Jack In The Box 2009 Annual Report Download - page 32

Table of Contents
2010. We are currently in the process of assessing the impact this guidance may have on our consolidated financial statements related to
our nonfinancial assets and liabilities.
In June 2009, the FASB issued authoritative guidance for consolidation, which changes the approach for determining which
enterprise has a controlling financial interest in variable interest entity and requires more frequent reassessments of whether an enterprise
is a primary beneficiary. This guidance is effective for annual periods beginning after November 15, 2009. We are currently in the
process of assessing the impact this guidance may have on our consolidated financial statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require
adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.
 
Our primary exposure to risks relating to financial instruments is changes in interest rates. Our credit facility, which is comprised
of a revolving credit facility and a term loan, bears interest at an annual rate equal to the prime rate or LIBOR plus an applicable margin
based on a financial leverage ratio. As of September 27, 2009, the applicable margin for the LIBOR-based revolving loans and term loan
was set at 1.125%.
We use interest rate swap agreements to reduce exposure to interest rate fluctuations. At September 27, 2009, we had two interest rate
swap agreements having an aggregate notional amount of $200.0 million expiring April 1, 2010. These agreements effectively convert a
portion of our variable rate bank debt to fixed-rate debt and have an average pay rate of 4.875%, yielding a fixed-rate of 6.00% including
the term loan’s applicable margin of 1.125%.
A hypothetical 100 basis point increase in short-term interest rates, based on the outstanding unhedged balance of our revolving
credit facility and term loan at September 27, 2009 would result in an estimated increase of $2.2 million in annual interest expense.
We are also exposed to the impact of commodity and utility price fluctuations related to unpredictable factors such as weather and
various other market conditions outside our control. Our ability to recover increased costs through higher prices is limited by the
competitive environment in which we operate. From time to time, we enter into futures and option contracts to manage these fluctuations.
At September 27, 2009, we had 20 natural gas Over the Counter Call Option agreements in place that represent approximately 33% of our
total requirements for natural gas for the months of November 2009 through March 2010.
 
The consolidated financial statements and related financial information required to be filed are indexed on page F-1 and are
incorporated herein.
 

Not applicable.
 
 
Based on an evaluation of the Company’s disclosure controls and procedures (as defined in Rules 13(a) — 15(e) and 15(d) —
15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the Company’s fiscal year ended September 27, 2009, the
Company’s Chief Executive Officer and Chief Financial Officer (its principal executive officer and principal financial officer,
respectively) have concluded that the Company’s disclosure controls and procedures were effective.
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