Jack In The Box 2007 Annual Report Download - page 41

Contractual obligations and commitments. The following is a summary of our contractual obligations and
commercial commitments as of September 30, 2007:
Total
Less Than
1 Year 1-3 Years 3-5 Years
After
5 Years
Payments Due by Period
(In thousands)
Contractual Obligations:
Credit facility term loan(1) . . . ........ $ 535,268 $ 27,050 $ 99,844 $334,802 $ 73,572
Revolving credit facility.............. ———— —
Capital lease obligations(1) . . . ........ 25,270 7,040 5,704 3,941 8,585
Other long-term debt obligations(1) ..... 177 150 27 — —
Operating lease obligations . . . ........ 1,813,413 188,191 341,635 300,074 983,513
Guarantee(2) ...................... 1,675 1,257 262 156 —
Benefit obligations(3) ............... 117,305 9,847 16,805 19,632 71,021
Total contractual obligations. ........ $2,493,108 $233,535 $464,277 $658,605 $1,136,691
Other Commercial Commitments:
Stand-by letters of credit(4) . . . ........ $ 37,094 $ 37,094 $ — $ — $ —
(1) Obligations related to our credit facility term loan, capital lease obligations, and other long-term debt
obligations include interest expense estimated at interest rates in effect on September 30, 2007.
(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 us, we are obligated to perform in accordance with the terms of the
guarantee agreement.
(3) Includes expected payments associated with our defined benefit plans, postretirement benefit plans and our
non-qualified deferred compensation plan through fiscal 2017.
(4) Consists primarily of letters of credit for workers’ compensation and general liability insurance.
DISCUSSION OF CRITICAL ACCOUNTING ESTIMATES
We have identified the following as our most critical accounting estimates, which are those that are most
important to the portrayal of the Company’s financial condition and results and require management’s most
subjective and complex judgments. Information regarding our other significant accounting estimates and policies
are disclosed in Note 1 to our consolidated financial statements.
Share-based Compensation — We account for share-based compensation in accordance with SFAS 123R.
Under the provisions of SFAS 123R, share-based compensation cost is estimated at the grant date based on the
award’s fair-value as calculated by an option pricing model and is recognized as expense ratably over the requisite
service period. The option pricing models require various highly judgmental assumptions including volatility,
forfeiture rates, and expected option life. If any of the assumptions used in the model change significantly, share-
based compensation expense may differ materially in the future from that recorded in the current period.
Retirement Benefits — We sponsor pension and other retirement plans in various forms covering those
employees who meet certain eligibility requirements. Several statistical and other factors, which attempt to
anticipate future events, are used in calculating the expense and liability related to the plans, including assumptions
about the discount rate, expected return on plan assets and the rate of increase in compensation levels, as determined
by us using specified guidelines. In addition, our outside actuarial consultants also use certain statistical factors such
as turnover, retirement and mortality rates to estimate our future benefit obligations. The actuarial assumptions used
may differ materially from actual results due to changing market and economic conditions, higher or lower turnover
and retirement rates or longer or shorter life spans of participants. These differences may affect the amount of
pension expense we record.
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