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Long-Term Debt and Capital Lease Obligations | 12 Months Ended
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Dec. 29, 2016
Debt Disclosure [Abstract] |
Long-Term Debt and Capital Lease Obligations | 6. Long-Term Debt and Capital Lease Obligations Long-term debt is summarized as follows:
|  | December 29, 2016 |  | December 31, 2015 |
|  | (in thousands, except payment data) |
Mortgage notes |  | $ | 50,399 |  | $ | 51,305 |
Senior notes |  |  | 90,286 |  |  | 101,429 |
Unsecured term note due February 2025, with monthly principal and interest payments of $39,110, bearing interest at 5.75% |  |  | 3,053 |  |  | 3,338 |
Revolving credit agreement |  |  | 140,000 |  |  | 30,000 |
Unsecured term loan |  |  | – |  |  | 40,000 |
Debt issuance costs |  |  | (355) |  |  | (404) |
|  |  | 283,383 |  |  | 225,668 |
Less current maturities, net of issuance costs |  |  | 12,040 |  |  | 18,292 |
|  | $ | 271,343 |  | $ | 207,376 |
The mortgage notes, both fixed rate and adjustable, bear interest from 3.0% to 5.9%, have a weighted-average rate of 4.70% at December 29, 2016 and 4.59% at December 31, 2015, and mature in fiscal years 2017 through 2043. The mortgage notes are secured by the related land, buildings and equipment. A note maturing in January 2017 with a balance of $24,226,000 as of December 29, 2016 was classified as long-term debt as the note was repaid subsequent to year-end and replaced with borrowings on the Company’s revolving credit facility and a $15,000,000 mortgage note bearing interest at LIBOR plus 2.75%, requiring monthly principal and interest payments and maturing in fiscal 2020. The $90,286,000 of senior notes maturing in 2018 through 2025 require annual principal payments in varying installments and bear interest payable semi-annually at fixed rates ranging from 4.02% to 6.55%, with a weighted-average fixed rate of 5.10% at December 29, 2016 and 5.26% at December 31, 2015. The Company has the ability to issue commercial paper through an agreement with a bank, up to a maximum of $35,000,000. The agreement requires the Company to maintain unused bank lines of credit at least equal to the principal amount of outstanding commercial paper. There were no borrowings on commercial paper as of December 29, 2016 or December 31, 2015. During fiscal 2016, the Company replaced its then-existing credit agreement, consisting of a $37,188,000 term loan and a $175,000,000 revolving credit facility, with a new five-year $225,000,000 credit facility that expires in June 2021. There were borrowings of $140,000,000 outstanding on the revolving credit facility at December 29, 2016, bearing interest at LIBOR plus a margin which adjusts based on the Company’s borrowing levels, effectively 1.83% at December 29, 2016 and 1.61% at December 31, 2015. The revolving credit facility requires an annual facility fee of 0.20% on the total commitment. Based on borrowings outstanding, availability under the line at December 29, 2016 totaled $85,000,000. The Company’s loan agreements include, among other covenants, maintenance of certain financial ratios, including a debt-to-capitalization ratio and a fixed charge coverage ratio. The Company is in compliance with all financial debt covenants at December 29, 2016. Scheduled annual principal payments on long-term debt, net of amortization of debt issuance costs, for the years subsequent to December 29, 2016, are:
|  | (in thousands) |
Fiscal Year |  |  |
2017 |  | $ | 12,040 |
2018 |  |  | 27,855 |
2019 |  |  | 9,704 |
2020 |  |  | 24,090 |
2021 |  |  | 159,830 |
Thereafter |  |  | 49,864 |
|  | $ | 283,383 |
Interest paid, net of amounts capitalized, for fiscal 2016, the Transition Period, fiscal 2015 and fiscal 2014 totaled $9,105,000, $5,220,000, $9,353,000 and $9,370,000, respectively. Subsequent to December 29, 2016, the Company issued $50,000,000 of unsecured senior notes privately placed with three institutional lenders. The notes bear interest at 4.32% per annum and mature in fiscal 2027. The Company used the net proceeds of the sale of the notes to repay outstanding indebtedness and for general corporate purposes. The Company utilizes derivatives principally to manage market risks and reduce its exposure resulting from fluctuations in interest rates. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk-management objectives and strategies for undertaking various hedge transactions. The Company entered into an interest rate swap agreement on February 28, 2013 covering $25,000,000 of floating rate debt, which expires January 22, 2018, and requires the Company to pay interest at a defined rate of 0.96% while receiving interest at a defined variable rate of one-month LIBOR (0.75% at December 29, 2016). The notional amount of the swap is $25,000,000. The Company recognizes derivatives as either assets or liabilities on the consolidated balance sheets at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and on the type of hedging relationship. Derivatives that do not qualify for hedge accounting must be adjusted to fair value through earnings. For derivatives that are designated and qualify as a cash flow hedge, the effective portion of the gain or loss on the derivative is reported as a component of accumulated other comprehensive loss and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. The Company’s interest rate swap agreement was considered effective and qualified as a cash flow hedge from inception through June 16, 2016, at which time the derivative was undesignated and the balance in accumulated other comprehensive loss of $159,000 ($96,000 net of tax) was reclassified into interest expense. As of June 16, 2016, the swap was considered ineffective for accounting purposes and the increase in fair value of the swap from June 16, 2016 through the end of fiscal 2016 of $165,000 was recorded as a reduction to interest expense. The Company does not expect the interest rate swap to have a material effect on earnings within the next 12 months. Capital Lease Obligations - During fiscal 2012, the Company entered into a master licensing agreement with CDF2 Holdings, LLC, a subsidiary of Cinedigm Digital Cinema Corp. (CDF2), whereby CDF2 purchased on the Company’s behalf, and then deployed and licensed back to the Company, digital cinema projection systems (the “systems”) for use by the Company in its theatres. As of December 29, 2016, 642 of the Company’s screens were utilizing the systems under a 10-year master licensing agreement with CDF2. Included in furniture, fixtures and equipment is $45,510,000 related to the digital systems as of December 29, 2016 and December 31, 2015, which is being amortized over the remaining estimated useful life of the assets. Accumulated amortization of the digital systems was $28,294,000 and $22,118,000 as of December 29, 2016 and December 31, 2015, respectively. Under the terms of the master licensing agreement, the Company made an initial one-time payment to CDF2. The Company expects that the balance of CDF2’s costs to deploy the systems will be covered primarily through the payment of virtual print fees (VPFs) from film distributors to CDF2 each time a digital movie is booked on one of the systems deployed on a Company screen. The Company agreed to make an average number of bookings of eligible digital movies on each screen on which a licensed system has been deployed to provide for a minimum level of VPFs paid by distributors (standard booking commitment) to CDF2. To the extent the VPFs paid by distributors are less than the standard booking commitment, the Company must make a shortfall payment to CDF2. Based upon the Company’s historical booking patterns, the Company does not expect to make any shortfall payments during the life of the agreement. Accounting Standards Codification No. 840, Leases, requires that the Company consider the entire amount of the standard booking commitment minimum lease payments for purposes of determining the capital lease obligation. The maximum amount per year that the Company could be required to pay is approximately $6,163,000 until the obligation is fully satisfied. The Company’s capital lease obligation is being reduced as VPFs are paid by the film distributors to CDF2. The Company has recorded the reduction of the obligation associated with the payment of VPFs as a reduction of the interest related to the obligation and the amortization incurred related to the systems, as the payments represent a specific reimbursement of the cost of the systems by the studios. Based on the Company's expected minimum number of eligible movies to be booked, the Company expects the obligation to be reduced by at least $5,543,000 within the next 12 months. This reduction will be recognized as an offset to amortization and is expected to offset the majority of the amortization of the systems. In conjunction with the Wehrenberg theatre acquisition (see Note 3), the Company became the obligor of several movie theatre and equipment leases with unaffiliated third parties that qualify for capital lease accounting. We have recorded the leased buildings and equipment and corresponding obligations under the capital leases on our balance sheet at an initial preliminary fair value of $17,511,000. The Company will amortize the leased assets on a straight-line basis over the various remaining terms of the leases. The Company paid $146,000 in lease payments on these capital leases during fiscal 2016. Aggregate minimum lease payments under these capital leases, assuming the exercise of certain lease options, are as follows at December 29, 2016:
|  | (in thousands) |
Fiscal Year |  |  |
2017 |  | $ | 3,695 |
2018 |  |  | 3,701 |
2019 |  |  | 3,729 |
2020 |  |  | 3,694 |
2021 |  |  | 3,566 |
Thereafter |  |  | 17,914 |
|  | $ | 36,299 |

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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