BOOT BARN HOLDINGS, INC., 10-Q filed on 12/9/2014
Quarterly Report
Document and Entity Information
6 Months Ended
Sep. 27, 2014
Dec. 1, 2014
Document and Entity Information
 
 
Entity Registrant Name
Boot Barn Holdings, Inc. 
 
Entity Central Index Key
0001610250 
 
Document Type
10-Q 
 
Document Period End Date
Sep. 27, 2014 
 
Amendment Flag
false 
 
Current Fiscal Year End Date
--03-28 
 
Entity Current Reporting Status
No 
 
Entity Filer Category
Non-accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
25,709,663 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q2 
 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Thousands, unless otherwise specified
Sep. 27, 2014
Mar. 29, 2014
Current assets:
 
 
Cash and cash equivalents
$ 1,381 
$ 1,118 
Accounts receivable
1,839 
2,191 
Inventories
119,447 
102,702 
Prepaid expenses and other current assets
13,654 
8,685 
Total current assets
136,321 
114,696 
Property and equipment, net
23,485 
21,450 
Goodwill
93,097 
93,097 
Intangible assets, net
58,410 
59,723 
Other assets
3,078 
2,897 
Total assets
314,391 
291,863 
Current liabilities:
 
 
Line of credit
51,856 
28,624 
Accounts payable
42,328 
36,029 
Accrued expenses and other current liabilities
21,234 
20,763 
Current portion of notes payable
1,308 
1,000 
Total current liabilities
116,726 
86,416 
Deferred taxes
20,341 
19,960 
Long-term portion of notes payable
128,365 
98,500 
Other liabilities
2,407 
2,412 
Total liabilities
267,839 
207,288 
Commitments and contingencies (Note 6)
   
   
Stockholders' equity:
 
 
Common stock, $0.0001 par value; September 27, 2014 - 100,000 shares authorized, 19,929 shares issued and outstanding; March 29, 2014 - 100,000 shares authorized, 18,929 shares issued and outstanding
Preferred stock, $0.0001 par value; 10,000 shares authorized, no shares issued or outstanding
   
   
Additional paid-in capital
44,197 
78,834 
Retained earnings
2,353 
1,652 
Total Boot Barn Holdings, Inc. stockholders' equity
46,552 
80,488 
Non-controlling interest
4,087 
Total stockholders' equity
46,552 
84,575 
Total liabilities and stockholders' equity
$ 314,391 
$ 291,863 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Sep. 27, 2014
Mar. 29, 2014
CONDENSED CONSOLIDATED BALANCE SHEETS
 
 
Common Stock, par value (in dollars per share)
$ 0.0001 
$ 0.0001 
Common stock, share authorized (in shares)
100,000,000 
100,000,000 
Common Stock, share issued (in shares)
19,929,350 
18,929,000 
Common Stock, share outstanding (in shares)
19,929,350 
18,929,000 
Preferred Stock, par value (in dollars per share)
$ 0.0001 
$ 0.0001 
Preferred Stock, shares authorized (in shares)
10,000,000 
10,000,000 
Preferred Stock, shares issued (in shares)
Preferred Stock, shares outstanding (in shares)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Thousands, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Sep. 27, 2014
Sep. 28, 2013
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
 
 
 
Net sales
$ 86,384 
$ 77,370 
$ 168,881 
$ 141,944 
Cost of goods sold
58,631 
53,207 
114,238 
95,353 
Amortization of inventory fair value adjustment
 
434 
 
579 
Total cost of goods sold
58,631 
53,641 
114,238 
95,932 
Gross profit
27,753 
23,729 
54,643 
46,012 
Operating expenses:
 
 
 
 
Selling, general and administrative expenses
23,371 
23,861 
44,868 
42,706 
Acquisition-related expenses
 
 
 
671 
Total operating expenses
23,371 
23,861 
44,868 
43,377 
Income (loss) from operations
4,382 
(132)
9,775 
2,635 
Interest expense, net
2,821 
2,206 
5,578 
7,284 
Other income, net
25 
11 
Income (loss) before income taxes
1,568 
(2,335)
4,222 
(4,638)
Income tax expense (benefit)
624 
(875)
1,865 
(1,733)
Net income (loss)
944 
(1,460)
2,357 
(2,905)
Net income (loss) attributed to non-controlling interest
 
(73)
(145)
Net income (loss) attributed to Boot Barn Holdings, Inc.
$ 944 
$ (1,387)
$ 2,353 
$ (2,760)
Net income (loss) per share:
 
 
 
 
Basic shares (in dollars per share)
$ 0.05 
$ (0.07)
$ 0.05 
$ (0.15)
Diluted shares (in dollars per share)
$ 0.05 
$ (0.07)
$ 0.05 
$ (0.15)
Weighted average shares outstanding:
 
 
 
 
Basic shares
19,929 
18,929 
19,539 
18,929 
Diluted shares
20,552 
18,929 
20,121 
18,929 
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (USD $)
In Thousands, except Share data, unless otherwise specified
Common Stock
Additional Paid-In Capital
Retained Earnings
Noncontrolling interest
Total
Balance at Mar. 29, 2014
$ 2 
$ 78,834 
$ 1,652 
$ 4,087 
$ 84,575 
Balance (in shares) at Mar. 29, 2014
18,929,000 
 
 
 
 
Increase (Decrease) in Stockholders' Equity
 
 
 
 
 
Net income
 
 
2,353 
2,357 
Stock-based compensation expense
 
920 
 
 
920 
Dividends paid
 
(39,648)
(1,652)
 
(41,300)
Reorganization and issuance of stock
 
4,091 
 
(4,091)
 
Reorganization and issuance of stock (in shares)
1,000,000 
 
 
 
 
Balance at Sep. 27, 2014
$ 2 
$ 44,197 
$ 2,353 
 
$ 46,552 
Balance (in shares) at Sep. 27, 2014
19,929,000 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Sep. 27, 2014
Sep. 28, 2013
Cash flows from operating activities
 
 
Net income (loss)
$ 2,357 
$ (2,905)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
 
 
Depreciation
2,819 
1,794 
Stock-based compensation
920 
593 
Amortization of intangible assets
1,313 
1,926 
Amortization of deferred loan fees
371 
2,227 
Loss on disposal of property and equipment
86 
291 
Accretion of above market leases
(90)
(119)
Deferred taxes
381 
338 
Amortization of inventory fair value adjustment
 
579 
Changes in operating assets and liabilities:
 
 
Accounts receivable
352 
402 
Inventories
(16,745)
(13,984)
Prepaid expenses and other current assets
(4,969)
(4,021)
Other assets
168 
(144)
Accounts payable
5,992 
1,207 
Accrued expenses and other current liabilities
471 
3,533 
Other liabilities
49 
291 
Net cash used in operating activities
(6,525)
(7,992)
Cash flows from investing activities
 
 
Purchases of property and equipment
(4,597)
(5,041)
Purchase of trademark rights
 
(100)
Acquisition of business, net of cash acquired
 
(13,980)
Net cash used in investing activities
(4,597)
(19,121)
Cash flows from financing activities
 
 
Line of credit - net
23,232 
20,361 
Proceeds from loan borrowings
30,750 
100,000 
Repayments on debt and capital lease obligations
(615)
(69,531)
Debt issuance fees
(682)
(3,185)
Dividends paid
(41,300)
 
Repayment of debt in connection with acquisition
 
(20,078)
Net cash provided by financing activities
11,385 
27,567 
Net increase in cash and cash equivalents
263 
454 
Cash and cash equivalents, beginning of period
1,118 
1,190 
Cash and cash equivalents, end of period
1,381 
1,644 
Supplemental disclosures of cash flow information:
 
 
Cash paid for income taxes
2,152 
418 
Cash paid for interest
4,599 
4,983 
Supplemental disclosure of non-cash activities:
 
 
Unpaid purchases of property and equipment
439 
737 
Equipment acquired through capital lease
$ 36 
$ 28 
Business Operations
Business Operations

 

1.Business Operations

 

Boot Barn Holdings, Inc., formerly known as WW Top Investment Corporation (the “Company”) was formed on November 17, 2011, and is incorporated in the State of Delaware. The equity of the Company consisted of 100,000,000 authorized shares and 19,929,350 issued and outstanding shares of common stock as of September 27, 2014. The shares of common stock have voting rights of one vote per share.

 

As of June 8, 2014, the Company held all of the outstanding shares of common stock of WW Holding Corporation, which held 95.0% of the outstanding shares of common stock of Boot Barn Holding Corporation. On June 9, 2014, WW Holding Corporation was merged with and into the Company and then Boot Barn Holding Corporation was merged with and into the Company. As a result of this reorganization, Boot Barn, Inc. became a direct wholly owned subsidiary of the Company, and the minority stockholders that formerly held 5.0% of Boot Barn Holding Corporation became holders of 5.0% of the Company. Net income (loss) attributed to non-controlling interest was recorded for all periods through June 9, 2014. Subsequent to June 9, 2014, there were no noncontrolling interests. On June 10, 2014, the legal name of the Company was changed from WW Top Investment Corporation to Boot Barn Holdings, Inc.

 

The Company operates specialty retail stores that sell western and work boots and related apparel and accessories. The Company operates retail locations throughout the U.S. and sells its merchandise via the internet. The Company operated a total of 158 stores in 24 states as of September 27, 2014 and 152 stores in 23 states as of March 29, 2014. As of September 27, 2014, all stores operate under the Boot Barn name, with the exception of two stores which operate under the “American Worker” name.

Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

 

2.Summary of Significant Accounting Policies

 

Information regarding the Company’s significant accounting policies is contained in Note 2, “Summary of Significant Accounting Policies”, to the consolidated financial statements included in the Company’s final prospectus filed with the Securities and Exchange Commission (the “SEC”) on October 30, 2014. Presented below in the following notes is supplemental information that should be read in conjunction with those consolidated financial statements.

 

Basis of Presentation

 

The Company’s consolidated financial statements as of and for the thirteen weeks and twenty-six weeks ended September 27, 2014 and September 28, 2013 are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”), and include the accounts of the Company and each of its subsidiaries, including Boot Barn, Inc., RCC Western Stores, Inc. (“RCC”) and Baskins Acquisition Holdings, LLC (“Baskins”). All intercompany accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation. Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements have been condensed or omitted.

 

In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments that are of a normal and recurring nature necessary to fairly present the Company’s financial position and results of operations and cash flows in all material respects as of the dates and for the periods presented. The results of operations presented in the interim condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the fiscal year ending March 28, 2015.

 

Fiscal Year

 

The Company reports its results of operations and cash flows on a 52- or 53-week basis, and its fiscal year ends on the Saturday closest to March 31. The years ending March 29, 2014 (“fiscal 2014”) and March 30, 2013 (“fiscal 2013”) each consisted of 52 weeks. Fiscal quarters contain thirteen weeks, with the exception of the fourth quarter of a 53-week fiscal year, which contains fourteen weeks. The second quarter of fiscal 2015 and fiscal 2014 ended on September 27, 2014 and September 28, 2013, respectively.

 

Comprehensive Income

 

The Company does not have any components of other comprehensive income (loss) recorded within its consolidated financial statements and, therefore, does not separately present a statement of comprehensive income (loss) in its consolidated financial statements.

 

Segment Reporting

 

GAAP has established guidance for reporting information about a company’s operating segments, including disclosures related to a company’s products and services, geographic areas and major customers. The Company operates in a single operating segment, which includes net sales generated from its retail stores and e-commerce website. All of the Company’s identifiable assets are in the U.S.

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Among the significant estimates affecting the Company’s consolidated financial statements are those relating to revenue recognition, inventories, goodwill, intangible and long-lived assets, stock-based compensation and income taxes. Management regularly evaluates its estimates and assumptions based upon historical experience and various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. As of September 27, 2014, the Company had identified no indicators of impairment with respect to its goodwill, intangible and long-lived asset balances. To the extent actual results differ from those estimates, the Company’s future results of operations may be affected.

 

Fair Value of Certain Financial Assets and Liabilities

 

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, (“ASC 820”) which requires disclosure of the estimated fair value of certain assets and liabilities defined by the guidance as financial instruments. The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable and debt. ASC 820 defines the fair value of financial instruments as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.

 

·

Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities.

 

·

Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data.

 

·

Level 3 uses one or more significant inputs that are unobservable and supported by little or no market activity, and reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation.

 

Cash and cash equivalents, accounts receivable and accounts payable are valued at fair value and are classified according to the lowest level input that is significant to the fair value measurement. As a result, the asset or liability could be classified as Level 2 or Level 3 even though there may be certain significant inputs that are readily observable. The Company believes that the recorded value of its financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or duration.

 

Although market quotes for the fair value of the outstanding debt arrangements discussed in Note 4, “Revolving Credit Facilities and Long-Term Debt” are not readily available, the Company believes its carrying value approximates fair value due to the variable interest rates, which are Level 2 inputs. There were no financial assets or liabilities requiring fair value measurements as of September 27, 2014 on a recurring basis.

 

Recent Accounting Pronouncements

 

In July 2013, the FASB issued Accounting Standards Update (“ASU”) No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force)”. The amendments in this ASU provide guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. An unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward with certain exceptions, in which case such an unrecognized tax benefit should be presented in the financial statements as a liability. The amendments in this ASU do not require new recurring disclosures. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Companies may choose to apply this guidance retrospectively to each prior reporting period presented. The Company adopted this ASU on March 30, 2014, and the adoption of this guidance did not have a material impact on its consolidated financial statements.

 

In April 2014, the FASB issued ASU No. 2014-08, “Presentation of Financial Statements and Property, Plant, and Equipment ” and “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. The ASU amendment changes the requirements for reporting discontinued operations in Subtopic 205-20. The amendment is effective on a prospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2014. Early adoption is permitted for disposals that have not been reported in financial statements previously issued. Based on the Company’s evaluation of the ASU, its adoption of this update is not expected to have a material impact on the Company’s financial position or results of operation.

 

In May 2014, the FASB issued ASU No. 2014-09, “Revenue From Contracts with Customers”. The ASU amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The new standard is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled to when products are transferred to customers. The Company is required to adopt this new standard for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. The new revenue accounting standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. Based on the Company’s evaluation of the ASU, its adoption of this update is not expected to have a material impact on the Company’s financial position or results of operation.

 

In August 2014, the FASB issued an amendment to the accounting guidance related to the evaluation of an entity’s ability to continue as a going concern. The amendment establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern in connection with preparing financial statements for each annual and interim reporting period. The update also gives guidance to determine whether to disclose information about relevant conditions and events when there is substantial doubt about an entity’s ability to continue as a going concern. This guidance will be effective for us as of December 15, 2016. The new guidance is not expected to have an impact on our financial position, results of operations, or cash flows.

Business Combinations
Business Combinations

 

3.Business Combinations

 

Baskins Acquisition Holdings, LLC

 

Effective May 25, 2013, the Company completed the acquisition of 100% of the member interests in Baskins, including 30 stores and an online retail website. Baskins was a specialty western retailer with stores in Texas and Louisiana, and the acquisition expanded the Company’s operations into these core markets. All of the acquired Baskins stores were subsequently converted into Boot Barn stores. The goodwill represents the additional amounts paid in order to expand the Company’s geographical presence.

 

The acquisition-date fair value of the consideration transferred totaled $37.7 million, which consisted of $36.0 million in cash and $1.7 million of contingent consideration. The $36.0 million of cash included $13.7 million paid to the members of Baskins, $2.2 million paid into an escrow account and $20.1 million to repay Baskins’ outstanding debt. These payments were partially offset by $1.9 million, which represents the amount of cash on hand immediately prior to the closing of the acquisition. As of September 27, 2014, $1.7 million remained in an escrow account and is not included in the Company’s condensed consolidated balance sheet. Due to the nature of the escrow account, the cash portion of the consideration transferred was determined only provisionally and was subject to change pending the outcome of any escrow claims. Claims against the escrow account could have been made until November 30, 2014, but no claims were made as of that date.

 

The Company was obligated to make additional earnout payments, contingent on the achievement of milestones relating to 12-month store sales associated with three new stores for the periods beginning January 24, 2013, January 31, 2013 and February 20, 2013 at each of the three stores. The maximum amount payable upon achievement of the milestones was $2.1 million. Each of the milestones was achieved, and the Company made a cash payment of $2.1 million in the fourth quarter of fiscal 2014. As of the acquisition date, the Company estimated that these earnout payments would be $1.7 million, based on then existing facts and circumstances. The estimated fair value of this earnout was determined by using revenue projections and applying a discount rate to reflect the risk of the underlying conditions not being satisfied, such that no payment would be due. The fair value measurement of the earnout was based primarily on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in ASC 820. A total of $0.4 million from the revaluation of contingent consideration was recorded in the fourth quarter of fiscal 2014 to selling, general and administrative expenses in the Company’s consolidated statement of operations.

 

The total fair value of consideration transferred for the acquisition was allocated to the net tangible and intangible assets based upon their estimated fair values as of the date of the acquisition. The excess of the purchase price over the net tangible and intangible assets was recorded as goodwill. The goodwill is deductible for income tax purposes. Such estimated fair values require management to make estimates and judgments, especially with respect to intangible assets. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date based on the purchase price (in thousands):

 

 

 

At May 25, 2013
(Level 3)

 

 

 

 

 

Assets acquired:

 

 

 

Cash and cash equivalents

 

$

1,935 

 

Current assets

 

22,083 

 

Property and equipment, net

 

5,850 

 

Intangible assets acquired

 

5,006 

 

Goodwill

 

15,064 

 

Other assets

 

109 

 

Total assets acquired

 

50,047 

 

Liabilities assumed:

 

 

 

Other current liabilities

 

12,119 

 

Line of credit - current

 

10,259 

 

Notes payable - current

 

9,819 

 

Contingent consideration

 

1,740 

 

Above-market leases

 

83 

 

Capital lease obligation

 

138 

 

Total liabilities assumed

 

34,158 

 

Total purchase price

 

$

15,889 

 

 

Definite-lived intangible assets are recorded at their fair value as of the acquisition date with amortization computed utilizing the straight-line method over the assets’ estimated useful lives, with the exception of customer lists, which are amortized based on the estimated attrition rate. The period of amortization for trademarks is six months, non-compete agreements is four to five years, customer lists is five years, and below-market leases is two to 17 years. For leases under market rent, amortization is based on the discounted future benefits from lease payments under market rents.

 

Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred. The Company incurred $0.7 million of acquisition-related costs during the twenty-six weeks ended September 28, 2013. The amount of net revenue and net income of Baskins included in the Company’s condensed consolidated statements of operations from the acquisition date to September 28, 2013 were $17.0 million and less than $0.1 million, respectively.

 

Supplemental As Adjusted Data (Unaudited)

 

The unaudited as adjusted statements of operations data below gives effect to the Baskins acquisition, as well as the Company’s acquisition of RCC on August 31, 2012, as if they had all occurred as of March 30, 2013. These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Baskins, RCC and Boot Barn Holding Corporation to reflect the effects of amortization of purchased intangible assets and acquired inventory valuation step-up, additional financing as of April 3, 2011 in order to complete the acquisitions, income tax expense and other transaction costs directly associated with the acquisitions such as legal, accounting and banking fees. The adjustments are based upon currently available information and certain assumptions that the Company believes are reasonable under the circumstances. Pre-acquisition net sales and net income numbers for acquired entities are derived from their books and records prepared prior to the acquisition. This as adjusted data is presented for informational purposes only and does not purport to be indicative of the results of future operations or of the results that would have occurred had the acquisitions taken place as of the date noted above.

 

As adjusted net sales (Unaudited)

 

(in thousands)

 

Twenty-Six Weeks Ended
September 28, 2013

 

 

 

 

 

Net sales (as reported)

 

$

141,944 

 

Baskins

 

8,290 

 

As adjusted net sales

 

$

150,234 

 

 

As adjusted net loss (Unaudited)

 

(in thousands)

 

Twenty-six weeks ended
September 28, 2013

 

 

 

 

 

Net loss (as reported)

 

$

(2,905

)

Baskins

 

733

 

RCC

 

(563

)

Boot Barn Holding Corporation

 

1,994

 

As adjusted net income

 

$

(741

)

 

Revolving Credit Facilities and Long-Term Debt
Revolving Credit Facilities and Long-Term Debt

 

4.Revolving Credit Facilities and Long-Term Debt

 

Revolving Credit Facility (PNC Bank, N.A.)

 

On December 11, 2011, the Company obtained a collateral-based revolving line of credit with PNC Bank, N.A. (the ‘‘PNC Line of Credit’’), which the Company amended on August 31, 2012 and May 31, 2013. On April 15, 2014, the Company amended the PNC Line of Credit to increase the borrowing capacity from $60.0 million to up to $70.0 million. All other material terms of the PNC Line of Credit remained unchanged. The PNC Line of Credit is to be used for working capital and general corporate purposes, and has a maturity date of May 31, 2018. The available borrowing under the PNC Line of Credit is based on the collective value of eligible inventory and credit card receivables multiplied by specific advance rates, and is recalculated monthly. The PNC Line of Credit bears interest at (1) 0.75% if the amount of borrowings are less than 60% of the maximum borrowing capacity or 1.00% if the total borrowings are greater than 60% of the maximum borrowing capacity, plus (2) the highest of the bank’s public lending rate, federal funds open rate plus 0.50%, or the LIBOR rate for a period of one month plus 1.00%. The Company can also elect to use the Eurodollar rate plus 0.75% if the amount of borrowings is less than 60% of the maximum borrowing capacity or 1.00% if the total borrowings are greater than 60% of the maximum borrowing capacity. As of September 27, 2014, the total amount available to borrow was $17.9 million and the outstanding balance was $51.9 million. The outstanding borrowings as of September 27, 2014 consisted of $49.0 million outstanding at a rate of 1.9% and $2.9 million outstanding at a rate of 4.0%. Total interest expense incurred on the PNC Line of Credit for the thirteen and twenty-six weeks ended September 27, 2014 was $0.3 million and $0.6 million, respectively.

 

The PNC Line of Credit includes certain financial and nonfinancial covenants. The financial covenants include a minimum fixed charge coverage ratio only when ‘‘excess availability’’ falls below specified floor levels, while nonfinancial covenants include restrictions on a number of other activities. The Company was in compliance with its financial covenants as of September 27, 2014.

 

$130 Million Term Loan Due May 2019 (Golub Capital LLC)

 

The Company entered into a loan and security agreement with Golub Capital LLC on May 31, 2013, as amended by the first amendment to term loan and security agreement dated September 23, 2013 (the “Golub Loan”). On April 14, 2014, the Company entered into an amended and restated term loan and security agreement for the Golub Loan. The amended and restated loan and security agreement increased the borrowings on the Golub Loan from $99.2 million to $130.0 million. The obligations under the Golub Loan are secured by substantially all of the Company’s assets and the Company’s guarantors’ assets. A provision allowing the Company to conduct an initial public offering was also added to the amended and restated loan and security agreement. As of September 27, 2014, the principal on the Golub Loan was payable in quarterly installments of $327,000 made each calendar quarter and ending on the maturity date of the Golub Loan, which is May 31, 2019. The balance of the unpaid principal will be paid on the maturity date. All other material terms of the Golub Loan remain unchanged from the May 31, 2013 Golub Loan. The proceeds of the amendment to the Golub Loan were used to fund a portion of the $39.9 million dividend that was paid in April 2014. See Note 5 “Stock-based compensation”. The outstanding balance of the Golub Loan was $129.7 million at September 27, 2014.

 

Interest on the Golub Loan is paid quarterly and is calculated on either a base rate or the LIBOR rate. The base rate is a floating interest rate that is the sum of 4.75% plus the higher of (1) the prime rate, (2) the one-month LIBOR rate plus 1% with a LIBOR floor of 1.25% or (3) the Federal Funds rate, plus 50 basis points. The LIBOR rate is 5.75%, plus the LIBOR rate for a period of one, two, three, six, or, if available to all lenders, nine or 12 months (with a LIBOR floor of 1.25%), as elected by the Company. Interest is payable quarterly in arrears on the last day of each quarter. Interest charges are computed on the actual principal outstanding. As of September 27, 2014, the interest rate on the Golub Loan was 7.0%. Total interest expense incurred on the Golub Loan was $2.3 million and $6.4 million for the thirteen and twenty-six weeks ended September 27, 2014, respectively.

 

The Golub Loan requires the Company to meet certain financial and non-financial covenants. Financial covenants include a minimum interest coverage ratio and a maximum total leverage ratio. In addition, the term loan agreement also limits the amount that the Company can spend on capital expenditures per year. The Company was in compliance with all of its financial covenants as of September 27, 2014. The Golub Loan also requires, at the lender’s discretion, that 50% of the Company’s excess cash flow, as defined in the Golub Loan agreement, be used to make prepayments of outstanding loan amounts. The Company is also subject to early termination fees in certain instances of voluntary prepayments of the Golub Loan in excess of $10.0 million.

 

If there is an event of default under the Golub Loan, the principal and the interest accrued thereon may be declared immediately due and payable, subject to certain conditions set forth in the amended and restated term loan and security agreement. Events of default under the Golub Loan include, but are not limited to, the Company becoming delinquent in making certain payments due under the Golub Loan, the Company incurring certain events of default with respect to other indebtedness or obligations, the Company undergoing a change in control or the Company becoming subject to certain bankruptcy proceedings or orders. As of September 27, 2014, no events of default had occurred.

 

$20 Million Term Loan (PNC Bank, N.A.)

 

The Company entered into a loan and security agreement with PNC Bank N.A. on December 11, 2011, as amended by the first amendment to term loan agreement dated August 31, 2012 (the “PNC Term Loan”). The PNC Term Loan included a term loan facility of $20.0 million. Interest accrued on outstanding amounts under the PNC Term Loan at the rate of 7.5% per annum, due monthly. Effective October 1, 2012, monthly principal payments of $166,667 were required. In connection with the closing of the Golub Loan in May 2013, the Company converted all outstanding amounts on the PNC Term Loan to borrowings under the PNC Line of Credit.

 

Senior Subordinated Term Loans (Related Party Term Loans)

 

On December 11, 2011, the Company obtained senior subordinated term loans from certain subordinated lenders, in the aggregate amount of $25.0 million, bearing interest at the rate of 12.5%, due quarterly. The subordinated lenders were related parties. On August 31, 2012, the Company borrowed an additional $25.5 million from the subordinated lenders. See Note 8, “Related party transactions”. In connection with the closing of the Golub Loan in May 2013, the Company paid off all outstanding amounts on its senior subordinated term loans.

 

The Company incurred approximately $4.0 million of deferred loan fees related to the issuance of the Golub Loan and the PNC Line of Credit, which are being amortized to interest expense using the effective interest method over the term of the loan through May 31, 2019. The remaining balance of deferred loan fees as of September 27, 2014 is $3.2 million, and is included in prepaid expenses and other current assets (current portion) and other assets (long-term portion) on the condensed consolidated balance sheet.

 

Aggregate contractual maturities for the Company’s line of credit and long-term debt as of September 27, 2014 are as follows (in thousands):

 

Fiscal year

 

 

 

 

 

 

 

2015

 

$

654 

 

2016

 

1,308 

 

2017

 

1,308 

 

2018

 

1,308 

 

2019

 

53,164 

 

Thereafter

 

123,787 

 

Total

 

$

181,529 

 

 

Stock-Based Compensation
Stock-Based Compensation

 

5.Stock-Based Compensation

 

On January 27, 2012, the Company approved the 2011 Equity Incentive Plan (the “2011 Plan”). The 2011 Plan authorized the Company to issue options to employees, consultants and directors to purchase up to a total of 3,750,000 shares of common stock. As of September 27, 2014, all awards granted by the Company have been nonqualified stock options. Options granted under the 2011 Plan have a life of 10 years and vest over service periods of five years or in connection with certain events as defined by the 2011 Plan.

 

On April 11, 2014, the Company declared and subsequently paid a pro rata cash dividend to its stockholders totaling $39.9 million, made a cash payment of $1.4 million to holders of vested options, and lowered the exercise price of 1,918,550 unvested options by $2.00 per share. The cash payments totaling $41.3 million reduced retained earnings to zero and reduced additional paid-in capital by $39.7 million. The 2011 Plan has nondiscretionary antidilution provisions that require the fair value of the option awards to be equalized in the event of an equity restructuring. Consequently, the board of directors of the Company was obligated under the antidilution provisions to approve the reduction of the exercise price on the unvested options and make the cash payment to the holders of vested options. No incremental stock-based compensation expense was recognized for the dividend for the vested options or reduction in exercise price for the unvested options.

 

During the twenty-six weeks ended September 27, 2014, the Company granted certain members of management options to purchase a total of 237,500 shares of common stock under the 2011 Plan. The total grant date fair value of stock options granted in the twenty-six weeks ended September 27, 2014 was $1.5 million, with grant date fair values ranging from $6.20 to $6.36 per share. The Company is recognizing the expense relating to these stock options on a straight-line basis over the five-year service period of the awards. The exercise prices of these awards range between $11.14 and $11.40. No stock options were granted during the thirteen weeks ended September 27, 2014.

 

During the thirteen and twenty-six weeks ended September 28, 2013, the Company granted certain members of management options to purchase a total of 200,000 shares of common stock under the 2011 Plan. The total grant date fair value of the stock options was $1.4 million, all with a grant date fair value $6.92 per share. The Company is recognizing the expense relating to these stock option on a straight-line basis over the five-year service period of the awards. The exercise price of all these awards is $7.18 per share.

 

The fair values of stock options granted during the twenty-six weeks ended September 27, 2014 were estimated on the grant dates using the following assumptions:

 

 

 

Twenty-Six Weeks Ended
September 27, 2014

 

 

 

 

 

Expected option term(1)

 

6.5 years

 

Expected volatility factor(2)

 

56% 

 

Risk-free interest rate(3)

 

2.03% - 1.97%

 

Expected annual dividend yield(4)

 

0% 

 

 

 

(1)

The Company has limited historical information regarding expected option term. Accordingly, the Company determined the expected life of the options using the simplified method.

(2)

Stock volatility for each grant is measured using the weighted average of historical daily price changes of the Company’s competitors’ common stock over the most recent period equal to the expected option term of the Company’s awards.

(3)

The risk-free interest rate is determined using the rate on treasury securities with the same term.

(4)

The board of directors paid a dividend to stockholders in April 2014. The Company’s board of directors does not plan to pay cash dividends in the foreseeable future. Consequently, the Company used an expected dividend yield of zero.

 

The stock option awards discussed above were measured at fair value on the grant date using the Black-Scholes option valuation model. Key input assumptions used to estimate the fair value of stock options include the exercise price of the award, the expected option term, expected volatility of the Company’s stock price over the option’s expected term, the risk-free interest rate over the option’s expected term and the Company’s expected annual dividend yield, if any. The Company’s estimate of pre-vesting forfeitures, or forfeiture rate, was based on its internal analysis, which included the award recipients’ positions within the Company and the vesting period of the awards. The Company will issue shares of common stock when the options are exercised.

 

Intrinsic value for stock options is defined as the difference between the market price of the Company’s common stock on the last business day of the fiscal quarter and the weighted average exercise price of in-the-money stock options outstanding at the end of each fiscal period. The estimated market value per share was $13.57 and $11.40 at September 27, 2014 and March 29, 2014, respectively. The following table summarizes the stock award activity for the twenty-six weeks ended September 27, 2014 (aggregate intrinsic value in thousands):

 

 

 

 

 

Grant Date

 

Weighted

 

 

 

 

 

 

 

Weighted-

 

Average

 

 

 

 

 

 

 

Average

 

Remaining

 

Aggregate

 

 

 

Stock

 

Exercise

 

Contractual

 

Intrinsic

 

 

 

Options

 

Price(1)

 

Life (in Years)

 

Value

 

 

 

 

 

 

 

 

 

 

 

Outstanding at March 29, 2014

 

2,515,000 

 

$

5.97 

 

 

 

 

 

Granted

 

237,500 

 

$

10.23 

 

 

 

 

 

Cancelled, forfetied or expired

 

 

$

 

 

 

 

 

Outstanding at September 27, 2014

 

2,752,500 

 

$

6.34 

 

8.0 

 

$

19,908 

 

Vested and expected to vest at September 27, 2014

 

2,752,500 

 

$

6.34 

 

8.0 

 

$

19,908 

 

Exerciseable at September 27, 2014

 

761,450 

 

$

6.49 

 

7.5 

 

$

5,390 

 

 

 

(1)

The grant date weighted-average exercise price reflects the reduction of the exercise price by $2.00 per share for the 1,918,550 unvested options that were part of the April 2014 dividend discussed above.

 

Stock-based compensation expense was $0.5 million and $0.4 million for the thirteen weeks ended September 27, 2014 and September 28, 2013, respectively and $0.9 million and $0.6 million for the twenty-six weeks ended September 27, 2014 and September 28, 2013, respectively. Stock-based compensation expense of $0.1 million and less than $0.1 million was recorded in cost of goods sold in the condensed consolidated statements of operations for the thirteen weeks ended September 27, 2014 and September 28, 2013, respectively, and $0.2 million and less than $0.1 million for each of the twenty-six weeks ended September 27, 2014 and September 28, 2013, respectively. All other stock-based compensation expense is included in selling, general and administrative expenses in the condensed consolidated statements of operations. As of September 27, 2014, there was $6.5 million of total unrecognized stock-based compensation expense related to unvested stock options. This cost has a weighted-average remaining recognition period of 2.2 years.

 

A summary of the status of non-vested stock options as of September 27, 2014 and changes during the twenty-six weeks ended September 27, 2014 is presented below:

 

 

 

 

 

Weighted-

 

 

 

 

 

Average

 

 

 

 

 

Grant Date

 

 

 

Shares

 

Fair Value

 

 

 

 

 

 

 

Nonvested at March 29, 2014

 

1,793,550

 

$

3.55

 

Granted

 

237,500

 

$

6.28

 

Vested

 

(40,000

)

$

6.92

 

Nonvested shares forfeited

 

 

$

 

Nonvested at September 27, 2014

 

1,991,050

 

$

3.81

 

 

Commitments and Contingencies
Commitments and Contingencies

 

6.Commitments and Contingencies

 

The Company has employment agreements with three key officers of the Company. One of the employment agreements expires in November 2015. This agreement automatically renews for successive one-year terms and will continue to do so unless otherwise terminated. The two other employment agreements do not expire. The employment agreements, together with a letter agreement between one of these officers and the Company, provide for minimum salary levels and incentive bonuses that are payable under certain business conditions, as well as guaranteed payments in the event of termination of employment in certain circumstances. The future amounts payable under these employment agreements and this letter agreement have not been recorded in the condensed consolidated financial statements as of September 27, 2014 and March 29, 2014.

 

The Company is involved, from time to time, in litigation that is incidental to its business. The Company has reviewed these matters to determine if reserves are required for losses that are probable and reasonable to estimate in accordance with FASB ASC Topic 450, Contingencies. The Company evaluates such reserves, if any, based upon several criteria, including the merits of each claim, settlement discussions and advice from outside legal counsel, as well as indemnification of amounts expended by the Company’s insurers or others, if any. In management’s opinion, none of these legal matters, individually or in the aggregate, will have a material effect on the Company’s financial position, results of operations, cash flows or liquidity.

 

During the normal course of its business, the Company has made certain indemnifications and commitments under which the Company may be required to make payments for certain transactions. These indemnifications include those given to various lessors in connection with facility leases for certain claims arising from such facility leases, and indemnifications to directors and officers of the Company to the maximum extent permitted under the laws of the State of Delaware. The majority of these indemnifications and commitments do not provide for any limitation of the maximum potential future payments the Company could be obligated to make, and their duration may be indefinite. The Company has not recorded any liability for these indemnifications and commitments in the condensed consolidated balance sheets, statements of operations or cash flows as the impact is expected to be immaterial.

 

Income Taxes
Income Taxes

 

7.Income Taxes

 

The Company accounts for income taxes and the related accounts under the liability method in accordance with ASC Topic 740, Accounting for Income Taxes. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates to be in effect during the year in which the basis differences reverse. Because management believes that it is more likely than not that the Company will realize the full amount of the net deferred tax assets, the Company has not recorded any valuation allowance for the deferred tax assets.

 

The provision for income taxes is based on the current estimate of the annual effective tax rate and is adjusted as necessary for discrete events occurring in a particular period. The effective income tax rate was 39.8% and 37.5% for the thirteen weeks ended September 27, 2014 and September 28, 2013, respectively, and 44.2% and 37.4% for the twenty-six weeks ended September 27, 2014 and September 28, 2013, respectively. The effective tax rates for the thirteen and twenty-six weeks ended September 27, 2014 are higher than their comparable periods in fiscal 2014 due to increased income before income taxes and $0.2 million of discrete items recognized in the first quarter of fiscal 2015.

 

Related Party Transactions
Related Party Transactions

 

8.Related Party Transactions

 

Leases and Other Transactions

 

The Company has a lease agreement for one of its stores at a location owned by one minority stockholder of the Company. The Company paid less than $0.1 million for these leases during both of the thirteen weeks ended September 27, 2014 and September 28, 2013, and $0.1 million for both of the twenty-six weeks ended September 27, 2014 and September 28, 2013. These lease payments are included in selling, general and administrative expenses in the consolidated statements of operations.

 

Related Party Loans

 

As of March 30, 2013, the Company had notes payable (see Note 4, “Revolving Credit Facilities and Long-Term Debt”) to the subordinated lenders who own common stock of the Company. These notes were paid in full in May 2013. Interest and early termination fees paid to these entities totaled $3.6 million in the twenty-six weeks ended September 28, 2013.

 

Earnings (Loss) Per Share
Earnings (Loss) Per Share

 

9.Earnings (Loss) Per Share

 

Earnings (loss) per share is computed under the provisions of FASB ASC Topic 260, Earnings Per Share. Basic earnings (loss) per share is computed based on the weighted average number of outstanding shares of common stock during the period. Diluted earnings (loss) per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method, whereby proceeds from such exercise, unamortized compensation and hypothetical excess tax benefits, if any, on share-based awards are assumed to be used by the Company to purchase the common shares at the average market price during the period. Dilutive potential shares of common stock represent outstanding stock options. The dilutive effect of stock options and restricted stock is applicable only in periods of net income.

 

As discussed in Note 5, “Stock-based compensation”, holders of vested stock options received a cash payment of $1.4 million, which the Company deducted from net income for purposes of the earnings per share calculation to determine the net income available to common shareholders. This resulted in net income available for common stockholders of $0.9 million for purposes of the earnings per share calculation for the twenty-six weeks ended September 27, 2014.

 

The components of basic and diluted loss per share of common stock, in aggregate, for the thirteen and twenty-six weeks ended September 27, 2014 and September 28, 2013 are as follows (in thousands, except per share amounts):

 

 

 

Thirteen Weeks Ended

 

Twenty-Six Weeks Ended

 

 

 

September 27,
2014

 

September 28,
2013

 

September 27,
2014

 

September 28,
2013

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributed to Boot Barn Holdings, Inc.

 

$

944

 

$

(1,387

)

$

2,353

 

$

(2,760

)

Weighted average basic shares outstanding

 

19,929

 

18,929

 

19,539

 

18,929

 

Dilutive effect of stock options

 

623

 

 

582

 

 

Weighted average diluted shares outstanding

 

20,552

 

18,929

 

20,121

 

18,929

 

Basic earnings (loss) per share

 

$

0.05

 

$

(0.07

)

$

0.05

 

$

(0.15

)

Diluted earnings (loss) per share

 

$

0.05

 

$

(0.07

)

$

0.05

 

$

(0.15

)

 

Options to purchase 350,000 shares and 599,463 shares of common stock were outstanding during the thirteen and twenty-six weeks ended September 27, 2014, respectively, but were not included in the computation of weighted average diluted common shares outstanding as the effect of doing so would have been anti-dilutive.

 

The Company incurred a net loss for both of the thirteen and twenty-six weeks ended September 28, 2013. Therefore, potentially dilutive shares totaling 1,828,800 and 1,568,350 for the thirteen and twenty-six weeks ended September 28, 2013, respectively, are excluded from diluted weighted average shares outstanding for purposes of determining diluted loss per share.

 

Subsequent Events
Subsequent Events

 

10.Subsequent Events

 

Amendment of Certificate of Incorporation

 

On October 19, 2014, the Company’s board of directors authorized the amendment of its certificate of incorporation to increase the number of shares that the Company is authorized to issue to 100,000,000 shares of common stock, par value $0.0001 per share. In addition, the amendment of the certificate of incorporation authorized the Company to issue 10,000,000 shares of preferred stock, par value $0.0001 per share, and effect a 25-for-1 stock split of its outstanding common stock. The amendment became effective on October 27, 2014. Accordingly, all common share and per share amounts in these condensed consolidated financial statements have been adjusted to reflect the 25-for-1 stock split as though it had occurred at the beginning of the initial period presented.

 

Initial Public Offering

 

On October 29, 2014, the Company completed its initial public offering (“IPO”) in which it issued and sold 5,000,000 shares of its common stock. In addition, on October 31, 2014, the underwriters exercised their option to purchase an additional 750,000 shares of common stock from the Company to cover over-allotments. As a result, the total IPO size was 5,750,000 shares of common stock sold by the Company at a price of $16.00 per share.

 

Capitalized Offering Costs

 

As of September 27, 2014, the Company had capitalized $2.0 million of offering costs associated with the IPO, which were recorded in prepaid expenses and other current assets on the condensed consolidated balance sheet. Upon the completion of the IPO, these offering costs, in addition to any offering costs incurred subsequent to September 27, 2014, were reclassified to additional paid-in capital and offset against the IPO proceeds.

 

2014 Equity Incentive Plan

 

On October 19, 2014, the Company approved the 2014 Equity Incentive Plan (the “2014 Plan”). The 2014 Plan authorized the Company to issue options to employees, consultants and directors to purchase up to a total of 1,600,000 shares of common stock, par value $0.0001 per share. All awards granted by the Company to date have been nonqualified stock options or restricted stock awards.

 

Principal Payment On Golub Loan

 

On November 5, 2014, the Company used $81.9 million of the net proceeds from the IPO to pay down the principal balance on the Golub Loan. The Company incurred a pre-payment penalty of $0.6 million and accelerated amortization of deferred loan fees of $1.7 million, which was recorded to interest expense in the third quarter of fiscal 2015. The principal balance will be repaid in quarterly installments of $119,953 made each calendar quarter beginning December 31, 2014 and ending on the maturity date of May 31, 2019.

 

Amendments to Credit Facilities

 

On November 5, 2014, the Company entered into a third amendment (the “PNC Amendment”) to the PNC Line of Credit and an amendment (the “Golub Amendment”) to the Golub Loan. The PNC Amendment and the Golub Amendment each (a) permit certain addbacks to the definition of “EBITDA” (Earnings Before Interest, Taxes, Depreciation and Amortization) relating to expenses incurred in connection with the Company’s recently consummated IPO and the preparation of the Amendments, (b) revise the “Change of Control” definition and the covenant restricting certain equity issuances to be more customary for a publicly traded company, (c) delete the equity cure provisions, and (d) change the financial statement deliverable requirements, and timing, to align with the Securities and Exchange Commission disclosure requirements. In addition, the Golub Amendment reduced the applicable LIBOR Floor to 1.00% and changed the current interest rate from 7.00% to 6.75%.

 

Summary of Significant Accounting Policies (Policies)

 

Basis of Presentation

 

The Company’s consolidated financial statements as of and for the thirteen weeks and twenty-six weeks ended September 27, 2014 and September 28, 2013 are prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”), and include the accounts of the Company and each of its subsidiaries, including Boot Barn, Inc., RCC Western Stores, Inc. (“RCC”) and Baskins Acquisition Holdings, LLC (“Baskins”). All intercompany accounts and transactions among the Company and its subsidiaries have been eliminated in consolidation. Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements have been condensed or omitted.

 

In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments that are of a normal and recurring nature necessary to fairly present the Company’s financial position and results of operations and cash flows in all material respects as of the dates and for the periods presented. The results of operations presented in the interim condensed consolidated financial statements are not necessarily indicative of the results that may be expected for the fiscal year ending March 28, 2015.

 

 

Fiscal Year

 

The Company reports its results of operations and cash flows on a 52- or 53-week basis, and its fiscal year ends on the Saturday closest to March 31. The years ending March 29, 2014 (“fiscal 2014”) and March 30, 2013 (“fiscal 2013”) each consisted of 52 weeks. Fiscal quarters contain thirteen weeks, with the exception of the fourth quarter of a 53-week fiscal year, which contains fourteen weeks. The second quarter of fiscal 2015 and fiscal 2014 ended on September 27, 2014 and September 28, 2013, respectively.

 

 

Comprehensive Income

 

The Company does not have any components of other comprehensive income (loss) recorded within its consolidated financial statements and, therefore, does not separately present a statement of comprehensive income (loss) in its consolidated financial statements.

 

 

Segment Reporting

 

GAAP has established guidance for reporting information about a company’s operating segments, including disclosures related to a company’s products and services, geographic areas and major customers. The Company operates in a single operating segment, which includes net sales generated from its retail stores and e-commerce website. All of the Company’s identifiable assets are in the U.S.

 

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Among the significant estimates affecting the Company’s consolidated financial statements are those relating to revenue recognition, inventories, goodwill, intangible and long-lived assets, stock-based compensation and income taxes. Management regularly evaluates its estimates and assumptions based upon historical experience and various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. As of September 27, 2014, the Company had identified no indicators of impairment with respect to its goodwill, intangible and long-lived asset balances. To the extent actual results differ from those estimates, the Company’s future results of operations may be affected.

 

 

Fair Value of Certain Financial Assets and Liabilities

 

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures, (“ASC 820”) which requires disclosure of the estimated fair value of certain assets and liabilities defined by the guidance as financial instruments. The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable and debt. ASC 820 defines the fair value of financial instruments as the price that would be received from the sale of an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level hierarchy for disclosure that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities.

 

·

Level 1 uses unadjusted quoted prices that are available in active markets for identical assets or liabilities.

 

·

Level 2 uses inputs other than quoted prices included in Level 1 that are either directly or indirectly observable through correlation with market data. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs to valuation models or other pricing methodologies that do not require significant judgment because the inputs used in the model, such as interest rates and volatility, can be corroborated by readily observable market data.

 

·

Level 3 uses one or more significant inputs that are unobservable and supported by little or no market activity, and reflect the use of significant management judgment. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation.

 

Cash and cash equivalents, accounts receivable and accounts payable are valued at fair value and are classified according to the lowest level input that is significant to the fair value measurement. As a result, the asset or liability could be classified as Level 2 or Level 3 even though there may be certain significant inputs that are readily observable. The Company believes that the recorded value of its financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or duration.

 

Although market quotes for the fair value of the outstanding debt arrangements discussed in Note 4, “Revolving Credit Facilities and Long-Term Debt” are not readily available, the Company believes its carrying value approximates fair value due to the variable interest rates, which are Level 2 inputs. There were no financial assets or liabilities requiring fair value measurements as of September 27, 2014 on a recurring basis.

 

 

Recent Accounting Pronouncements

 

In July 2013, the FASB issued Accounting Standards Update (“ASU”) No. 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit when a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force)”. The amendments in this ASU provide guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. An unrecognized tax benefit should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward with certain exceptions, in which case such an unrecognized tax benefit should be presented in the financial statements as a liability. The amendments in this ASU do not require new recurring disclosures. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Companies may choose to apply this guidance retrospectively to each prior reporting period presented. The Company adopted this ASU on March 30, 2014, and the adoption of this guidance did not have a material impact on its consolidated financial statements.

 

In April 2014, the FASB issued ASU No. 2014-08, “Presentation of Financial Statements and Property, Plant, and Equipment ” and “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. The ASU amendment changes the requirements for reporting discontinued operations in Subtopic 205-20. The amendment is effective on a prospective basis for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2014. Early adoption is permitted for disposals that have not been reported in financial statements previously issued. Based on the Company’s evaluation of the ASU, its adoption of this update is not expected to have a material impact on the Company’s financial position or results of operation.

 

In May 2014, the FASB issued ASU No. 2014-09, “Revenue From Contracts with Customers”. The ASU amended revenue recognition guidance to clarify the principles for recognizing revenue from contracts with customers. The new standard is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled to when products are transferred to customers. The Company is required to adopt this new standard for annual and interim periods beginning after December 15, 2016. Early adoption is not permitted. The new revenue accounting standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. Based on the Company’s evaluation of the ASU, its adoption of this update is not expected to have a material impact on the Company’s financial position or results of operation.

 

In August 2014, the FASB issued an amendment to the accounting guidance related to the evaluation of an entity’s ability to continue as a going concern. The amendment establishes management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern in connection with preparing financial statements for each annual and interim reporting period. The update also gives guidance to determine whether to disclose information about relevant conditions and events when there is substantial doubt about an entity’s ability to continue as a going concern. This guidance will be effective for us as of December 15, 2016. The new guidance is not expected to have an impact on our financial position, results of operations, or cash flows.

 

Business Combinations (Tables)

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the acquisition date based on the purchase price (in thousands):

 

 

 

At May 25, 2013
(Level 3)

 

 

 

 

 

Assets acquired:

 

 

 

Cash and cash equivalents

 

$

1,935 

 

Current assets

 

22,083 

 

Property and equipment, net

 

5,850 

 

Intangible assets acquired

 

5,006 

 

Goodwill

 

15,064 

 

Other assets

 

109 

 

Total assets acquired

 

50,047 

 

Liabilities assumed:

 

 

 

Other current liabilities

 

12,119 

 

Line of credit - current

 

10,259 

 

Notes payable - current

 

9,819 

 

Contingent consideration

 

1,740 

 

Above-market leases

 

83 

 

Capital lease obligation

 

138 

 

Total liabilities assumed

 

34,158 

 

Total purchase price

 

$

15,889 

 

 

 

As adjusted net sales (Unaudited)

 

(in thousands)

 

Twenty-Six Weeks Ended
September 28, 2013

 

 

 

 

 

Net sales (as reported)

 

$

141,944 

 

Baskins

 

8,290 

 

As adjusted net sales

 

$

150,234 

 

 

As adjusted net loss (Unaudited)

 

(in thousands)

 

Twenty-six weeks ended
September 28, 2013

 

 

 

 

 

Net loss (as reported)

 

$

(2,905

)

Baskins

 

733

 

RCC

 

(563

)

Boot Barn Holding Corporation

 

1,994

 

As adjusted net income

 

$

(741

)

 

Revolving Credit Facilities and Long-Term Debt (Tables)
Schedule of aggregate contractual maturities for the Company's line of credit and long-term debt

 

Aggregate contractual maturities for the Company’s line of credit and long-term debt as of September 27, 2014 are as follows (in thousands):

 

Fiscal year

 

 

 

 

 

 

 

2015

 

$

654 

 

2016

 

1,308 

 

2017

 

1,308 

 

2018

 

1,308 

 

2019

 

53,164 

 

Thereafter

 

123,787 

 

Total

 

$

181,529 

 

 

Stock-Based Compensation (Tables)

 

 

 

 

Twenty-Six Weeks Ended
September 27, 2014

 

 

 

 

 

Expected option term(1)

 

6.5 years

 

Expected volatility factor(2)

 

56% 

 

Risk-free interest rate(3)

 

2.03% - 1.97%

 

Expected annual dividend yield(4)

 

0% 

 

 

 

(1)

The Company has limited historical information regarding expected option term. Accordingly, the Company determined the expected life of the options using the simplified method.

(2)

Stock volatility for each grant is measured using the weighted average of historical daily price changes of the Company’s competitors’ common stock over the most recent period equal to the expected option term of the Company’s awards.

(3)

The risk-free interest rate is determined using the rate on treasury securities with the same term.

(4)

The board of directors paid a dividend to stockholders in April 2014. The Company’s board of directors does not plan to pay cash dividends in the foreseeable future. Consequently, the Company used an expected dividend yield of zero.

 

 

 

The following table summarizes the stock award activity for the twenty-six weeks ended September 27, 2014 (aggregate intrinsic value in thousands):

 

 

 

 

 

Grant Date

 

Weighted

 

 

 

 

 

 

 

Weighted-

 

Average

 

 

 

 

 

 

 

Average

 

Remaining

 

Aggregate

 

 

 

Stock

 

Exercise

 

Contractual

 

Intrinsic

 

 

 

Options

 

Price(1)

 

Life (in Years)

 

Value

 

 

 

 

 

 

 

 

 

 

 

Outstanding at March 29, 2014

 

2,515,000 

 

$

5.97 

 

 

 

 

 

Granted

 

237,500 

 

$

10.23 

 

 

 

 

 

Cancelled, forfetied or expired

 

 

$

 

 

 

 

 

Outstanding at September 27, 2014

 

2,752,500 

 

$

6.34 

 

8.0 

 

$

19,908 

 

Vested and expected to vest at September 27, 2014

 

2,752,500 

 

$

6.34 

 

8.0 

 

$

19,908 

 

Exerciseable at September 27, 2014

 

761,450 

 

$

6.49 

 

7.5 

 

$

5,390 

 

 

 

(1)

The grant date weighted-average exercise price reflects the reduction of the exercise price by $2.00 per share for the 1,918,550 unvested options that were part of the April 2014 dividend discussed above.

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

Average

 

 

 

 

 

Grant Date

 

 

 

Shares

 

Fair Value

 

 

 

 

 

 

 

Nonvested at March 29, 2014

 

1,793,550

 

$

3.55

 

Granted

 

237,500

 

$

6.28

 

Vested

 

(40,000

)

$

6.92

 

Nonvested shares forfeited

 

 

$

 

Nonvested at September 27, 2014

 

1,991,050

 

$

3.81

 

 

Earnings (Loss) Per Share (Tables)
Schedule of the components of basic and diluted loss per share of common stock

 

The components of basic and diluted loss per share of common stock, in aggregate, for the thirteen and twenty-six weeks ended September 27, 2014 and September 28, 2013 are as follows (in thousands, except per share amounts):

 

 

 

Thirteen Weeks Ended

 

Twenty-Six Weeks Ended

 

 

 

September 27,
2014

 

September 28,
2013

 

September 27,
2014

 

September 28,
2013

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributed to Boot Barn Holdings, Inc.

 

$

944

 

$

(1,387

)

$

2,353

 

$

(2,760

)

Weighted average basic shares outstanding

 

19,929

 

18,929

 

19,539

 

18,929

 

Dilutive effect of stock options

 

623

 

 

582

 

 

Weighted average diluted shares outstanding

 

20,552

 

18,929

 

20,121

 

18,929

 

Basic earnings (loss) per share

 

$

0.05

 

$

(0.07

)

$

0.05

 

$

(0.15

)

Diluted earnings (loss) per share

 

$

0.05

 

$

(0.07

)

$

0.05

 

$

(0.15

)

 

Business Operations (Details) (USD $)
In Thousands, except Share data, unless otherwise specified
Sep. 27, 2014
Vote
store
state
Jun. 9, 2014
Mar. 29, 2014
state
store
Jun. 8, 2014
WW Holding Corporation
Boot Barn Holding Corporation
Jun. 9, 2014
Boot Barn Holding Corporation
Business Operations
 
 
 
 
 
Number of shares authorized
100,000,000 
 
100,000,000 
 
 
Number of shares issued
19,929,350 
 
18,929,000 
 
 
Number of shares outstanding
19,929,350 
 
18,929,000 
 
 
Number of votes per common share
 
 
 
 
Ownership percentage (as a percent)
 
 
 
95.00% 
 
Ownership percentage of noncontrolling shareholders (as a percent)
 
 
 
 
5.00% 
Percentage of the entity's shares owned by minority stockholders of the Predecessor
 
5.00% 
 
 
 
Non-controlling interest
$ 0 
 
$ 4,087 
 
 
Number of stores
158 
 
152 
 
 
Number of states in which the Company operates
24 
 
23 
 
 
Number of stores operated under other name
 
 
 
 
Summary of Significant Accounting Policies (Details) (USD $)
In Thousands, unless otherwise specified
6 Months Ended 12 Months Ended
Sep. 27, 2014
item
Mar. 29, 2014
Mar. 30, 2013
Fiscal Year
 
 
 
Fiscal year period
 
364 days 
364 days 
Fiscal quarter period, except for a 53-week fiscal year
91 days 
 
 
Fiscal quarter period, for a 53-week fiscal year
98 days 
 
 
Use of Estimates
 
 
 
Number of indicators of impairment for goodwill, intangible, and long-lived assets
 
 
Fair Value of Certain Financial Assets and Liabilities
 
 
 
Financial assets requiring fair value measurements on a recurring basis
$ 0 
 
 
Financial liabilities requiring fair value measurements on a recurring basis
$ 0 
 
 
Business Combinations (Details) (USD $)
3 Months Ended 4 Months Ended 6 Months Ended 6 Months Ended 4 Months Ended 0 Months Ended 3 Months Ended 6 Months Ended 0 Months Ended
Sep. 27, 2014
store
Sep. 28, 2013
Sep. 28, 2013
Sep. 27, 2014
store
Sep. 28, 2013
Mar. 29, 2014
store
Sep. 28, 2013
RCC
Sep. 28, 2013
Boot Barn Holding Corporation
Sep. 28, 2013
Maximum
May 25, 2013
Baskins
Mar. 29, 2014
Baskins
Sep. 27, 2014
Baskins
Sep. 28, 2013
Baskins
Nov. 30, 2014
Baskins
claim
May 25, 2013
Baskins
store
May 25, 2013
Baskins
Trademarks
May 25, 2013
Baskins
Non-Compete Agreements
Minimum
May 25, 2013
Baskins
Non-Compete Agreements
Maximum
May 25, 2013
Baskins
Customer Lists
May 25, 2013
Baskins
Below-market leases
Minimum
May 25, 2013
Baskins
Below-market leases
Maximum
Business combinations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100.00% 
 
 
 
 
 
 
Number of stores
158 
 
 
158 
 
152 
 
 
 
 
 
 
 
 
30 
 
 
 
 
 
 
Consideration transferred
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of consideration transferred
 
 
 
 
 
 
 
 
 
$ 37,700,000 
 
 
 
 
 
 
 
 
 
 
 
Cash transferred
 
 
 
 
 
 
 
 
 
36,000,000 
 
 
 
 
 
 
 
 
 
 
 
Cash paid to acquiree members
 
 
 
 
 
 
 
 
 
13,700,000 
 
 
 
 
 
 
 
 
 
 
 
Cash placed in escrow
 
 
 
 
 
 
 
 
 
2,200,000 
 
1,700,000 
 
 
 
 
 
 
 
 
 
Repayment of acquiree debt
 
 
 
 
 
 
 
 
 
20,100,000 
 
 
 
 
 
 
 
 
 
 
 
Number of claims against escrow account
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Additional information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contingent consideration achievement term
 
 
 
 
 
 
 
 
 
12 months 
 
 
 
 
 
 
 
 
 
 
 
Number of new stores
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum cash payment if milestones are achieved
 
 
 
 
 
 
 
 
 
2,100,000 
 
 
 
 
 
 
 
 
 
 
 
Actual cash payment due to achievement of milestones
 
 
 
 
 
 
 
 
 
 
2,100,000 
 
 
 
 
 
 
 
 
 
 
Revaluation of contingent consideration
23,371,000 
23,861,000 
 
44,868,000 
42,706,000 
 
 
 
 
 
400,000 
 
 
 
 
 
 
 
 
 
 
Assets acquired:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,935,000 
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
22,083,000 
 
 
 
 
 
 
Property and equipment, net
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,850,000 
 
 
 
 
 
 
Intangible assets acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,006,000 
 
 
 
 
 
 
Goodwill
93,097,000 
 
 
93,097,000 
 
93,097,000 
 
 
 
 
 
 
 
 
15,064,000 
 
 
 
 
 
 
Other assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
109,000 
 
 
 
 
 
 
Total assets acquired
 
 
 
 
 
 
 
 
 
 
 
 
 
 
50,047,000 
 
 
 
 
 
 
Liabilities assumed:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other current liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12,119,000 
 
 
 
 
 
 
Line of credit - current
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10,259,000 
 
 
 
 
 
 
Notes payable - current
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9,819,000 
 
 
 
 
 
 
Contingent consideration
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,740,000 
 
 
 
 
 
 
Above-market leases
 
 
 
 
 
 
 
 
 
 
 
 
 
 
83,000 
 
 
 
 
 
 
Capital lease obligation
 
 
 
 
 
 
 
 
 
 
 
 
 
 
138,000 
 
 
 
 
 
 
Total liabilities assumed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
34,158,000 
 
 
 
 
 
 
Total purchase price
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15,889,000 
 
 
 
 
 
 
Useful life
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6 months 
4 years 
5 years 
5 years 
2 years 
17 years 
Acquisition-related costs
 
 
 
 
671,000 
 
 
 
 
 
 
 
700,000 
 
 
 
 
 
 
 
 
Proforma information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue
 
 
17,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
 
 
100,000 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales (as reported)
86,384,000 
77,370,000 
 
168,881,000 
141,944,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As adjusted net sales
 
 
 
 
150,234,000 
 
 
 
 
 
 
 
8,290,000 
 
 
 
 
 
 
 
 
Net income (loss)
944,000 
(1,460,000)
 
2,357,000 
(2,905,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As adjusted net income
 
 
 
 
$ (741,000)
 
$ (563,000)
$ 1,994,000 
 
 
 
 
$ 733,000 
 
 
 
 
 
 
 
 
Revolving Credit Facilities and Long-Term Debt (Details) (USD $)
1 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended 3 Months Ended 6 Months Ended 6 Months Ended 0 Months Ended 0 Months Ended
Apr. 30, 2014
Sep. 27, 2014
Mar. 29, 2014
Sep. 27, 2014
Revolving credit facility (PNC Bank, N.A.)
Sep. 27, 2014
Revolving credit facility (PNC Bank, N.A.)
Apr. 15, 2014
Revolving credit facility (PNC Bank, N.A.)
Apr. 14, 2014
Revolving credit facility (PNC Bank, N.A.)
Sep. 27, 2014
Revolving credit facility (PNC Bank, N.A.)
Federal funds open rate
Sep. 27, 2014
Revolving credit facility (PNC Bank, N.A.)
LIBOR rate
Sep. 27, 2014
Revolving credit facility (PNC Bank, N.A.)
Borrowings less than 60% of the maximum borrowing capacity
Highest of the bank's public lending rate or prime rate
Sep. 27, 2014
Revolving credit facility (PNC Bank, N.A.)
Borrowings less than 60% of the maximum borrowing capacity
LIBOR rate
Sep. 27, 2014
Revolving credit facility (PNC Bank, N.A.)
Borrowings less than 60% of the maximum borrowing capacity
Eurodollar rate
Sep. 27, 2014
Revolving credit facility (PNC Bank, N.A.)
Borrowings greater than 60% of the maximum borrowing capacity
Highest of the bank's public lending rate or prime rate
Sep. 27, 2014
Revolving credit facility (PNC Bank, N.A.)
Borrowings greater than 60% of the maximum borrowing capacity
LIBOR rate
Sep. 27, 2014
Revolving credit facility (PNC Bank, N.A.)
Borrowings greater than 60% of the maximum borrowing capacity
Eurodollar rate
Sep. 27, 2014
Borrowings at interest rate one
Sep. 27, 2014
Borrowings at interest rate two
Sep. 27, 2014
$130 million term loan due May 2019 (Golub Capital LLC)
item
Sep. 27, 2014
$130 million term loan due May 2019 (Golub Capital LLC)
item
Apr. 14, 2014
$130 million term loan due May 2019 (Golub Capital LLC)
Apr. 13, 2014
$130 million term loan due May 2019 (Golub Capital LLC)
Sep. 27, 2014
$130 million term loan due May 2019 (Golub Capital LLC)
Highest of the bank's public lending rate or prime rate
Sep. 27, 2014
$130 million term loan due May 2019 (Golub Capital LLC)
Federal funds open rate
Sep. 27, 2014
$130 million term loan due May 2019 (Golub Capital LLC)
LIBOR rate
Sep. 27, 2014
$130 million term loan due May 2019 (Golub Capital LLC)
One-month LIBOR rate
Oct. 1, 2012
$20 million term loan (PNC Bank, N.A.)
Aug. 31, 2012
$20 million term loan (PNC Bank, N.A.)
Aug. 31, 2012
Senior subordinated term loans (related party term loans)
Dec. 11, 2011
Senior subordinated term loans (related party term loans)
Sep. 27, 2014
Golub Loan and PNC Line of Credit
Revolving credit facilities and long-term debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Borrowing capacity
 
 
 
 
 
$ 70,000,000 
$ 60,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Threshold percentage of the maximum borrowing capacity, at which different percentage points added to the variable rate or reference rate to compute the final interest rate on the debt instrument will apply
 
 
 
 
60.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Description of variable rate basis
 
 
 
 
 
 
 
 
one month LIBOR 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
one, two, three, six, or, if available to all lenders, nine or 12 months 
one month LIBOR 
 
 
 
 
 
Percentage added to the variable rate to compute the final interest rate
 
 
 
 
 
 
 
 
 
0.75% 
0.75% 
 
1.00% 
1.00% 
 
 
 
 
 
 
 
4.75% 
4.75% 
 
4.75% 
 
 
 
 
 
Percentage points added to the reference rate to compute the variable rate
 
 
 
 
 
 
 
0.50% 
1.00% 
 
 
0.75% 
 
 
1.00% 
 
 
 
 
 
 
 
0.50% 
5.75% 
1.00% 
 
 
 
 
 
Amount available to borrow
 
 
 
17,900,000 
17,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding balance of credit facilities
 
51,856,000 
28,624,000 
51,900,000 
51,900,000 
 
 
 
 
 
 
 
 
 
 
49,000,000 
2,900,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Line of credit interest rate (as a percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1.90% 
4.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
130,000,000 
99,200,000 
 
 
 
 
 
20,000,000 
 
25,000,000 
 
Periodic payment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
327,000 
 
 
 
 
 
 
166,667 
 
 
 
 
Required payment frequency
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
quarterly 
 
 
 
 
 
 
monthly 
 
 
 
 
Dividends paid
39,900,000 
41,300,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding balance of loan
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
129,700,000 
129,700,000