Jack In The Box 2015 Annual Report Download - page 34

Assets Held for Sale and Leaseback — We use sale and leaseback financing to lower the initial cash investment in our Jack in the Box restaurants to the
cost of the equipment, whenever possible. In 2015, we exercised our right of first refusal related to five leased properties which we intend to sell and
leaseback within the next 12 months. The following table summarizes the cash flow activity related to sale and leaseback transactions in each fiscal year
(dollars in thousands):



Number of restaurants sold and leased back
—
3
24
Proceeds from sale and leaseback transactions
$ —
$ 5,698
$ 47,431
Purchases of assets intended for sale and leaseback
$ (10,396)
$ (2,801)
$ (26,058)
As of September 27, 2015, we had investments of approximately $15.2 million relating to seven restaurant properties that we expect to sell and leaseback
during fiscal 2016.
Acquisition of Franchise-Operated Restaurants — In 2015 and 2014, we acquired seven and four Jack in the Box franchise restaurants, respectively. In
2013, we acquired 13 Qdoba franchise restaurants in select markets where we believe there is continued opportunity for restaurant development.
Additionally, in 2013 we exercised our right of first refusal and acquired one Jack in the Box restaurant. The following table details franchise-operated
restaurant acquisition activity in each fiscal year (dollars in thousands):



Number of restaurants acquired from franchisees
7
4
14
Cash used to acquire franchise-operated restaurants
$ —
$ 1,750
$ 12,064
The purchase price was primarily allocated to liabilities assumed and property and equipment in 2015, and property and equipment, goodwill and
reacquired franchise rights in 2014 and 2013. For additional information, refer to Note 3, Summary of Refranchisings, Franchisee Development and
Acquisitions, of the notes to the consolidated financial statements.
. Cash used in financing activities decreased $21.9 million in 2015 and $6.6 million in 2014 as compared with the respective prior
year. The decrease in 2015 is due primarily to an increase in borrowings under our credit facility, partially offset by an increase in cash used to pay dividends
and a decrease in proceeds from the issuance of common stock. The decrease in 2014 is due primarily to an increase in borrowings under our credit facility
and the change in our book overdraft related to the timing of working capital receipts and disbursements, partially offset by an increase in cash used to
repurchase shares of our common stock and to pay dividends, and a decrease in proceeds from the issuance of common stock.
Credit Facility — On July 1, 2015, the Company amended its credit facility to increase its overall borrowing capacity. The amended credit facility was
increased to $1.2 billion, consisting of (i) a $900.0 million revolving credit agreement and (ii) a $300.0 million term loan. In connection with the
amendment, the Company borrowed $300.0 million under the term loan and approximately $360.0 million under the revolving credit agreement. The
proceeds from the amendment were used to repay all borrowings under the credit facility prior to the amendment and pay related transaction fees and
expenses associated with amending the credit facility.
We are subject to a number of customary covenants under our credit facility, including limitations on additional borrowings, acquisitions, loans to
franchisees, lease commitments, stock repurchases, dividend payments and requirements to maintain certain financial ratios. We were in compliance with all
covenants as of September 27, 2015.
At September 27, 2015, we had $300.0 million outstanding under the term loan, borrowings under the revolving credit agreement of $395.0 million and
letters of credit outstanding of $25.2 million. For additional information related to our credit facility, refer to Note 7, Indebtedness, of the notes to the
consolidated financial statements.
Interest Rate Swaps — To reduce our exposure to rising interest rates under our credit facility, we consider interest rate swaps. In August 2010, we entered
into two forward-looking swaps that effectively converted $100.0 million of our variable rate term loan to a fixed-rate basis beginning September 2011
through September 2014. In April 2014, we entered into nine forward-starting interest rate swap agreements that effectively convert $300.0 million of our
variable rate borrowings to a fixed rate basis from October 2014 through October 2018. In June 2015, we entered into eleven forward-starting interest rate
swap agreements that effectively convert an additional $200.0 million of our variable rate borrowings and future expected variable rate borrowings to a fixed
rate from October 2015 through October 2018, and $500.0 million from October 2018 through October 2022. For additional information, refer to Note 6,
Derivative Instruments, of the notes to the consolidated financial statements and Item 7A, Quantitative and Qualitative Disclosures about Market Risk, of
this Report.
Repurchases of Common Stock — During fiscal 2015, we repurchased 3.7 million shares at an aggregate cost of $317.1 million, compared with 5.6
million shares at an aggregate cost of $319.7 million in fiscal 2014, and 4.0 million shares at an aggregate cost
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