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Senior Credit Facility
3 Months Ended
Mar. 26, 2016
Debt Disclosure [Abstract]  
Senior Credit Facility
Senior Credit Facility:

During the period of October 24, 2011 through February 19, 2016, the Company was party to a senior credit facility (the “2011 Senior Credit Facility”), which provided for borrowings up to $400 million (with a sublimit of $30 million for swingline loans) as of December 26, 2015 and March 28, 2015.

On February 19, 2016, the Company replaced the 2011 Senior Credit Facility by entering into a new senior credit facility (the “2016 Senior Credit Facility”) consisting of a $200 million term loan and a $500 million revolving credit facility (with a sublimit of $50 million for swingline loans). This agreement is unsecured and matures on February 19, 2021.

2011 Senior Credit Facility

Under the 2011 Senior Credit Facility, the Company had outstanding borrowings of $150 million and $60 million as of December 26, 2015 and March 28, 2015, respectively. In addition, there were $48.7 million and $50.5 million of outstanding letters of credit under the 2011 Senior Credit Facility as of December 26, 2015 and March 28, 2015, respectively.

2016 Senior Credit Facility
 
The 2016 Senior Credit Facility contains a $200 million term loan which requires quarterly payments totaling $10 million per
year in years one and two and $20 million per year in years three through five, with the remaining balance due in full on the maturity date of February 19, 2021. The 2016 Senior Credit Facility also contains a $500 million revolving credit facility (with a sublimit of $50 million for swingline loans).

As of March 26, 2016, the Company had outstanding total borrowings of $250 million under the 2016 Senior Credit Facility consisting of $200 million in borrowings under the term loan and $50 million in borrowings under the revolving credit facility. Unamortized debt issuance costs recorded as an offset to the outstanding borrowings were approximately $1.4 million at March 26, 2016. Additionally, there were $47.6 million of outstanding letters of credit under the 2016 Senior Credit Facility as of March 26, 2016.

Borrowings under both the term loan and the revolver bear interest at either the bank’s base rate (3.500% at March 26, 2016) or the London Inter-Bank Offer Rate (“LIBOR”) (0.435% at March 26, 2016) plus an additional amount ranging from 0.500% to 1.125% per annum (0.625% at March 26, 2016), adjusted quarterly based on our leverage ratio.  The Company is also required to pay, quarterly in arrears, a commitment fee for unused capacity ranging from 0.075% to 0.200% per annum (0.100% at March 26, 2016), adjusted quarterly based on the Company’s leverage ratio.

Proceeds from the 2016 Senior Credit Facility may be used for working capital, capital expenditures, dividends, share repurchases, and other matters. There are no compensating balance requirements associated with the 2016 Senior Credit Facility.

The 2016 Senior Credit Facility requires quarterly compliance with respect to two material covenants: a fixed charge coverage ratio and a leverage ratio.  Both ratios are calculated on a trailing twelve-month basis at the end of each fiscal quarter. The fixed charge coverage ratio compares earnings before interest, taxes, depreciation, amortization, share-based compensation and rent expense (“consolidated EBITDAR”) to the sum of interest paid and rental expense (excluding any straight-line rent adjustments).  The fixed charge coverage ratio shall be greater than or equal to 2.00 as of the last day of each fiscal quarter. The leverage ratio compares rental expense (excluding any straight-line rent adjustments) multiplied by a factor of six plus total debt to consolidated EBITDAR.  The leverage ratio shall be less than or equal to 4.00 as of the last day of each fiscal quarter. The 2016 Senior Credit Facility also contains certain other restrictions regarding additional indebtedness, capital expenditures, business operations, guarantees, investments, mergers, consolidations and sales of assets, transactions with subsidiaries or affiliates, and liens.   As of March 26, 2016, the Company was in compliance with all debt covenants.

Interest Rate Swap

Subsequent to March 26, 2016, the Company entered into an interest rate swap agreement which became effective on March 31, 2016 with a maturity date of February 19, 2021. The objective of the interest rate swap is to mitigate interest rate risk associated with future changes in interest rates. To accomplish this objective, the interest rate swap is intended to hedge the variable cash flows associated with the variable rate term loan borrowings under the 2016 Senior Credit Facility. The notional amount of the interest rate swap will begin at $197.5 million (the principal amount of the term loan borrowings as of March 31, 2016) and will amortize at the same time and in the same amount as the term loan borrowings. The interest rate swap will entitle the Company to receive a variable rate of interest based on LIBOR in exchange for the payment of a fixed rate of interest throughout the life of the agreement without exchange of the underlying notional amount. The Company has designated this interest rate swap as a cash flow hedge and will account for the underlying activity in accordance with hedge accounting beginning in the second fiscal quarter of 2016.