Jack In The Box 2007 Annual Report Download - page 39

Cash Flows. The following table summarizes our cash flows from operating, investing and financing
activities for each of the past three fiscal years (in thousands):
2007 2006 2005
Total cash provided by (used in):
Operating activities . ............................. $179,809 $205,139 $ 157,888
Investing activities . . ............................. (131,341) (63,827) (114,521)
Financing activities . ............................. (266,672) (11,114) (71,359)
Increase (decrease) in cash and cash equivalents ........... $(218,204) $130,198 $ (27,992)
Operating Activities. In 2007, operating cash flow decreased $25.3 million to $179.8 million compared with
a year ago primarily due to an increase in income tax payments.
Investing Activities. Cash flows used in investing activities were $131.3 million in 2007 compared to
$63.8 million in 2006 increasing primarily due to a decrease in proceeds from assets held for sale and leaseback,
higher capital expenditures and cash used in 2007 to acquire nine Qdoba restaurants previously operated by
franchisees.
Capital Expenditures. Our capital expenditure program includes, among other things, investments in new
locations, restaurant remodeling, and information technology enhancements. We used cash of $154.2 million for
purchases of property and equipment in 2007 compared with $150.0 million in 2006 and $126.1 million in 2005.
The increase in capital expenditures in each year primarily relates to our on-going comprehensive re-image
program.
In fiscal year 2008, capital expenditures are expected to be approximately $175 – $185 million, including
investment costs related to the JACK IN THE BOX restaurant re-image program and kitchen enhancements. We plan to
open approximately 22 – 28 new JACK IN THE BOX restaurants in 2008, and under our brand reinvention strategy, plan
to re-image approximately 250 restaurants.
Sale of Company-Operated Restaurants. We have continued our strategy of selectively selling JACKINTHEBOX
company-operated restaurants to franchisees, selling 76, 82, and 58 restaurants in 2007, 2006 and 2005, respectively.
Proceeds from the sale of company-operated restaurants were $51.3 million, $54.4 million, and $33.5 million,
respectively.
Acquisition of Franchise-Operated Restaurants. In the third quarter of 2007, Qdoba acquired nine franchise-
operated restaurants for approximately $7.0 million in cash. The primary assets acquired include $2.5 million in net
property and equipment and $4.5 million in goodwill.
Financing Activities. Cash used in financing activities increased $255.6 million to $266.7 million, compared
with a year ago, due primarily to an increase in stock repurchases and term loan principal payments, offset in part by
proceeds received related to our new credit facility.
New Financing. On December 15, 2006, we replaced our existing credit facility with a new credit facility
intended to provide a more flexible capital structure and facilitate the execution of our strategic plan. The new credit
facility was comprised of (i) a $150.0 million revolving credit facility maturing on December 15, 2011 and (ii) a
term loan maturing on December 15, 2012, initially both with London Interbank Offered Rate (“LIBOR”) plus
1.375%. At inception, we borrowed $475.0 million under the term loan facility and used the proceeds to repay all
borrowings under the prior credit facility, to pay related transaction fees and expenses and to repurchase a portion of
our outstanding stock. We subsequently elected to make, without penalty, a $60.0 million optional prepayment of
our term loan, which will be applied to the remaining scheduled principal installments in the direct order of
maturity. The prepayment reduced the interest rate on the credit facility by 25 basis points to LIBOR plus 1.125%,
which is expected to result in an annualized interest savings of approximately $2.0 million. At September 30, 2007,
we had no borrowings under the revolving credit facility, $415.0 million outstanding under the term loan and had
letters of credit outstanding of $37.1 million.
As part of the new credit agreement, we may also 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 new credit facility
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