Jack In The Box 2010 Annual Report Download - page 28

Table of Contents
due primarily to a decline in the number of new Jack in the Box and Qdoba restaurants developed and the number of existing restaurants
rebuilt, and lower spending related to our re-image program and network and system upgrades. In 2010, we continued reimaging our
restaurants, focusing on the interiors as we substantially completed reimaging the restaurant exteriors in 2009. The reimage program,
which began in 2006, is an important part of the chain’s brand-reinvention initiative and is intended to create a warm and inviting dining
experience for Jack in the Box guests. As of October 3, 2010, approximately 68% of all Jack in the Box company-operated restaurants
feature all interior and exterior elements of the reimage program; we expect completion by the end of fiscal year 2011. In 2009, capital
expenditures decreased due to lower spending related to our reimage program as well as the inclusion of a kitchen enhancement project and
the purchase of our smoothie equipment in 2008. The kitchen enhancements were designed to increase restaurant capacity for new product
introductions while reducing utility expense using energy-efficient equipment.
In fiscal 2011, capital expenditures are expected to be approximately $135-$145 million, including investment costs related to the Jack
in the Box restaurant re-image program and the continued rollout of our new logo. We plan to open approximately 25 new Jack in the Box
and 25 new Qdoba company-operated restaurants in 2011.
 We have continued to expand franchise ownership in the Jack in the Box system primarily
through the sale of company-operated restaurants to franchisees. The following table details proceeds received in connection with our
refranchising activities :
  
Number of restaurants sold to franchisees 219 194 109
Cash proceeds from the sale of company-operated restaurants $ 66,152 $ 94,927 $ 57,117
Notes receivable 25,809 21,575 27,928
Total proceeds $ 91,961 $ 116,502 $ 85,045
Average proceeds $ 420 $ 601 $ 780
All fiscal years presented include financing provided to facilitate the closing of certain transactions. As of October 3, 2010, notes
receivable related to refranchisings were $29.8 million, of which $18.7 million has been repaid since the end of the fiscal year. We expect
total proceeds of $85-$95 million from the sale of 175-225 Jack in the Box restaurants in 2011.
 In 2010, we acquired 16 Qdoba franchise-operated restaurants in the Boston
market for approximately $8.1 million. The purchase price was allocated to property and equipment, goodwill and reacquired franchise
rights. For additional information, refer to Note 3,  , of the notes to the
consolidated financial statements.
In 2009, we acquired 22 Qdoba franchise-operated restaurants for approximately $6.8 million, net of cash received. The total
purchase price was allocated to property and equipment, goodwill and other income. The restaurants acquired are located in Michigan and
California, which we believe provide good long-term growth potential consistent with our strategic goals.
Financing Activities. Cash used in financing activities increased $20.8 million in 2010 and $96.8 million in 2009 compared with the
previous year. These increases were primarily attributable to purchases of our common stock in 2010 and the repayment of borrowings
under our revolving credit facility in 2009.
 On June 29, 2010, we replaced our existing credit facility with a new credit facility intended to provide a more
flexible capital structure. The new credit facility is comprised of (i) a $400.0 million revolving credit facility and (ii) a $200.0 million term
loan with a five-year maturity, initially both with London Interbank Offered Rate (“LIBOR”) plus 2.50 In connection with the
refinancing, borrowings under the term loan and $169.0 million of borrowings under the revolving credit facility were used to repay all
borrowings under the prior credit facility and related transaction fees and expenses, including those associated with the new credit facility.
Loan origination costs associated with the new credit facility were $9.5 million and are included as deferred costs in other assets, net in
the accompanying consolidated balance sheet as of October 3, 2010.
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 new credit facility
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