Jack In The Box 2006 Annual Report Download - page 40

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24
The Company is expecting to fund the Tender Offer with available cash and a new credit facility. The Company
has received commitments for a new $625 million credit facility, which will be comprised of a $150 million
revolving credit facility and a $475 million term loan. Proceeds from the new credit facility will be used to repay the
Company’ s existing term loan with the remaining proceeds, along with existing cash, used to fund the Tender Offer.
The Company expects to close the new credit facility by December 18, 2006.
Contractual Obligations and Commitments. The following is a summary of the Company’ s contractual
obligations and commercial commitments as of October 1, 2006:
Payments Due by Period (in thousands)
Total
Less than
1 year 1-3 years 3-5 years
After
5 years
Contractual Obligations:
Credit facility term loan (1) ................................... $ 333,737 $ 48,611 $ 37,445 $ 247,681 $ —
Revolving credit facility ........................................ — — — — —
Capital lease obligations (1) .................................. 32,102 7,267 10,168 4,399 10,268
Other long-term debt obligations (1) ..................... 502 239 263 — —
Operating lease obligations.................................... 1,664,976 178,595 321,889 269,421 895,071
Guarantee (2) ......................................................... 1,675 1,003 517 155 —
Total contractual obligations.............................. $ 2,032,992 $ 235,715 $ 370,282 $ 521,656 $ 905,339
Other Commercial Commitments:
Stand-by letters of credit (3) .................................. $ 40,448 $ 40,448 $ — $ — $ —
____________
(1) Obligations related to the Company’ s credit facility term loan, capital lease obligations, and other long-term debt
obligations include interest expense estimated at interest rates in effect on October 1, 2006.
(2) Consists of a guarantee associated with one Chi-Chi’ s property. Due to the bankruptcy of the Chi-Chi’ s
restaurant chain, previously owned by the Company, we are obligated to perform in accordance with the terms
of the guarantee agreement.
(3) Consists primarily of letters of credit for workers’ compensation and general liability insurance. Letters of credit
outstanding against our credit facility totaled $0.3 million. Letters of credit outstanding under our cash-
collateralized letters of credit agreement totaled $40.2 million and do not impact the borrowing capacity under
our credit facility.
Capital Expenditures. Cash flows used for additions to property and equipment were $150.0 million, $126.1
million and $120.1 million in 2006, 2005 and 2004, respectively. The increase in 2006 compared with 2005 is due
primarily to investments associated with the Company’ s re-image program. Fiscal 2005, compared with fiscal 2004,
includes higher expenditures for new restaurants and QUICK STUFF locations, as well as increases in facility
improvements primarily related to brand reinvention. The Company also incurred capital lease obligations of $1.8
million, $0.9 million and $9.9 million in 2006, 2005 and 2004, respectively.
In fiscal year 2007, capital expenditures are expected to be approximately $160 million. We plan to open a
moderate number of new JACK IN THE BOX restaurants in 2007, and under our brand reinvention strategy, plan to re-
image approximately 150 to 200 restaurants.
Future Liquidity. We require capital principally to grow the business through new restaurant construction, as
well as to maintain, improve and refurbish existing restaurants, and for general operating purposes. Our primary
short-term and long-term sources of liquidity are expected to be cash flows from operations, the revolving bank
credit facility, and the sale and leaseback of certain restaurant properties. Additional potential sources of liquidity
include the sale of company-operated restaurants to franchisees. Based upon current levels of operations and
anticipated growth, we expect that cash flows from operations, combined with other financing alternatives in place
or available, will be sufficient to meet debt service, capital expenditure and working capital requirements.