAR) to fixed charges (which includes rent and interest expenses) may not drop below 1.50
on a rolling four quarter basis. We are in compliance with all covenants and other requirements of our credit agreements and senior notes.
Additionally, the credit agreements do not include rating triggers or subjective clauses that would accelerate maturity dates.
Fiscal Year 2006
During fiscal year 2006, we neither entered into new borrowing arrangements, nor were any significant amendments made to existing
agreements.
Fiscal Year 2005
We acquired Hair Club for Men and Women in December 2004 for approximately $210 million. The acquisition was financed with
approximately $110 million of debt under our existing revolving credit facility and $100 million of senior term notes issued under an existing
agreement, with interest rates ranging from 4.0 to 4.9 percent and maturation dates between November 2008 and November 2011.
On April 7, 2005 we entered into an amendment and restatement of our existing revolving credit facility with a syndicate of eight banks.
Among other changes, this amendment and restatement increased the borrowing capacity under the facility from $250.0 million to $350.0
million, extended the facility’s expiration date to April 2010, reduced the spread charged for certain borrowings under the facility, and
modified certain financial covenants.
In addition, on April 7, 2005, we issued $200.0 million of senior unsecured debt to approximately twenty purchasers via a private
placement transaction pursuant to a Master Note Purchase Agreement. The placement was split into four tranches, with $100.0 million
maturing March 31, 2013 and $100.0 million maturing March 31, 2015. Of the debt maturing in 2013, $30.0 million was issued as fixed rate
debt with a rate of 4.97 percent. The remaining $70.0 million was issued as variable rate debt and is priced at 0.52 percent over LIBOR. As for
the $100.0 million maturing in 2015, $70.0 million was issued at a fixed
56