Jack In The Box 2011 Annual Report Download - page 32

Table of Contents
Acquisition of Franchise-Operated Restaurants — In each year, we acquired certain Qdoba franchise markets consistent with our strategy to
opportunistically acquire markets where we believe there is continued opportunity for restaurant development. The following table details franchise-operated
restaurant acquisition activity (dollars in thousands):
  
Number of restaurants acquired from franchisees 32 16 22
Cash used to acquire franchise-operated restaurants $ 31,077 $ 8,115 $ 6,760
The purchase prices were primarily allocated to property and equipment, goodwill and reacquired franchise rights. For additional information, refer to Note
3, Summary of Refranchisings, Franchisee Development and Acquisitions , of the notes to the consolidated financial statements.
FFE Loans to Franchisees — During fiscal 2011, FFE processed loans to qualifying franchisees of $14.5 million for use in re-imaging their
restaurants. These loans have terms ranging from five to seven years and bear a fixed or variable rate of interest. For additional information related to FFE,
refer to Note 7, Indebtedness and Note 15, Variable Interest Entities, of the notes to the consolidated financial statements.
. Cash used in financing activities decreased $35.8 million in 2011 and increased $20.8 million in 2010 as compared with the
previous year. In 2011, the decrease is due primarily to higher debt payments in 2010 related to the refinancing of our credit facility, offset in part by cash
used in 2011 to repurchase shares of our common stock and the change in our book overdraft. The increase in 2010 primarily relates to repurchases of our
common stock and the repayment of borrowings under our revolving credit facility in 2009.
Refinancing — In 2010, we replaced our then existing credit facility with our current credit facility intended to provide a more flexible capital structure. 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
sheets.
Credit Facility — Our credit facility is comprised of (i) a $400.0 million revolving credit facility and (ii) a $200.0 million term loan maturing on June 29,
2015, initially both with London Interbank Offered Rate (“LIBOR”) plus 2.50 %. 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. We may make voluntary prepayments of the loans under the revolving credit facility and
term loan at any time without premium or penalty. Specific events, such as asset sales, certain issuances of debt and insurance and condemnation recoveries,
may trigger a mandatory prepayment.
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, dividend payments and requirements to maintain certain financial ratios.
At October 2, 2011, we had $185.0 million outstanding under the term loan, borrowings under the revolving credit facility of $275.0 million and letters of
credit outstanding of $35.8 million. For additional information related to our credit facility, refer to Note 7, Indebtedness, of the notes to the consolidated
financial statements.
FFE Credit Facility — In January 2011, FFE entered into an $80.0 million Senior Secured Revolving Securitization Facility (“FFE Facility”) with a third
party to assist in funding our franchisee lending program.
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