Supercuts 2008 Annual Report Download - page 96

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4. FINANCING ARRANGEMENTS (Continued)
Agreement), as well as other customary terms and conditions. The maturity date for the debt may be accelerated upon the occurrence of various
Events of Default, including breaches of the agreement, certain cross-default situations, certain bankruptcy related situations, and other
customary events of default.
During March of fiscal year 2002, the Company completed a $125.0 million private debt placement. Of this amount, $58.0 million was
issued at a fixed coupon rate of 6.73 percent with a final maturity date of March 15, 2009 and $67.0 million was issued at a fixed coupon rate of
7.20 percent with a final maturity date of March 15, 2012. This private placement debt is unsecured and payments are due on a semi-annual
basis. In anticipation of the new Master Note Purchase Agreement discussed above, the Company closed on the First Amendment to Note
Purchase Agreement (related to this private debt placement) in April 2005. The amendment modified certain financial covenants so that they
would be more consistent with the financial covenants in the new Master Note Purchase Agreement.
Revolving Credit Facility
The Company has an unsecured $350.0 million revolving credit facility with rates tied to LIBOR plus 60.0 basis points. The revolving
credit facility requires a quarterly facility fee on the average daily amount of the facility (whether used or unused) calculated at a rate of 15 basis
points. Both the LIBOR credit spread and the facility fee are based on the Company's debt-to-
EBITDA ratio at the end of each fiscal quarter. The
facility expires in July 2012.
On July 12, 2007, the Company amended its $350.0 revolving credit agreement. Among other changes, the ratio of earnings before interest,
taxes, depreciation, amortization, and rent (EBITDAR), to fixed changes covenant was modified from a ratio of 1.65 on a rolling four quarter
basis to a ratio of 1.50 on a rolling four quarter basis. The Company is in compliance with all covenants and other requirements of its credit
agreements and senior notes. Additionally, the credit agreements do not include rating triggers or subjective clauses that would accelerate
maturity dates.
The maturity date for the revolving credit facility may be accelerated upon the occurrence of various events of default, including breaches
of the credit agreement, certain cross-default situations, certain bankruptcy related situations, and other customary events of default. The interest
rates under the facility vary and are based on a bank's reference rate, the federal funds rate and/or LIBOR, as applicable, and a leverage ratio for
the Company determined by a formula tied to the Company's debt and its adjusted income.
As of June 30, 2008 and 2007, the Company had outstanding borrowings under this facility of $139.1 and $147.8 million, respectively.
Because the credit agreement provides for possible acceleration of the maturity date of the facility based on provisions that are not objectively
determinable, the outstanding borrowings as of June 30, 2008 and 2007 are classified as part of the current portion of the Company's long-term
debt. Additionally, the Company had outstanding standby letters of credit under the facility of $31.7 million at June 30, 2008, primarily related
to its self-insurance program. The Company had outstanding standby letters of credit under the facility of $54.6 million at June 30, 2007,
primarily related to its self-insurance program and Department of Education requirements surrounding Title IV funding. Unused available credit
under the facility at June 30, 2008 and 2007 was $179.2 and $147.6 million, respectively.
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