Jack In The Box 2006 Annual Report Download - page 35

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19
•Interest Rate Swap. To further reduce exposure to rising interest rates, we entered into a third interest rate
swap that will effectively convert $60 million of our variable rate term loan borrowings to a fixed-rate basis
beginning March 2008, concurrent with the end of our existing $60 million interest rate swap, through April
2010.
•Effective October 1, 2006, we adopted the provisions of Financial Accounting Standards Board (“FASB”)
Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations – an interpretation of FASB
Statement No. 143 (“FIN 47”), which clarifies the term conditional asset retirement obligation and requires a
liability to be recorded if the fair value of the obligation can be reasonably estimated. The adoption of this
statement reduced fiscal 2006 income by approximately $.03 per diluted share. This change is not expected
to have a material impact on Company operations in the future.
The following table sets forth, unless otherwise indicated, the percentage relationship to total revenues of certain
items included in the Company’ s consolidated statements of earnings.
CONSOLIDATED STATEMENTS OF EARNINGS DATA
Fiscal Year
Oct. 1,
2006
Oct. 2,
2005
Oct. 3,
2004
Revenues:
Restaurant sales ................................................................................................
.
76.0% 81.7% 87.6%
Distribution and other sales ..............................................................................
.
18.5 13.9 8.5
Franchised rents and royalties...........................................................................
.
3.7 3.2 2.9
Gains on sale of company-operated restaurants and other................................
.
1.8 1.2 1.0
Total revenues...............................................................................................
.
100.0% 100.0% 100.0%
Costs of revenues:
Restaurant costs of sales (1) .............................................................................
.
31.2% 31.7% 31.0%
Restaurant operating costs (1) ..........................................................................
.
51.3 51.4 51.9
Costs of distribution and other sales (1) ..........................................................
.
98.7 98.7 98.2
Franchised restaurant costs (1) .........................................................................
.
43.9 43.9 47.9
Total costs of revenues..................................................................................
.
82.6 83.0 82.4
Selling, general and administrative expenses .......................................................
.
10.9 10.9 11.4
Earnings from operations..............................................................................
.
6.6 6.1 6.2
____________
(1) As a percentage of the related sales and/or revenues.
Effective October 3, 2005, we adopted Statement of Financial Accounting Standards (“SFAS”) 123R, Share-
Based Payment, which requires that all employee share-based compensation be measured using a fair value method
and that the resulting compensation cost be recognized in the financial statements. The Company selected the
modified prospective method of adoption. Under this method, compensation expense that we recognized in 2006
included: (a) compensation expense for all share-based payments granted prior to, but not yet vested as of, October
3, 2005, based on the grant date fair value estimated in accordance with the original provisions of SFAS 123,
Accounting for Stock-Based Compensation, and (b) compensation expense for all share-based payments granted on
or after October 3, 2005, based on the grant date fair value estimated in accordance with the provisions of SFAS
123R. Results for prior periods have not been restated.