Jack In The Box 2009 Annual Report Download - page 30

Table of Contents
(1) Obligations related to our credit facility, capital lease obligations, and other long-term debt obligations include interest expense
estimated at interest rates in effect on September 27, 2009.
(2) Includes purchase commitments for food, beverage, packaging items and certain utilities.
(3) Includes expected payments associated with our defined benefit plans, postretirement benefit plans and our non-qualified deferred
compensation plan through fiscal 2017.
(4) Consists primarily of letters of credit for workers’ compensation and general liability insurance.
The contractual obligations and commitments table includes $24.8 million in contributions we expect to make to our pension plans
in fiscal 2010. We maintain two pension plans, a noncontributory defined benefit pension plan (“qualified pension plan”) covering
substantially all full-time employees and an unfunded supplemental executive plan (“non-qualified pension plan’). Our policy is to fund
our qualified pension plan at amounts necessary to satisfy the minimum amount required by law, plus additional amounts as determined
by management to improve the plan’s funded status. Based on the funding status of our qualified pension plan as of our last
measurement date, we are not required to make a minimum contribution in 2010, however, we currently expect to make voluntary
contributions of approximately $22.0 million during the fiscal year. Contributions beyond fiscal 2010 will depend on changes in the
discount rate and returns on plan assets. As of September 27, 2009, our qualified pension plan had a projected benefit obligation
(“PBO”) of $290.5 million and plan assets of $231.6 million, and our non-qualified pension plan had a PBO of $49.5 million.

We have identified the following as our most critical accounting estimates, which are those that are most important to the portrayal of
the Company’s financial condition and results and require management’s most subjective and complex judgments. Information regarding
our other significant accounting estimates and policies are disclosed in Note 1 to our consolidated financial statements.
Share-based Compensation — We offer share-based compensation plans to attract, retain and motivate key officers, non-employee
directors and employees to work toward the financial success of the Company. Share-based compensation cost for our stock option grants
is estimated at the grant date based on the award’s fair-value as calculated by an option pricing model and is recognized as expense ratably
over the requisite service period. The option pricing models require various highly judgmental assumptions including volatility, forfeiture
rates, and expected option life. If any of the assumptions used in the model change significantly, share-based compensation expense may
differ materially in the future from that recorded in the current period.
Retirement Benefits — Our defined benefit and other postretirement plans’ costs and liabilities are determined using several
statistical and other factors, which attempt to anticipate future events, including assumptions about the discount rate and expected return
on plan assets. Our discount rate is set annually by us, with assistance from our actuaries, and is determined by considering the average
of pension yield curves constructed of a population of high-quality bonds with a Moody’s or Standard and Poor’s rating of “AA” or better
meeting certain other criteria. As of September 27, 2009, our discount rate was 6.16% for our defined benefit and postretirement benefit
plans. Our expected long-term rate of return on assets is determined taking into consideration our projected asset allocation and economic
forecasts prepared with the assistance of our actuarial consultants. As of September 27, 2009, our assumed expected long-term rate of
return was 7.75% for our qualified defined benefit plan. The actuarial assumptions used may differ materially from actual results due to
changing market and economic conditions, higher or lower turnover and retirement rates or longer or shorter life spans of participants.
These differences may affect the amount of pension expense we record. A hypothetical 25 basis point reduction in the assumed discount
rate and expected long-term rate of return on plan assets would have resulted in an estimated increase of $2.4 million and $4.7 million,
respectively, in our fiscal 2010 pension expense. We expect our pension expense to increase in fiscal 2010 principally due to a decrease in
our discount rate from 7.30% to 6.16%.
Self Insurance — We are self-insured for a portion of our losses related to workers’ compensation, general liability, automotive,
medical and dental programs. In estimating our self-insurance accruals, we utilize independent actuarial estimates of expected losses,
which are based on statistical analysis of historical data. These assumptions are closely monitored and adjusted when warranted by
changing circumstances. Should a greater
29