Jack In The Box 2012 Annual Report Download - page 29

Acquisition of Franchise-Operated Restaurants — In each year, we acquired Qdoba franchise restaurants in select markets where we believe there is
continued opportunity for restaurant development. The following table details franchise-operated restaurant acquisition activity ( dollars in thousands):



Number of restaurants acquired from franchisees
46
32
16
Cash used to acquire franchise-operated restaurants
$48,945
$31,077
$8,115
The purchase prices were primarily allocated to property and equipment, goodwill and reacquired franchise rights. For additional information, refer to Note
3, Summary of Refranchisings, Franchisee Development and Acquisitions , of the notes to the consolidated financial statements.
Franchise Finance, LLC(“FFE” Loans to Franchisees — During fiscal 2012 and 2011, FFE processed loans to qualifying franchisees of $4.0
million and $14.5 million, respectively, for use in re-imaging their restaurants. These loans have terms ranging from five to seven years and bear a fixed or
variable rate of interest. For additional information related to FFE, refer to Note 15, Variable Interest Entities, of the notes to the consolidated financial
statements.
. Cash used in financing activities decreased $29.5 million in 2012 and $35.8 million in 2011 as compared with the previous year.
The decrease in 2012 is primarily attributed to a decrease in cash used to repurchase shares of common stock, partially offset by a decrease in borrowings
under our credit facility. In 2011, the decrease is due primarily to higher debt payments in 2010 related to the refinancing of our credit facility, offset in part by
cash used in 2011 to repurchase shares of our common stock and the change in our book overdraft.
Credit Facility — As of September 30, 2012, our credit facility comprised (i) a $400.0 million revolving credit facility and (ii) a term loan maturing on
June 29, 2015, bearing interest at London Interbank Offered Rate (“LIBOR”) plus 2.50%. As part of the credit agreement, we could request the issuance of up
to $75.0 million in letters of credit, the outstanding amount of which reduces the net borrowing capacity under the agreement. The credit facility required the
payment of an annual commitment fee based on the unused portion of the credit facility. The credit facility’s interest rates and the annual commitment rate
were based on a financial leverage ratio, as defined in the credit agreement. We could make voluntary prepayments of the loans under the revolving credit
facility and term loan at any time without premium or penalty. Specific events, such as asset sales, certain issuances of debt and insurance and condemnation
recoveries, could trigger a mandatory prepayment.
We are subject to a number of customary covenants under our credit facility, including limitations on additional borrowings, acquisitions, loans to
franchisees, capital expenditures, lease commitments, stock repurchases, dividend payments and requirements to maintain certain financial ratios. We were in
compliance with all covenants as of September 30, 2012.
At September 30, 2012, we had $165.0 million outstanding under the term loan, borrowings under the revolving credit facility of $250.0 million and
letters of credit outstanding of $30.9 million. For additional information related to our credit facility, refer to Note 7, Indebtedness, of the notes to the
consolidated financial statements.
Refinancing — In November 2012, we replaced our existing credit facility with a new five-year $600.0 million senior credit facility, comprised of a $400.0
million revolving credit facility and $200.0 million term loan, intended to provide a more flexible capital structure and take advantage of lower interest rates.
Proceeds from the refinancing were used to retire the previous senior credit facility that was due in June 2015. As of the closing, approximately $220.0 million
of the revolving credit facility was drawn and $200.0 million was outstanding on the term loan. Both will mature in November 2017, with the term loan
having required principal payments of $20.0 million in each of the first four years after closing, and the balance due in the fifth year. The interest rate on the
new senior credit facility is based on the Company’s leverage ratio and can range from LIBOR plus 1.75% to 2.25% with no floor. The initial interest rate is
LIBOR plus 2.0%. For additional information related to our new credit facility, refer to Note 21, Subsequent Events, of the notes to the consolidated financial
statements.
Interest Rate Swaps — To reduce our exposure to rising interest rates under our credit facility, we consider interest rate swaps. In August 2010, we entered
into two forward-looking swaps that effectively convert $100.0 million of our variable rate term loan to a fixed-rate basis beginning September 2011 through
September 2014. Based on the term loan’s applicable margin of 2.50% as of September 30, 2012, these agreements have an average pay rate of 1.54%,
yielding a fixed rate of 4.04%. For additional information related to our interest rate swaps, refer to Note 6, Derivative Instruments, of the notes to the
consolidated financial statements.
Repurchases of Common Stock — During 2012, 2011 and 2010, we repurchased approximately 1.2 million, 9.1 million and 4.9 million shares at an
aggregate cost of $29.5 million, $193.1 million and $97.0 million, respectively. As of September 30, 2012, under a plan approved by the Board in
November 2011, we had an aggregate amount of $76.9 million remaining for repurchases
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