Jack In The Box 2008 Annual Report Download - page 61

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. In fiscal 2007, we elected to make, without penalty, a
$60.0 million optional prepayment of our term loan, which has been applied to the remaining scheduled principal
installments in the direct order of maturity. Our term loan is scheduled to be repaid in quarterly installments of
$11.3 million, $11.9 million, $17.8 million and $71.3 million in October 2009 and calendar years 2010, 2011, and
2012, respectively. 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 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 accompanying consolidated balance sheets. Deferred financing fees of $1.9 million
related to the prior credit facility were written-off and are included in interest expense, net in the accompanying
consolidated statement of earnings in fiscal 2007.
Interest rate swaps — We are exposed to interest rate volatility with regard to our variable rate debt. To reduce
our exposure to rising interest rates, 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.
These agreements have been designated as cash flow hedges under the terms of SFAS 133, Accounting for
Derivative Instruments and Hedging Activities, with effectiveness assessed based on changes in the present value of
interest payments on the term loan. As such, the gains or losses on these derivatives will be reported in other
comprehensive income.
Covenants — We are subject to a number of customary covenants under our credit facility, including
limitations on additional borrowings, acquisitions, loans to franchisees, capital expenditures, lease commitments,
stock repurchases and dividend payments, and requirements to maintain certain financial ratios and prepay term
loans with a portion of our excess cash flows, as defined therein. As of September 28, 2008, we complied with all
debt covenants.
Future cash payments — Scheduled principal payments on our long-term debt for each of the next five fiscal
years are as follows (in thousands):
Fiscal Year
2009 ............................................................... $ 2,331
2010 ............................................................... 48,185
2011 ............................................................... 66,621
2012 ............................................................... 323,700
2013 ............................................................... 72,228
Total principal payments................................................. $513,065
Capitalized interest — We capitalize interest in connection with the construction of our restaurants and other
facilities. Interest capitalized in 2008, 2007 and 2006 was $0.9 million, $1.4 million and $1.4 million, respectively.
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JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)