Jack In The Box 2008 Annual Report Download - page 35

Financing. Our credit facility is 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, both bearing interest at 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 in 2007, which has been applied to the remaining scheduled
principal installments in the direct order of maturity. At September 28, 2008, we had borrowings under the revolving
credit facility of $91.0 million, $415.0 million outstanding under the term loan and had letters of credit outstanding
of $35.5 million.
As part of the 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 credit facility requires
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 are based on a financial leverage ratio, as defined in the credit
agreement. Our obligations under the credit facility are secured by first priority liens and security interests in the
capital stock, partnership, and membership interests owned by us and (or) our subsidiaries, and any proceeds
thereof, subject to certain restrictions set forth in the credit agreement. Additionally, the credit agreement includes a
negative pledge on all tangible and intangible assets (including all real and personal property) with customary
exceptions.
Loan origination costs associated with the new credit facility were $7.4 million and are included as deferred
costs in other assets, net in the consolidated balance sheet. Deferred financing fees of $1.9 million related to the
prior credit facility were written-off in the first quarter of 2007 and are included in interest expense, net in the
consolidated statement of earnings for the year ended September 30, 2007.
Interest Rate Swaps. Concurrent with the termination of our prior credit facility, we liquidated three swap
agreements and reversed the fair value of the swaps recorded as a component of accumulated other comprehensive
loss, net. To reduce our exposure to rising interest rates under our credit facility, in March 2007, we entered into two
interest rate swap agreements that will effectively convert $200.0 million of our variable rate term loan borrowings
to a fixed rate basis for three years.
Debt Covenants. We are subject to a number of covenants under our various debt instruments, including
limitations on additional borrowings, acquisitions, loans to franchisees, capital expenditures, lease commitments,
stock repurchases and dividend payments, as well as requirements to maintain certain financial ratios, cash flows
and net worth. As of September 28, 2008, we complied with all debt covenants.
Debt Outstanding. Total debt outstanding increased to $518.6 million at September 28, 2008 from
$433.3 million at the beginning of the fiscal year. Current maturities of long-term debt decreased $3.5 million
and long-term debt, net of current maturities increased $88.7 million due to borrowings under the revolving credit
facility. Given the uncertainty surrounding the liquidity and stability of the credit markets, we elected to maintain
approximately $38.0 million of additional borrowings under our revolving credit facility at September 28, 2008.
Repurchases of Common Stock. In November 2007, the Board approved a program to repurchase up to
$200.0 million in shares of our common stock over three years expiring November 9, 2010. We repurchased
3.9 million shares at an aggregate cost of $100.0 million during fiscal 2008. As of September 28, 2008, the total
remaining amount authorized for repurchase was $100.0 million.
Pursuant to a tender offer in December 2006, we accepted for purchase approximately 2.3 million shares of
common stock at a purchase price of $61.00 per share, for a total cost of $143.3 million. In December 2006, the
Board of Directors authorized a program to repurchase up to 3.3 million shares of our common stock in calendar
year 2007 to complete the repurchase of the total shares authorized in the Tender Offer. In the second quarter of
2007, under a 10b5-1 plan, we repurchased 3.2 million shares for $220.1 million. The Tender Offer and the
additional repurchase program were funded through the new credit facility and available cash, and all shares
repurchased were subsequently retired.
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