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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Jack in the Box Inc | NASDAQ:JACK | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 55.23 | 53.86 | 60.77 | 0 | 09:01:33 |
DELAWARE
|
|
95-2698708
|
(State of Incorporation)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
9330 BALBOA AVENUE, SAN DIEGO, CA
|
|
92123
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
þ
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
|
|
Page
|
|
PART I – FINANCIAL INFORMATION
|
|
Item 1.
|
|
|
|
||
|
Condensed
Consolidated Statements of Earnings
|
|
|
||
|
||
|
||
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
Item 3.
|
||
Item 4.
|
||
|
PART II – OTHER INFORMATION
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
Defaults of Senior Securities
|
|
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
|
July 3,
2016 |
|
September 27,
2015 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6,647
|
|
|
$
|
17,743
|
|
Accounts and other receivables, net
|
61,990
|
|
|
47,975
|
|
||
Inventories
|
7,933
|
|
|
7,376
|
|
||
Prepaid expenses
|
38,064
|
|
|
16,240
|
|
||
Assets held for sale
|
19,546
|
|
|
15,516
|
|
||
Other current assets
|
2,073
|
|
|
3,106
|
|
||
Total current assets
|
136,253
|
|
|
107,956
|
|
||
Property and equipment, at cost
|
1,592,049
|
|
|
1,563,377
|
|
||
Less accumulated depreciation and amortization
|
(874,562
|
)
|
|
(835,114
|
)
|
||
Property and equipment, net
|
717,487
|
|
|
728,263
|
|
||
Intangible assets, net
|
14,177
|
|
|
14,765
|
|
||
Goodwill
|
149,007
|
|
|
149,027
|
|
||
Other assets, net
|
274,590
|
|
|
303,968
|
|
||
|
$
|
1,291,514
|
|
|
$
|
1,303,979
|
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Current maturities of long-term debt
|
$
|
26,286
|
|
|
$
|
26,677
|
|
Accounts payable
|
21,289
|
|
|
32,137
|
|
||
Accrued liabilities
|
173,764
|
|
|
170,575
|
|
||
Total current liabilities
|
221,339
|
|
|
229,389
|
|
||
Long-term debt, net of current maturities
|
869,982
|
|
|
688,579
|
|
||
Other long-term liabilities
|
367,668
|
|
|
370,058
|
|
||
Stockholders’ (deficit) equity:
|
|
|
|
||||
Preferred stock $0.01 par value, 15,000,000 shares authorized, none issued
|
—
|
|
|
—
|
|
||
Common stock $0.01 par value, 175,000,000 shares authorized, 81,428,150 and 81,096,156 issued, respectively
|
814
|
|
|
811
|
|
||
Capital in excess of par value
|
421,195
|
|
|
402,986
|
|
||
Retained earnings
|
1,377,565
|
|
|
1,316,119
|
|
||
Accumulated other comprehensive loss
|
(145,616
|
)
|
|
(132,530
|
)
|
||
Treasury stock, at cost, 48,765,738 and 45,314,529 shares, respectively
|
(1,821,433
|
)
|
|
(1,571,433
|
)
|
||
Total stockholders’ (deficit) equity
|
(167,475
|
)
|
|
15,953
|
|
||
|
$
|
1,291,514
|
|
|
$
|
1,303,979
|
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3,
2016 |
|
July 5,
2015 |
|
July 3,
2016 |
|
July 5,
2015 |
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Company restaurant sales
|
$
|
278,829
|
|
|
$
|
270,655
|
|
|
$
|
903,842
|
|
|
$
|
891,455
|
|
Franchise rental revenues
|
52,878
|
|
|
52,375
|
|
|
175,218
|
|
|
174,036
|
|
||||
Franchise royalties and other
|
37,231
|
|
|
36,476
|
|
|
121,852
|
|
|
120,758
|
|
||||
|
368,938
|
|
|
359,506
|
|
|
1,200,912
|
|
|
1,186,249
|
|
||||
Operating costs and expenses, net:
|
|
|
|
|
|
|
|
||||||||
Company restaurant costs:
|
|
|
|
|
|
|
|
||||||||
Food and packaging
|
81,825
|
|
|
82,649
|
|
|
272,802
|
|
|
279,790
|
|
||||
Payroll and employee benefits
|
76,910
|
|
|
72,896
|
|
|
250,954
|
|
|
241,648
|
|
||||
Occupancy and other
|
59,118
|
|
|
56,103
|
|
|
196,344
|
|
|
187,602
|
|
||||
Total company restaurant costs
|
217,853
|
|
|
211,648
|
|
|
720,100
|
|
|
709,040
|
|
||||
Franchise occupancy expenses
|
38,848
|
|
|
39,087
|
|
|
128,475
|
|
|
130,821
|
|
||||
Franchise support and other costs
|
3,654
|
|
|
3,449
|
|
|
12,423
|
|
|
11,915
|
|
||||
Selling, general and administrative expenses
|
42,768
|
|
|
50,986
|
|
|
155,535
|
|
|
166,553
|
|
||||
Impairment and other charges, net
|
10,519
|
|
|
3,758
|
|
|
14,598
|
|
|
8,068
|
|
||||
(Gains) losses on the sale of company-operated restaurants
|
(409
|
)
|
|
183
|
|
|
(1,224
|
)
|
|
4,353
|
|
||||
|
313,233
|
|
|
309,111
|
|
|
1,029,907
|
|
|
1,030,750
|
|
||||
Earnings from operations
|
55,705
|
|
|
50,395
|
|
|
171,005
|
|
|
155,499
|
|
||||
Interest expense, net
|
7,613
|
|
|
4,504
|
|
|
22,699
|
|
|
13,937
|
|
||||
Earnings from continuing operations and before income taxes
|
48,092
|
|
|
45,891
|
|
|
148,306
|
|
|
141,562
|
|
||||
Income taxes
|
17,308
|
|
|
17,528
|
|
|
54,597
|
|
|
52,739
|
|
||||
Earnings from continuing operations
|
30,784
|
|
|
28,363
|
|
|
93,709
|
|
|
88,823
|
|
||||
Losses from discontinued operations, net of income tax benefit
|
(595
|
)
|
|
(1,532
|
)
|
|
(1,617
|
)
|
|
(3,152
|
)
|
||||
Net earnings
|
$
|
30,189
|
|
|
$
|
26,831
|
|
|
$
|
92,092
|
|
|
$
|
85,671
|
|
|
|
|
|
|
|
|
|
||||||||
Net earnings per share - basic:
|
|
|
|
|
|
|
|
||||||||
Earnings from continuing operations
|
$
|
0.94
|
|
|
$
|
0.76
|
|
|
$
|
2.75
|
|
|
$
|
2.34
|
|
Losses from discontinued operations
|
(0.02
|
)
|
|
(0.04
|
)
|
|
(0.05
|
)
|
|
(0.08
|
)
|
||||
Net earnings per share (1)
|
$
|
0.92
|
|
|
$
|
0.72
|
|
|
$
|
2.70
|
|
|
$
|
2.26
|
|
Net earnings per share - diluted:
|
|
|
|
|
|
|
|
||||||||
Earnings from continuing operations
|
$
|
0.93
|
|
|
$
|
0.75
|
|
|
$
|
2.72
|
|
|
$
|
2.30
|
|
Losses from discontinued operations
|
(0.02
|
)
|
|
(0.04
|
)
|
|
(0.05
|
)
|
|
(0.08
|
)
|
||||
Net earnings per share (1)
|
$
|
0.91
|
|
|
$
|
0.71
|
|
|
$
|
2.67
|
|
|
$
|
2.22
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
32,642
|
|
|
37,106
|
|
|
34,073
|
|
|
37,980
|
|
||||
Diluted
|
33,016
|
|
|
37,661
|
|
|
34,469
|
|
|
38,630
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per common share
|
$
|
0.30
|
|
|
$
|
0.30
|
|
|
$
|
0.90
|
|
|
$
|
0.70
|
|
(1)
|
Earnings per share may not add due to rounding.
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3,
2016 |
|
July 5,
2015 |
|
July 3,
2016 |
|
July 5,
2015 |
||||||||
Net earnings
|
$
|
30,189
|
|
|
$
|
26,831
|
|
|
$
|
92,092
|
|
|
$
|
85,671
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Net change in fair value of derivatives
|
(7,825
|
)
|
|
(5,027
|
)
|
|
(28,008
|
)
|
|
(11,699
|
)
|
||||
Net loss reclassified to earnings
|
860
|
|
|
461
|
|
|
3,180
|
|
|
1,556
|
|
||||
|
(6,965
|
)
|
|
(4,566
|
)
|
|
(24,828
|
)
|
|
(10,143
|
)
|
||||
Tax effect
|
2,696
|
|
|
1,748
|
|
|
9,610
|
|
|
3,883
|
|
||||
|
(4,269
|
)
|
|
(2,818
|
)
|
|
(15,218
|
)
|
|
(6,260
|
)
|
||||
Unrecognized periodic benefit costs:
|
|
|
|
|
|
|
|
||||||||
Actuarial losses and prior service costs reclassified to earnings
|
1,050
|
|
|
2,276
|
|
|
3,498
|
|
|
7,587
|
|
||||
Tax effect
|
(408
|
)
|
|
(872
|
)
|
|
(1,355
|
)
|
|
(2,905
|
)
|
||||
|
642
|
|
|
1,404
|
|
|
2,143
|
|
|
4,682
|
|
||||
Other:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
2
|
|
|
(72
|
)
|
|
(19
|
)
|
|
(56
|
)
|
||||
Tax effect
|
—
|
|
|
24
|
|
|
8
|
|
|
19
|
|
||||
|
2
|
|
|
(48
|
)
|
|
(11
|
)
|
|
(37
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive loss, net of tax
|
(3,625
|
)
|
|
(1,462
|
)
|
|
(13,086
|
)
|
|
(1,615
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
$
|
26,564
|
|
|
$
|
25,369
|
|
|
$
|
79,006
|
|
|
$
|
84,056
|
|
|
Year-to-date
|
||||||
|
July 3,
2016 |
|
July 5,
2015 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net earnings
|
$
|
92,092
|
|
|
$
|
85,671
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
70,314
|
|
|
68,205
|
|
||
Deferred finance cost amortization
|
2,049
|
|
|
1,690
|
|
||
Excess tax benefits from share-based compensation arrangements
|
(3,822
|
)
|
|
(17,781
|
)
|
||
Deferred income taxes
|
15,672
|
|
|
(4,046
|
)
|
||
Share-based compensation expense
|
9,220
|
|
|
10,041
|
|
||
Pension and postretirement expense
|
10,374
|
|
|
14,423
|
|
||
Gains on cash surrender value of company-owned life insurance
|
(5,008
|
)
|
|
(1,960
|
)
|
||
(Gains) losses on the sale of company-operated restaurants
|
(1,224
|
)
|
|
4,353
|
|
||
Losses on the disposition of property and equipment
|
2,295
|
|
|
1,074
|
|
||
Impairment charges and other
|
2,928
|
|
|
4,813
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts and other receivables
|
(16,333
|
)
|
|
(6,895
|
)
|
||
Inventories
|
(557
|
)
|
|
33
|
|
||
Prepaid expenses and other current assets
|
(7,677
|
)
|
|
20,760
|
|
||
Accounts payable
|
(7,466
|
)
|
|
690
|
|
||
Accrued liabilities
|
1,534
|
|
|
4,215
|
|
||
Pension and postretirement contributions
|
(14,700
|
)
|
|
(14,359
|
)
|
||
Other
|
(2,992
|
)
|
|
(5,782
|
)
|
||
Cash flows provided by operating activities
|
146,699
|
|
|
165,145
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Purchases of property and equipment
|
(74,971
|
)
|
|
(54,832
|
)
|
||
Purchases of assets intended for sale and leaseback
|
(5,593
|
)
|
|
(8,323
|
)
|
||
Proceeds from the sale and leaseback of assets
|
7,748
|
|
|
—
|
|
||
Proceeds from the sale of company-operated restaurants
|
1,434
|
|
|
2,651
|
|
||
Collections on notes receivable
|
3,237
|
|
|
5,648
|
|
||
Acquisition of franchise-operated restaurants
|
324
|
|
|
—
|
|
||
Other
|
51
|
|
|
1,888
|
|
||
Cash flows used in investing activities
|
(67,770
|
)
|
|
(52,968
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Borrowings on revolving credit facilities
|
576,000
|
|
|
742,000
|
|
||
Repayments of borrowings on revolving credit facilities
|
(376,000
|
)
|
|
(698,000
|
)
|
||
Proceeds from issuance of debt
|
—
|
|
|
300,000
|
|
||
Principal repayments on debt
|
(19,651
|
)
|
|
(198,217
|
)
|
||
Debt issuance costs
|
—
|
|
|
(1,942
|
)
|
||
Dividends paid on common stock
|
(30,513
|
)
|
|
(26,556
|
)
|
||
Proceeds from issuance of common stock
|
5,093
|
|
|
14,590
|
|
||
Repurchases of common stock
|
(250,000
|
)
|
|
(254,668
|
)
|
||
Excess tax benefits from share-based compensation arrangements
|
3,822
|
|
|
17,781
|
|
||
Change in book overdraft
|
1,213
|
|
|
—
|
|
||
Cash flows used in financing activities
|
(90,036
|
)
|
|
(105,012
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
11
|
|
|
(37
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
(11,096
|
)
|
|
7,128
|
|
||
Cash and cash equivalents at beginning of period
|
17,743
|
|
|
10,578
|
|
||
Cash and cash equivalents at end of period
|
$
|
6,647
|
|
|
$
|
17,706
|
|
|
July 3,
2016 |
|
July 5,
2015 |
||
Jack in the Box:
|
|
|
|
||
Company-operated
|
415
|
|
|
413
|
|
Franchise
|
1,839
|
|
|
1,835
|
|
Total system
|
2,254
|
|
|
2,248
|
|
Qdoba:
|
|
|
|
||
Company-operated
|
344
|
|
|
314
|
|
Franchise
|
344
|
|
|
334
|
|
Total system
|
688
|
|
|
648
|
|
2.
|
DISCONTINUED OPERATIONS
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3,
2016 |
|
July 5,
2015 |
|
July 3,
2016 |
|
July 5,
2015 |
||||||||
Unfavorable lease commitment adjustments
|
$
|
(675
|
)
|
|
$
|
(1,749
|
)
|
|
$
|
(2,143
|
)
|
|
$
|
(3,945
|
)
|
Bad debt expense related to subtenants
|
(225
|
)
|
|
(311
|
)
|
|
(349
|
)
|
|
(311
|
)
|
||||
Ongoing facility related costs
|
(2
|
)
|
|
(37
|
)
|
|
(72
|
)
|
|
(164
|
)
|
||||
Broker commissions
|
—
|
|
|
(58
|
)
|
|
(21
|
)
|
|
(200
|
)
|
||||
Loss before income tax benefit
|
$
|
(902
|
)
|
|
$
|
(2,155
|
)
|
|
$
|
(2,585
|
)
|
|
$
|
(4,620
|
)
|
Balance as of September 27, 2015
|
$
|
4,256
|
|
Adjustments (1)
|
2,143
|
|
|
Cash payments
|
(2,965
|
)
|
|
Balance as of July 3, 2016 (2)
|
$
|
3,434
|
|
(1)
|
Adjustments relate to revisions to certain sublease and cost assumptions due to changes in market conditions, as well as a charge to terminate one lease agreement, and includes interest expense.
|
(2)
|
The weighted average remaining lease term related to these commitments is approximately
three
years.
|
3.
|
SUMMARY OF REFRANCHISINGS, FRANCHISEE DEVELOPMENT AND ACQUISITIONS
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3,
2016 |
|
July 5,
2015 |
|
July 3,
2016 |
|
July 5,
2015 |
||||||||
Restaurants sold to Jack in the Box franchisees
|
—
|
|
|
—
|
|
|
1
|
|
|
21
|
|
||||
New restaurants opened by franchisees:
|
|
|
|
|
|
|
|
||||||||
Jack in the Box
|
4
|
|
|
1
|
|
|
9
|
|
|
12
|
|
||||
Qdoba
|
1
|
|
|
4
|
|
|
11
|
|
|
15
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Initial franchise fees
|
$
|
205
|
|
|
$
|
130
|
|
|
$
|
710
|
|
|
$
|
1,113
|
|
|
|
|
|
|
|
|
|
||||||||
Proceeds from the sale of company-operated restaurants (1)
|
$
|
413
|
|
|
$
|
21
|
|
|
$
|
1,434
|
|
|
$
|
2,651
|
|
Net assets sold (primarily property and equipment)
|
—
|
|
|
(204
|
)
|
|
(196
|
)
|
|
(2,638
|
)
|
||||
Goodwill related to the sale of company-operated restaurants
|
(5
|
)
|
|
—
|
|
|
(15
|
)
|
|
(32
|
)
|
||||
Other (2)
|
1
|
|
|
—
|
|
|
1
|
|
|
(4,334
|
)
|
||||
Gains (losses) on the sale of company-operated restaurants
|
$
|
409
|
|
|
$
|
(183
|
)
|
|
$
|
1,224
|
|
|
$
|
(4,353
|
)
|
(1)
|
Amounts in 2016 and 2015 include additional proceeds recognized upon the extension of the underlying franchise and lease agreements related to restaurants sold in a prior year of
$0.4 million
and
$0.1 million
, respectively, in the quarter, and
$1.4 million
and
$0.2 million
, respectively, year-to-date.
|
(2)
|
Amounts in 2015 include lease commitment charges related to restaurants closed in connection with the sale of the related market, and charges for operating restaurant leases with lease commitments in excess of our sublease rental income.
|
4.
|
FAIR VALUE MEASUREMENTS
|
|
Total
|
|
Quoted Prices
in Active
Markets for
Identical
Assets (3)
(Level 1)
|
|
Significant
Other
Observable
Inputs (3)
(Level 2)
|
|
Significant
Unobservable
Inputs (3)
(Level 3)
|
||||||||
Fair value measurements as of July 3, 2016:
|
|
|
|
|
|
|
|
||||||||
Non-qualified deferred compensation plan (1)
|
$
|
(37,287
|
)
|
|
$
|
(37,287
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps (Note 5) (2)
|
(51,202
|
)
|
|
—
|
|
|
(51,202
|
)
|
|
—
|
|
||||
Total liabilities at fair value
|
$
|
(88,489
|
)
|
|
$
|
(37,287
|
)
|
|
$
|
(51,202
|
)
|
|
$
|
—
|
|
Fair value measurements as of September 27, 2015:
|
|
|
|
|
|
|
|
||||||||
Non-qualified deferred compensation plan (1)
|
$
|
(35,003
|
)
|
|
$
|
(35,003
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps (Note 5) (2)
|
(26,374
|
)
|
|
—
|
|
|
(26,374
|
)
|
|
—
|
|
||||
Total liabilities at fair value
|
$
|
(61,377
|
)
|
|
$
|
(35,003
|
)
|
|
$
|
(26,374
|
)
|
|
$
|
—
|
|
(1)
|
We maintain an unfunded defined contribution plan for key executives and other members of management. The fair value of this obligation is based on the closing market prices of the participants’ elected investments.
|
(2)
|
We entered into interest rate swaps to reduce our exposure to rising interest rates on our variable rate debt. The fair values of our interest rate swaps are based upon Level 2 inputs which include valuation models as reported by our counterparties. The key inputs for the valuation models are quoted market prices, discount rates and forward yield curves.
|
(3)
|
We did not have any transfers in or out of Level 1, 2 or 3.
|
5.
|
DERIVATIVE INSTRUMENTS
|
|
Balance
Sheet
Location
|
|
Fair Value
|
||||||
|
|
July 3,
2016 |
|
September 27, 2015
|
|||||
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
||||
Interest rate swaps (Note 4)
|
Accrued liabilities
|
|
$
|
(5,237
|
)
|
|
$
|
(3,379
|
)
|
Interest rate swaps (Note 4)
|
Other long-term liabilities
|
|
(45,965
|
)
|
|
(22,995
|
)
|
||
Total derivatives
|
|
|
$
|
(51,202
|
)
|
|
$
|
(26,374
|
)
|
|
Location of Loss in Income
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
|
July 3,
2016 |
|
July 5,
2015 |
|
July 3,
2016 |
|
July 5,
2015 |
|||||||||
Loss recognized in OCI
|
N/A
|
|
$
|
(7,825
|
)
|
|
$
|
(5,027
|
)
|
|
$
|
(28,008
|
)
|
|
$
|
(11,699
|
)
|
Loss reclassified from accumulated OCI into net earnings
|
Interest expense, net
|
|
$
|
860
|
|
|
$
|
461
|
|
|
$
|
3,180
|
|
|
$
|
1,556
|
|
6.
|
IMPAIRMENT AND OTHER CHARGES, NET
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3,
2016 |
|
July 5,
2015 |
|
July 3,
2016 |
|
July 5,
2015 |
||||||||
Restructuring costs
|
$
|
7,744
|
|
|
$
|
10
|
|
|
$
|
7,744
|
|
|
$
|
29
|
|
Costs of closed restaurants (primarily lease obligations) and other
|
914
|
|
|
886
|
|
|
2,489
|
|
|
2,645
|
|
||||
Accelerated depreciation
|
673
|
|
|
2,610
|
|
|
1,531
|
|
|
4,749
|
|
||||
Losses on the disposition of property and equipment, net
|
637
|
|
|
228
|
|
|
2,283
|
|
|
580
|
|
||||
Restaurant impairment charges
|
551
|
|
|
24
|
|
|
551
|
|
|
65
|
|
||||
|
$
|
10,519
|
|
|
$
|
3,758
|
|
|
$
|
14,598
|
|
|
$
|
8,068
|
|
Employee severance and related costs
|
$
|
6,487
|
|
Facility closing costs
|
847
|
|
|
Other
|
410
|
|
|
|
$
|
7,744
|
|
Balance as of September 27, 2015
|
|
$
|
9,707
|
|
Additions
|
|
310
|
|
|
Adjustments (1)
|
|
707
|
|
|
Interest expense
|
|
1,084
|
|
|
Cash payments
|
|
(4,044
|
)
|
|
Balance as of July 3, 2016 (2)
|
|
$
|
7,764
|
|
(1)
|
Adjustments relate primarily to revisions of certain sublease and cost assumptions. Our estimates related to our future lease obligations, primarily the sublease income we anticipate, are subject to a high degree of judgment and may differ from actual sublease income due to changes in economic conditions, desirability of the sites and other factors.
|
(2)
|
The weighted average remaining lease term related to these commitments is approximately
five
years.
|
7.
|
INCOME TAXES
|
8.
|
RETIREMENT PLANS
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3,
2016 |
|
July 5,
2015 |
|
July 3,
2016 |
|
July 5,
2015 |
||||||||
Defined benefit pension plans:
|
|
|
|
|
|
|
|
||||||||
Interest cost
|
$
|
5,579
|
|
|
$
|
5,237
|
|
|
$
|
18,599
|
|
|
$
|
17,457
|
|
Service cost
|
1,212
|
|
|
1,908
|
|
|
4,040
|
|
|
6,360
|
|
||||
Expected return on plan assets
|
(5,020
|
)
|
|
(5,370
|
)
|
|
(16,735
|
)
|
|
(17,901
|
)
|
||||
Actuarial loss (1)
|
943
|
|
|
2,172
|
|
|
3,144
|
|
|
7,240
|
|
||||
Amortization of unrecognized prior service costs (1)
|
56
|
|
|
62
|
|
|
185
|
|
|
207
|
|
||||
Net periodic benefit cost
|
$
|
2,770
|
|
|
$
|
4,009
|
|
|
$
|
9,233
|
|
|
$
|
13,363
|
|
Postretirement healthcare plans:
|
|
|
|
|
|
|
|
||||||||
Interest cost
|
$
|
292
|
|
|
$
|
276
|
|
|
$
|
972
|
|
|
$
|
920
|
|
Actuarial loss (1)
|
51
|
|
|
42
|
|
|
169
|
|
|
140
|
|
||||
Net periodic benefit cost
|
$
|
343
|
|
|
$
|
318
|
|
|
$
|
1,141
|
|
|
$
|
1,060
|
|
|
Defined Benefit
Pension Plans
|
|
Postretirement
Healthcare Plans
|
||||
Net year-to-date contributions
|
$
|
13,738
|
|
|
$
|
962
|
|
Remaining estimated net contributions during fiscal 2016
|
$ 65,700 to 85,700
|
|
|
$
|
400
|
|
9.
|
SHARE-BASED COMPENSATION
|
Nonvested stock units
|
140,794
|
|
Stock options
|
99,923
|
|
Performance share awards
|
32,970
|
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3,
2016 |
|
July 5,
2015 |
|
July 3,
2016 |
|
July 5,
2015 |
||||||||
Nonvested stock units
|
$
|
745
|
|
|
$
|
723
|
|
|
$
|
4,472
|
|
|
$
|
4,105
|
|
Stock options
|
316
|
|
|
585
|
|
|
2,039
|
|
|
2,139
|
|
||||
Performance share awards
|
238
|
|
|
1,335
|
|
|
2,372
|
|
|
3,407
|
|
||||
Nonvested stock awards
|
20
|
|
|
31
|
|
|
67
|
|
|
127
|
|
||||
Deferred compensation for non-management directors
|
—
|
|
|
—
|
|
|
270
|
|
|
263
|
|
||||
Total share-based compensation expense
|
$
|
1,319
|
|
|
$
|
2,674
|
|
|
$
|
9,220
|
|
|
$
|
10,041
|
|
10.
|
STOCKHOLDERS’ EQUITY
|
11.
|
AVERAGE SHARES OUTSTANDING
|
|
Quarter
|
|
Year-to-date
|
||||||||
|
July 3,
2016 |
|
July 5,
2015 |
|
July 3,
2016 |
|
July 5,
2015 |
||||
Weighted-average shares outstanding – basic
|
32,642
|
|
|
37,106
|
|
|
34,073
|
|
|
37,980
|
|
Effect of potentially dilutive securities:
|
|
|
|
|
|
|
|
||||
Stock options
|
145
|
|
|
213
|
|
|
161
|
|
|
301
|
|
Nonvested stock awards and units
|
176
|
|
|
196
|
|
|
182
|
|
|
197
|
|
Performance share awards
|
53
|
|
|
146
|
|
|
53
|
|
|
152
|
|
Weighted-average shares outstanding – diluted
|
33,016
|
|
|
37,661
|
|
|
34,469
|
|
|
38,630
|
|
Excluded from diluted weighted-average shares outstanding:
|
|
|
|
|
|
|
|
||||
Antidilutive
|
170
|
|
|
99
|
|
|
176
|
|
|
85
|
|
Performance conditions not satisfied at the end of the period
|
61
|
|
|
23
|
|
|
61
|
|
|
17
|
|
12.
|
CONTINGENCIES AND LEGAL MATTERS
|
13.
|
SEGMENT REPORTING
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3,
2016 |
|
July 5,
2015 |
|
July 3,
2016 |
|
July 5,
2015 |
||||||||
Revenues by segment:
|
|
|
|
|
|
|
|
||||||||
Jack in the Box restaurant operations
|
$
|
264,493
|
|
|
$
|
263,339
|
|
|
$
|
876,138
|
|
|
$
|
884,734
|
|
Qdoba restaurant operations
|
104,445
|
|
|
96,167
|
|
|
324,774
|
|
|
301,515
|
|
||||
Consolidated revenues
|
$
|
368,938
|
|
|
$
|
359,506
|
|
|
$
|
1,200,912
|
|
|
$
|
1,186,249
|
|
Earnings from operations by segment:
|
|
|
|
|
|
|
|
||||||||
Jack in the Box restaurant operations
|
$
|
69,528
|
|
|
$
|
62,355
|
|
|
$
|
218,364
|
|
|
$
|
207,523
|
|
Qdoba restaurant operations
|
14,172
|
|
|
13,805
|
|
|
33,532
|
|
|
37,265
|
|
||||
Shared services and unallocated costs
|
(28,404
|
)
|
|
(25,582
|
)
|
|
(82,115
|
)
|
|
(84,936
|
)
|
||||
Gains (losses) on the sale of company-operated restaurants
|
409
|
|
|
(183
|
)
|
|
1,224
|
|
|
(4,353
|
)
|
||||
Consolidated earnings from operations
|
55,705
|
|
|
50,395
|
|
|
171,005
|
|
|
155,499
|
|
||||
Interest expense, net
|
7,613
|
|
|
4,504
|
|
|
22,699
|
|
|
13,937
|
|
||||
Consolidated earnings from continuing operations and before income taxes
|
$
|
48,092
|
|
|
$
|
45,891
|
|
|
$
|
148,306
|
|
|
$
|
141,562
|
|
Total depreciation expense by segment:
|
|
|
|
|
|
|
|
||||||||
Jack in the Box restaurant operations
|
$
|
14,877
|
|
|
$
|
14,737
|
|
|
$
|
50,409
|
|
|
$
|
49,051
|
|
Qdoba restaurant operations
|
4,536
|
|
|
3,864
|
|
|
14,403
|
|
|
13,179
|
|
||||
Shared services and unallocated costs
|
1,401
|
|
|
1,573
|
|
|
4,936
|
|
|
5,445
|
|
||||
Consolidated depreciation expense
|
$
|
20,814
|
|
|
$
|
20,174
|
|
|
$
|
69,748
|
|
|
$
|
67,675
|
|
|
Jack in the Box
|
|
Qdoba
|
|
Total
|
||||||
Balance at September 27, 2015
|
$
|
48,430
|
|
|
$
|
100,597
|
|
|
$
|
149,027
|
|
Disposals
|
(20
|
)
|
|
—
|
|
|
(20
|
)
|
|||
Balance at July 3, 2016
|
$
|
48,410
|
|
|
$
|
100,597
|
|
|
$
|
149,007
|
|
14.
|
SUPPLEMENTAL CONSOLIDATED CASH FLOW INFORMATION (
in thousands
)
|
|
Year-to-date
|
||||||
|
July 3,
2016 |
|
July 5,
2015 |
||||
Cash paid during the year for:
|
|
|
|
||||
Interest, net of amounts capitalized
|
$
|
(22,919
|
)
|
|
$
|
(13,433
|
)
|
Income tax payments
|
$
|
(33,453
|
)
|
|
$
|
(18,685
|
)
|
Non-cash transactions:
|
|
|
|
||||
Equipment capital lease obligations incurred
|
$
|
702
|
|
|
$
|
4,894
|
|
Decrease in accrued treasury stock repurchases
|
$
|
—
|
|
|
$
|
(3,112
|
)
|
Increase in dividends accrued or converted to common stock equivalents
|
$
|
163
|
|
|
$
|
121
|
|
(Decrease) increase in obligations for purchases of property and equipment
|
$
|
(4,882
|
)
|
|
$
|
53
|
|
15.
|
SUPPLEMENTAL CONSOLIDATED BALANCE SHEET INFORMATION
(in thousands)
|
|
|||||||
|
July 3,
2016 |
|
September 27,
2015 |
||||
Accounts and other receivables, net:
|
|
|
|
||||
Trade
|
$
|
49,261
|
|
|
$
|
36,990
|
|
Notes receivable
|
1,526
|
|
|
1,726
|
|
||
Other
|
13,980
|
|
|
10,814
|
|
||
Allowance for doubtful accounts
|
(2,777
|
)
|
|
(1,555
|
)
|
||
|
$
|
61,990
|
|
|
$
|
47,975
|
|
Prepaid expenses:
|
|
|
|
||||
Prepaid income taxes
|
$
|
16,431
|
|
|
$
|
7,645
|
|
Prepaid rent
|
14,404
|
|
|
318
|
|
||
Other
|
7,229
|
|
|
8,277
|
|
||
|
$
|
38,064
|
|
|
$
|
16,240
|
|
Other assets, net:
|
|
|
|
||||
Company-owned life insurance policies
|
$
|
104,521
|
|
|
$
|
99,513
|
|
Deferred tax assets
|
101,253
|
|
|
118,184
|
|
||
Deferred rent receivable
|
47,205
|
|
|
45,330
|
|
||
Other
|
21,611
|
|
|
40,941
|
|
||
|
$
|
274,590
|
|
|
$
|
303,968
|
|
Accrued liabilities:
|
|
|
|
||||
Payroll and related taxes
|
$
|
46,002
|
|
|
$
|
56,223
|
|
Insurance
|
38,237
|
|
|
35,370
|
|
||
Deferred rent
|
15,580
|
|
|
1,806
|
|
||
Advertising
|
12,024
|
|
|
20,692
|
|
||
Sales and property taxes
|
11,096
|
|
|
11,574
|
|
||
Deferred beverage funding
|
10,482
|
|
|
5,176
|
|
||
Gift card liability
|
5,273
|
|
|
4,608
|
|
||
Deferred franchise fees
|
1,165
|
|
|
1,198
|
|
||
Other
|
33,905
|
|
|
33,928
|
|
||
|
$
|
173,764
|
|
|
$
|
170,575
|
|
Other long-term liabilities:
|
|
|
|
||||
Defined benefit pension plans
|
$
|
172,641
|
|
|
$
|
180,476
|
|
Straight-line rent accrual
|
46,875
|
|
|
46,807
|
|
||
Other
|
148,152
|
|
|
142,775
|
|
||
|
$
|
367,668
|
|
|
$
|
370,058
|
|
16.
|
SUBSEQUENT EVENTS
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Overview
— a general description of our business and
2016
highlights.
|
•
|
Financial reporting
— a discussion of changes in presentation, if any.
|
•
|
Results of operations
— an analysis of our condensed consolidated statements of earnings for the periods presented in our condensed consolidated financial statements.
|
•
|
Liquidity and capital resources
— an analysis of our cash flows including capital expenditures, share repurchase activity, dividends, known trends that may impact liquidity and the impact of inflation, if applicable.
|
•
|
Discussion of critical accounting estimates
— a discussion of accounting policies that require critical judgments and estimates.
|
•
|
New accounting pronouncements
— a discussion of new accounting pronouncements, dates of implementation and the impact on our consolidated financial position or results of operations, if any.
|
•
|
Cautionary statements regarding forward-looking statements
— a discussion of the risks and uncertainties that may cause our actual results to differ materially from any forward-looking statements made by management.
|
•
|
Changes in sales at restaurants open more than one year (“same-store sales”) and average unit volumes (“AUVs”) are presented for franchised restaurants and on a system-wide basis, which includes company and franchise restaurants. Franchise sales represent sales at franchise restaurants and are revenues of our franchisees. We do not record franchise sales as revenues; however, our royalty revenues and percentage rent revenues are calculated based on a percentage of franchise sales. We believe franchise and system same-store sales and AUV information is useful to investors as a significant indicator of the overall strength of our business.
|
•
|
Company restaurant margin (“restaurant margin”) is defined as Company restaurant sales less expenses incurred directly by our restaurants in generating those sales (food and packaging costs, payroll and employee benefits, and occupancy and other costs). We also present restaurant margin as a percentage of Company restaurant sales.
|
•
|
Franchise margin is defined as franchise rental revenues and franchise royalties and other, less franchise occupancy expenses, and franchise support and other costs, and is also presented as a percentage of franchise revenues.
|
•
|
Same-Store Sales
—
Same-store sales declined
0.2%
year-to-date at company-operated Jack in the Box restaurants compared with a year ago primarily driven by a decrease in traffic. Qdoba’s year-to-date same-store sales increase of
1.8%
at company-operated restaurants compared with a year ago, was driven primarily by an increase in transactions, menu price increases, and catering growth.
|
•
|
Commodity Costs
—
Commodity costs decreased approximately
2.5%
and
4.7%
year-to-date at our Jack in the Box and Qdoba restaurants, respectively, in
2016
compared with a year ago. We expect our overall commodity costs in fiscal 2016 to decrease approximately 2-
3
% and
5%
at our Jack in the Box and Qdoba restaurants, respectively. Beef represents the largest portion, or approximately 20%, of the Company’s overall commodity spend. We typically do not enter into fixed price contracts for our beef needs. For the full year, we currently expect beef costs to decrease approximately 15-20%.
|
•
|
Restaurant Margins
—
Our year-to-date consolidated company-operated restaurant margin
decreased
slightly in
2016
to
20.3%
from
20.5%
a year ago. Jack in the Box’s company-operated restaurant margin
improved
to
21.3%
in 2016 from
20.8%
in the prior year due primarily to lower costs for food and packaging and benefits of refranchising, partially offset by minimum wage increases in California that went into effect in January 2016, and by higher costs for equipment upgrades. Company-operated restaurant margins at our Qdoba restaurants
decreased
to
18.4%
in 2016 from
19.8%
a year ago primarily reflecting an increase in new restaurant activity and higher costs for equipment upgrades.
|
•
|
Jack in the Box Franchising Program
—
Year-to-date, franchisees opened a total of
nine
restaurants. In fiscal
2016
, we expect to open approximately
20
Jack in the Box restaurants, the majority of which will be franchise locations. Our Jack in the Box system was
82%
franchised as of
July 3, 2016
. We plan to increase franchise ownership of the Jack in the Box system to 90-95% by the end of the first quarter of fiscal 2018.
|
•
|
Qdoba New Unit Growth
—
Year-to-date, we opened
26
company-operated restaurants, and franchisees opened
eleven
restaurants. In fiscal
2016
, we plan for the opening of
50 to 60
Qdoba restaurants, of which approximately
35
are expected to be company-operated restaurants.
|
•
|
Restructuring Costs
—
In 2016, we announced a plan to reduce our general and administrative costs. In connection with this plan, we have recorded $7.7 million of restructuring charges which are included in impairment and other costs, net in the accompanying Condensed Consolidated Statements of Earnings.
|
•
|
Return of Cash to Shareholders
—
Year-to-date, we returned cash to shareholders in the form of share repurchases and cash dividends. We repurchased
3.5 million
shares of our common stock at an average price of
$72.44
per share, totaling
$250.0 million
, including the costs of brokerage fees. We also declared dividends of $0.90 per common share totaling
$30.7 million
.
|
|
Quarter
|
|
Year-to-date
|
||||||||
|
July 3, 2016
|
|
July 5, 2015
|
|
July 3, 2016
|
|
July 5, 2015
|
||||
Revenues:
|
|
|
|
|
|
|
|
||||
Company restaurant sales
|
75.6
|
%
|
|
75.3
|
%
|
|
75.3
|
%
|
|
75.1
|
%
|
Franchise rental revenues
|
14.3
|
%
|
|
14.6
|
%
|
|
14.6
|
%
|
|
14.7
|
%
|
Franchise royalties and other
|
10.1
|
%
|
|
10.1
|
%
|
|
10.1
|
%
|
|
10.2
|
%
|
Total revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Operating costs and expenses, net:
|
|
|
|
|
|
|
|
||||
Company restaurant costs:
|
|
|
|
|
|
|
|
||||
Food and packaging (1)
|
29.3
|
%
|
|
30.5
|
%
|
|
30.2
|
%
|
|
31.4
|
%
|
Payroll and employee benefits (1)
|
27.6
|
%
|
|
26.9
|
%
|
|
27.8
|
%
|
|
27.1
|
%
|
Occupancy and other (1)
|
21.2
|
%
|
|
20.7
|
%
|
|
21.7
|
%
|
|
21.0
|
%
|
Total company restaurant costs (1)
|
78.1
|
%
|
|
78.2
|
%
|
|
79.7
|
%
|
|
79.5
|
%
|
Franchise occupancy expenses (2)
|
73.5
|
%
|
|
74.6
|
%
|
|
73.3
|
%
|
|
75.2
|
%
|
Franchise support and other costs (3)
|
9.8
|
%
|
|
9.5
|
%
|
|
10.2
|
%
|
|
9.9
|
%
|
Selling, general and administrative expenses
|
11.6
|
%
|
|
14.2
|
%
|
|
13.0
|
%
|
|
14.0
|
%
|
Impairment and other charges, net
|
2.9
|
%
|
|
1.0
|
%
|
|
1.2
|
%
|
|
0.7
|
%
|
(Gains) losses on the sale of company-operated restaurants
|
(0.1
|
)%
|
|
0.1
|
%
|
|
(0.1
|
)%
|
|
0.4
|
%
|
Earnings from operations
|
15.1
|
%
|
|
14.0
|
%
|
|
14.2
|
%
|
|
13.1
|
%
|
Income tax rate (4)
|
36.0
|
%
|
|
38.2
|
%
|
|
36.8
|
%
|
|
37.3
|
%
|
(1)
|
As a percentage of company restaurant sales.
|
(2)
|
As a percentage of franchise rental revenues.
|
(3)
|
As a percentage of franchise royalties and other.
|
(4)
|
As a percentage of earnings from continuing operations and before income taxes.
|
|
Quarter
|
|
Year-to-date
|
||||
|
July 3, 2016
|
|
July 5, 2015
|
|
July 3, 2016
|
|
July 5, 2015
|
Jack in the Box:
|
|
|
|
|
|
|
|
Company
|
(0.2)%
|
|
5.5%
|
|
(0.2)%
|
|
5.4%
|
Franchise
|
1.5%
|
|
7.9%
|
|
1.3%
|
|
7.0%
|
System
|
1.1%
|
|
7.3%
|
|
0.9%
|
|
6.6%
|
Qdoba:
|
|
|
|
|
|
|
|
Company
|
1.0%
|
|
6.6%
|
|
1.8%
|
|
9.1%
|
Franchise
|
0.1%
|
|
9.0%
|
|
1.3%
|
|
11.4%
|
System
|
0.6%
|
|
7.7%
|
|
1.6%
|
|
10.2%
|
|
July 3, 2016
|
|
July 5, 2015
|
||||||||||||||
|
Company
|
|
Franchise
|
|
Total
|
|
Company
|
|
Franchise
|
|
Total
|
||||||
Jack in the Box:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Beginning of year
|
413
|
|
|
1,836
|
|
|
2,249
|
|
|
431
|
|
|
1,819
|
|
|
2,250
|
|
New
|
2
|
|
|
9
|
|
|
11
|
|
|
2
|
|
|
12
|
|
|
14
|
|
Refranchised
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
(21
|
)
|
|
21
|
|
|
—
|
|
Acquired from franchisees
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
7
|
|
|
(7
|
)
|
|
—
|
|
Closed
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
|
(6
|
)
|
|
(10
|
)
|
|
(16
|
)
|
End of period
|
415
|
|
|
1,839
|
|
|
2,254
|
|
|
413
|
|
|
1,835
|
|
|
2,248
|
|
% of JIB system
|
18
|
%
|
|
82
|
%
|
|
100
|
%
|
|
18
|
%
|
|
82
|
%
|
|
100
|
%
|
Qdoba:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Beginning of year
|
322
|
|
|
339
|
|
|
661
|
|
|
310
|
|
|
328
|
|
|
638
|
|
New
|
26
|
|
|
11
|
|
|
37
|
|
|
8
|
|
|
15
|
|
|
23
|
|
Closed
|
(4
|
)
|
|
(6
|
)
|
|
(10
|
)
|
|
(4
|
)
|
|
(9
|
)
|
|
(13
|
)
|
End of period
|
344
|
|
|
344
|
|
|
688
|
|
|
314
|
|
|
334
|
|
|
648
|
|
% of Qdoba system
|
50
|
%
|
|
50
|
%
|
|
100
|
%
|
|
48
|
%
|
|
52
|
%
|
|
100
|
%
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total system end of period
|
759
|
|
|
2,183
|
|
|
2,942
|
|
|
727
|
|
|
2,169
|
|
|
2,896
|
|
% of consolidated system
|
26
|
%
|
|
74
|
%
|
|
100
|
%
|
|
25
|
%
|
|
75
|
%
|
|
100
|
%
|
|
Quarter
|
|
Year-to-date
|
||||||||||||||||||||||||
|
July 3, 2016
|
|
July 5, 2015
|
|
July 3, 2016
|
|
July 5, 2015
|
||||||||||||||||||||
Company restaurant sales
|
$
|
179,458
|
|
|
|
|
$
|
179,451
|
|
|
|
|
$
|
595,401
|
|
|
|
|
$
|
605,786
|
|
|
|
||||
Company restaurant costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Food and packaging
|
51,893
|
|
|
28.9
|
%
|
|
55,218
|
|
|
30.8
|
%
|
|
179,142
|
|
|
30.1
|
%
|
|
192,906
|
|
|
31.8
|
%
|
||||
Payroll and employee benefits
|
50,654
|
|
|
28.2
|
%
|
|
49,599
|
|
|
27.6
|
%
|
|
167,744
|
|
|
28.2
|
%
|
|
167,227
|
|
|
27.6
|
%
|
||||
Occupancy and other
|
36,446
|
|
|
20.3
|
%
|
|
35,115
|
|
|
19.6
|
%
|
|
121,522
|
|
|
20.4
|
%
|
|
119,797
|
|
|
19.8
|
%
|
||||
Total company restaurant costs
|
138,993
|
|
|
77.5
|
%
|
|
139,932
|
|
|
78.0
|
%
|
|
468,408
|
|
|
78.7
|
%
|
|
479,930
|
|
|
79.2
|
%
|
||||
Restaurant margin
|
$
|
40,465
|
|
|
22.5
|
%
|
|
$
|
39,519
|
|
|
22.0
|
%
|
|
$
|
126,993
|
|
|
21.3
|
%
|
|
$
|
125,856
|
|
|
20.8
|
%
|
|
Quarter
|
|
Year-to-date
|
||||
Increase (decrease) in the average number of Jack in the Box company restaurants
|
$
|
1,100
|
|
|
$
|
(15,500
|
)
|
Jack in the Box AUV (decrease) increase
|
(1,100
|
)
|
|
5,100
|
|
||
Total change in company restaurant sales
|
$
|
—
|
|
|
$
|
(10,400
|
)
|
|
Quarter
|
|
Year-to-date
|
||||||||
|
July 3, 2016
|
|
July 5, 2015
|
|
July 3, 2016
|
|
July 5, 2015
|
||||
Average check (1)
|
3.5
|
%
|
|
3.9
|
%
|
|
2.8
|
%
|
|
3.9
|
%
|
Transactions
|
(3.7
|
)%
|
|
1.6
|
%
|
|
(3.0
|
)%
|
|
1.5
|
%
|
Change in same-store sales
|
(0.2
|
)%
|
|
5.5
|
%
|
|
(0.2
|
)%
|
|
5.4
|
%
|
(1)
|
Amounts in
2016
and
2015
include price increases of approximately
3.3%
and
2.0%
, respectively, in the quarter, and
3.1%
and
2.1%
, respectively, year-to-date.
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3, 2016
|
|
July 5, 2015
|
|
July 3, 2016
|
|
July 5, 2015
|
||||||||
Franchise rental revenues
|
$
|
52,849
|
|
|
$
|
52,325
|
|
|
$
|
175,126
|
|
|
$
|
173,874
|
|
|
|
|
|
|
|
|
|
||||||||
Royalties
|
31,770
|
|
|
31,377
|
|
|
104,190
|
|
|
103,158
|
|
||||
Franchise fees and other
|
416
|
|
|
186
|
|
|
1,421
|
|
|
1,916
|
|
||||
Franchise royalties and other
|
32,186
|
|
|
31,563
|
|
|
105,611
|
|
|
105,074
|
|
||||
Total franchise revenues
|
85,035
|
|
|
83,888
|
|
|
280,737
|
|
|
278,948
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Rental expense
|
31,571
|
|
|
31,388
|
|
|
103,708
|
|
|
105,187
|
|
||||
Depreciation and amortization
|
7,253
|
|
|
7,656
|
|
|
24,692
|
|
|
25,485
|
|
||||
Franchise occupancy expenses
|
38,824
|
|
|
39,044
|
|
|
128,400
|
|
|
130,672
|
|
||||
Franchise support and other costs
|
2,515
|
|
|
2,506
|
|
|
8,614
|
|
|
8,910
|
|
||||
Total franchise costs
|
41,339
|
|
|
41,550
|
|
|
137,014
|
|
|
139,582
|
|
||||
Franchise margin
|
$
|
43,696
|
|
|
$
|
42,338
|
|
|
$
|
143,723
|
|
|
$
|
139,366
|
|
Franchise margin as a % of franchise revenues
|
51.4
|
%
|
|
50.5
|
%
|
|
51.2
|
%
|
|
50.0
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Average number of franchise restaurants
|
1,839
|
|
|
1,834
|
|
|
1,838
|
|
|
1,826
|
|
||||
% increase
|
0.3
|
%
|
|
|
|
0.7
|
%
|
|
|
||||||
Increase in franchise-operated same-store sales
|
1.5
|
%
|
|
7.9
|
%
|
|
1.3
|
%
|
|
7.0
|
%
|
||||
Royalties as a percentage of franchise restaurant sales
|
5.1
|
%
|
|
5.1
|
%
|
|
5.1
|
%
|
|
5.1
|
%
|
|
Quarter
|
|
Year-to-date
|
||||||||||||||||||||||||
|
July 3, 2016
|
|
July 5, 2015
|
|
July 3, 2016
|
|
July 5, 2015
|
||||||||||||||||||||
Company restaurant sales
|
$
|
99,371
|
|
|
|
|
$
|
91,204
|
|
|
|
|
$
|
308,441
|
|
|
|
|
$
|
285,669
|
|
|
|
||||
Company restaurant costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Food and packaging
|
29,932
|
|
|
30.1
|
%
|
|
27,431
|
|
|
30.1
|
%
|
|
93,660
|
|
|
30.4
|
%
|
|
86,884
|
|
|
30.4
|
%
|
||||
Payroll and employee benefits
|
26,256
|
|
|
26.4
|
%
|
|
23,297
|
|
|
25.5
|
%
|
|
83,210
|
|
|
27.0
|
%
|
|
74,421
|
|
|
26.1
|
%
|
||||
Occupancy and other
|
22,672
|
|
|
22.8
|
%
|
|
20,988
|
|
|
23.0
|
%
|
|
74,822
|
|
|
24.3
|
%
|
|
67,805
|
|
|
23.7
|
%
|
||||
Total company restaurant costs
|
78,860
|
|
|
79.4
|
%
|
|
71,716
|
|
|
78.6
|
%
|
|
251,692
|
|
|
81.6
|
%
|
|
229,110
|
|
|
80.2
|
%
|
||||
Restaurant margin
|
$
|
20,511
|
|
|
20.6
|
%
|
|
$
|
19,488
|
|
|
21.4
|
%
|
|
$
|
56,749
|
|
|
18.4
|
%
|
|
$
|
56,559
|
|
|
19.8
|
%
|
|
Quarter
|
|
Year-to-date
|
||||
Increase in the average number of Qdoba company restaurants
|
$
|
8,400
|
|
|
$
|
19,700
|
|
Qdoba AUV (decrease) increase
|
(200
|
)
|
|
3,100
|
|
||
Total change in company restaurant sales
|
$
|
8,200
|
|
|
$
|
22,800
|
|
|
Quarter
|
|
Year-to-date
|
||||||||
|
July 3, 2016
|
|
July 5, 2015
|
|
July 3, 2016
|
|
July 5, 2015
|
||||
Transactions
|
0.4
|
%
|
|
(1.1
|
)%
|
|
1.8
|
%
|
|
—
|
%
|
Average check (1)
|
—
|
%
|
|
6.4
|
%
|
|
(0.7
|
)%
|
|
7.9
|
%
|
Catering
|
0.6
|
%
|
|
1.3
|
%
|
|
0.7
|
%
|
|
1.2
|
%
|
Change in same-store sales
|
1.0
|
%
|
|
6.6
|
%
|
|
1.8
|
%
|
|
9.1
|
%
|
(1)
|
Amounts in
2016
and
2015
include price increases of approximately
1.3%
and
0.0%
, respectively, in the quarter, and
1.0%
and
0.3%
, respectively, year-to-date.
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3, 2016
|
|
July 5, 2015
|
|
July 3, 2016
|
|
July 5, 2015
|
||||||||
Franchise rental revenues
|
$
|
29
|
|
|
$
|
50
|
|
|
$
|
92
|
|
|
$
|
162
|
|
|
|
|
|
|
|
|
|
||||||||
Royalties
|
4,784
|
|
|
4,559
|
|
|
15,148
|
|
|
14,501
|
|
||||
Franchise fees and other
|
261
|
|
|
354
|
|
|
1,093
|
|
|
1,183
|
|
||||
Franchise royalties and other
|
5,045
|
|
|
4,913
|
|
|
16,241
|
|
|
15,684
|
|
||||
Total franchise revenues
|
5,074
|
|
|
4,963
|
|
|
16,333
|
|
|
15,846
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Rental expense (1)
|
24
|
|
|
43
|
|
|
75
|
|
|
149
|
|
||||
Franchise support and other costs
|
1,139
|
|
|
943
|
|
|
3,809
|
|
|
3,005
|
|
||||
Total franchise costs
|
1,163
|
|
|
986
|
|
|
3,884
|
|
|
3,154
|
|
||||
Franchise margin
|
$
|
3,911
|
|
|
$
|
3,977
|
|
|
$
|
12,449
|
|
|
$
|
12,692
|
|
Franchise margin as a % of franchise revenues
|
77.1
|
%
|
|
80.1
|
%
|
|
76.2
|
%
|
|
80.1
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Average number of franchise restaurants
|
346
|
|
|
333
|
|
|
343
|
|
|
332
|
|
||||
% increase
|
3.9
|
%
|
|
|
|
3.3
|
%
|
|
|
||||||
Increase in franchise-operated same-store sales
|
0.1
|
%
|
|
9.0
|
%
|
|
1.3
|
%
|
|
11.4
|
%
|
||||
Royalties as a percentage of estimated franchise restaurant sales
|
5.1
|
%
|
|
5.0
|
%
|
|
5.0
|
%
|
|
5.0
|
%
|
(1)
|
Included in franchise occupancy expenses in the accompanying Condensed Consolidated Statements of Earnings.
|
|
(Decrease) / Increase
|
||||||
|
Quarter
|
|
Year-to-date
|
||||
Legal settlement
|
$
|
(2,543
|
)
|
|
$
|
(2,543
|
)
|
Cash surrender value of COLI policies, net
|
(2,342
|
)
|
|
(2,223
|
)
|
||
Incentive compensation (including share-based compensation and related payroll taxes)
|
(1,272
|
)
|
|
(6,651
|
)
|
||
Pension and postretirement benefits
|
(1,215
|
)
|
|
(4,049
|
)
|
||
Employee relocation
|
(472
|
)
|
|
(856
|
)
|
||
Qdoba brand conference
|
—
|
|
|
833
|
|
||
Advertising
|
72
|
|
|
3,697
|
|
||
Insurance
|
1,302
|
|
|
3,636
|
|
||
Other
|
(1,748
|
)
|
|
(2,862
|
)
|
||
|
$
|
(8,218
|
)
|
|
$
|
(11,018
|
)
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3, 2016
|
|
July 5, 2015
|
|
July 3, 2016
|
|
July 5, 2015
|
||||||||
Restructuring costs
|
$
|
7,744
|
|
|
$
|
10
|
|
|
$
|
7,744
|
|
|
$
|
29
|
|
Costs of closed restaurants (primarily lease obligations) and other
|
914
|
|
|
886
|
|
|
2,489
|
|
|
2,645
|
|
||||
Accelerated depreciation
|
673
|
|
|
2,610
|
|
|
1,531
|
|
|
4,749
|
|
||||
Losses on the disposition of property and equipment, net
|
637
|
|
|
228
|
|
|
2,283
|
|
|
580
|
|
||||
Restaurant impairment charges
|
551
|
|
|
24
|
|
|
551
|
|
|
65
|
|
||||
|
$
|
10,519
|
|
|
$
|
3,758
|
|
|
$
|
14,598
|
|
|
$
|
8,068
|
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3, 2016
|
|
July 5, 2015
|
|
July 3, 2016
|
|
July 5, 2015
|
||||||||
Number of restaurants sold to Jack in the Box franchisees
|
—
|
|
|
—
|
|
|
1
|
|
|
21
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Gains (losses) on the sale of company-operated restaurants
|
$
|
409
|
|
|
$
|
(183
|
)
|
|
$
|
1,224
|
|
|
$
|
(4,353
|
)
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3, 2016
|
|
July 5, 2015
|
|
July 3, 2016
|
|
July 5, 2015
|
||||||||
Interest expense
|
$
|
7,653
|
|
|
$
|
4,564
|
|
|
$
|
23,009
|
|
|
$
|
14,256
|
|
Interest income
|
(40
|
)
|
|
(60
|
)
|
|
(310
|
)
|
|
(319
|
)
|
||||
Interest expense, net
|
$
|
7,613
|
|
|
$
|
4,504
|
|
|
$
|
22,699
|
|
|
$
|
13,937
|
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3, 2016
|
|
July 5, 2015
|
|
July 3, 2016
|
|
July 5, 2015
|
||||||||
Distribution business
|
$
|
(61
|
)
|
|
$
|
(203
|
)
|
|
$
|
(37
|
)
|
|
$
|
(283
|
)
|
2013 Qdoba Closures
|
(534
|
)
|
|
(1,329
|
)
|
|
(1,580
|
)
|
|
(2,869
|
)
|
||||
|
$
|
(595
|
)
|
|
$
|
(1,532
|
)
|
|
$
|
(1,617
|
)
|
|
$
|
(3,152
|
)
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 3, 2016
|
|
July 5, 2015
|
|
July 3, 2016
|
|
July 5, 2015
|
||||||||
Distribution business
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
|
$
|
—
|
|
|
$
|
(0.01
|
)
|
2013 Qdoba Closures
|
(0.02
|
)
|
|
(0.04
|
)
|
|
(0.05
|
)
|
|
(0.07
|
)
|
||||
|
$
|
(0.02
|
)
|
|
$
|
(0.04
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.08
|
)
|
•
|
working capital;
|
•
|
capital expenditures for new restaurant construction and restaurant renovations;
|
•
|
income tax payments;
|
•
|
debt service requirements; and
|
•
|
obligations related to our benefit plans.
|
|
Year-to-date
|
||||||
|
July 3, 2016
|
|
July 5, 2015
|
||||
Total cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
146,699
|
|
|
$
|
165,145
|
|
Investing activities
|
(67,770
|
)
|
|
(52,968
|
)
|
||
Financing activities
|
(90,036
|
)
|
|
(105,012
|
)
|
||
Effect of exchange rate changes
|
11
|
|
|
(37
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
$
|
(11,096
|
)
|
|
$
|
7,128
|
|
|
Year-to-date
|
||||||
|
July 3, 2016
|
|
July 5, 2015
|
||||
Jack in the Box:
|
|
|
|
||||
Restaurant facility expenditures
|
$
|
23,182
|
|
|
$
|
21,101
|
|
New restaurants
|
8,615
|
|
|
2,598
|
|
||
Other, including information technology
|
448
|
|
|
3,245
|
|
||
|
32,245
|
|
|
26,944
|
|
||
Qdoba:
|
|
|
|
||||
New restaurants
|
32,302
|
|
|
15,073
|
|
||
Restaurant facility expenditures
|
3,796
|
|
|
2,032
|
|
||
Other, including information technology
|
3,129
|
|
|
2,614
|
|
||
|
39,227
|
|
|
19,719
|
|
||
Shared Services:
|
|
|
|
||||
Information technology
|
3,310
|
|
|
5,824
|
|
||
Other, including facility improvements
|
189
|
|
|
2,345
|
|
||
|
3,499
|
|
|
8,169
|
|
||
|
|
|
|
||||
Consolidated capital expenditures
|
$
|
74,971
|
|
|
$
|
54,832
|
|
|
Year-to-date
|
||||||
|
July 3, 2016
|
|
July 5, 2015
|
||||
Number of restaurants sold to Jack in the Box franchisees
|
1
|
|
|
21
|
|
||
|
|
|
|
||||
Total proceeds
|
$
|
1,434
|
|
|
$
|
2,651
|
|
|
|
Year-to-date
|
||||||
|
|
July 3, 2016
|
|
July 5, 2015
|
||||
Number of restaurants sold and leased back
|
|
4
|
|
|
—
|
|
||
|
|
|
|
|
||||
Proceeds from sale and leaseback transactions
|
|
$
|
7,748
|
|
|
$
|
—
|
|
Purchases of assets intended for sale and leaseback
|
|
$
|
(5,593
|
)
|
|
$
|
(8,323
|
)
|
•
|
Food service businesses such as ours may be materially and adversely affected by changes in consumer preferences or dining habits, and economic, political and socioeconomic conditions. Adverse economic conditions such as unemployment and decreased discretionary spending may result in reduced restaurant traffic and sales, and impose practical limits on pricing. We are also subject to geographic concentration risks, with nearly 70% of system Jack in the Box restaurants located in California and Texas.
|
•
|
Our profitability depends in part on food and commodity costs and availability, including animal feed costs, fuel costs, and other supply and distribution costs. The risks of increased commodities costs and volatility in costs could adversely affect our profitability and results of operations.
|
•
|
The success of our business strategy depends on the value and relevance of our brands. Multi-unit food service businesses such as ours can be materially and adversely affected by widespread negative publicity of any type, particularly regarding food quality, food safety or public health issues. Negative publicity regarding our brands or the restaurant industry in general could cause a decline in system restaurant sales and could have a material adverse effect on our financial condition and results of operations.
|
•
|
We are reliant on third party suppliers and distributors, and any shortages or interruptions in supply could adversely affect the availability, quality and cost of ingredients.
|
•
|
Our business can be materially and adversely affected by severe weather conditions or natural disasters, which can result in lost restaurant sales, supply chain interruptions and increased costs.
|
•
|
Growth and new restaurant development involve substantial risks, including risks associated with unavailability of suitable franchisees, limited financing availability, cost overruns and the inability to secure suitable sites on acceptable terms. In addition, our growth strategy includes opening restaurants in new or existing markets where we cannot assure that we will be able to successfully expand or acquire critical market presence, attract customers or otherwise operate profitably.
|
•
|
There are risks associated with our franchise business model, including the demand for our franchises, the selection of appropriate franchisees and whether our franchisees and new restaurant developers will have the capabilities to be effective operators and remain aligned with us on operating, promotional and capital-intensive initiatives, in an ever-changing competitive environment. Additionally, our franchisees and operators could experience operational, financial or other challenges that could affect payments to us of rents and/or royalties, or could damage our brands and reputation.
|
•
|
Our plan to increase the percentage of franchise restaurants to 90 - 95% is subject to risks and uncertainties, and we may not achieve reductions in costs at the rate we desire. We may not be able to identify franchisee candidates with appropriate experience and financial resources or to negotiate mutually acceptable agreements with potential franchisees. Our franchisee candidates may not be able to obtain financing at acceptable rates and terms. We may not be able to increase the percentage of franchised restaurants at the rate we desire or achieve the ownership mix of franchise to company-operated restaurants that we desire.
|
•
|
The restaurant and take-away food industry is highly competitive with respect to price, service, location, brand identification and menu quality and innovation. We cannot assure that we will be able to effectively respond to aggressive competitors (including competitors with significantly greater financial resources); or that our competitive strategies will
|
•
|
Should our advertising and promotions be less effective than our competitors, there could be a material adverse effect on our results of operations and financial condition.
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In recent years, we have identified strategies and taken steps to reduce operating costs to align with the increased Jack in the Box franchise ownership and to further integrate Jack in the Box and Qdoba brand systems. The ability to evaluate, identify and implement operating cost reductions through these initiatives is subject to risks and uncertainties, and we cannot assure that these activities, or any other activities that we may undertake in the future, will achieve the desired cost savings and efficiencies.
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•
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The loss of key personnel could have a material adverse effect on our business.
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•
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The costs of compliance with government regulations, including those resulting in increased labor costs, could negatively affect our results of operations and financial condition.
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•
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A material failure or interruption of service or a breach in security of our information technology systems or databases could cause reduced efficiency in operations, loss or misappropriation of data or, loss of consumer confidence and/or potential costs, fines and litigation, including costs associated with reputation damage, consumer fraud, privacy breach, or business interruptions, which in turn could affect cash flows or our operating results. In addition, the costs of information security, regulatory compliance, investment in technology and risk mitigation measures may negatively affect our margins or financial results.
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We maintain a documented system of internal controls, which is reviewed and monitored by an Internal Controls Committee and tested by the Company’s full-time internal audit department. Any failures in the effectiveness of our internal controls could have a material adverse effect on our operating results or cause us to fail to meet our reporting obligations.
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•
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We are subject to risks of owning, operating and leasing property, including but not limited to environmental risks. Any of this could result in the imposition of severe penalties or restrictions on operations by governmental agencies or courts of law, which could adversely affect operations.
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We have a significant amount of indebtedness, which could adversely affect our business and our ability to meet our obligations. Our ability to repay borrowings under our credit facility and to meet our other debt or contractual obligations will depend upon our future performance and our cash flows from operations, both of which are subject to prevailing economic conditions and financial, business and other known and unknown risks and uncertainties, certain of which are beyond our control.
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Changes in accounting standards, policies or related interpretations by accountants or regulatory entities may negatively impact our results.
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We are subject to litigation which is inherently unpredictable and can result in unfavorable resolutions where the amount of ultimate loss may exceed our estimated loss contingencies, impose other costs related to defense of claims, or occupy management’s time.
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Number
|
Description
|
Form
|
Filed with SEC
|
3.1
|
Restated Certificate of Incorporation, as amended, dated September 21, 2007
|
10-K
|
11/20/2009
|
3.1.1
|
Certificate of Amendment of Restated Certificate of Incorporation, dated September 21, 2007
|
8-K
|
9/24/2007
|
3.2
|
Amended and Restated Bylaws, dated August 7, 2013
|
10-Q
|
8/8/2013
|
99.1
|
Separation and Release Agreement with Timothy Casey
|
8-K
|
6/23/2016
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
—
|
Filed herewith
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
—
|
Filed herewith
|
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
—
|
Filed herewith
|
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
—
|
Filed herewith
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
JACK IN THE BOX INC.
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|
|
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|
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By:
|
/
S
/ J
ERRY
P. R
EBEL
|
|
|
Jerry P. Rebel
|
|
|
Executive Vice President and Chief Financial Officer (principal financial officer)
(Duly Authorized Signatory)
|
1 Year Jack in the Box Chart |
1 Month Jack in the Box Chart |
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