UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 ____________________________________________________
FORM 10-Q
 _______________________________________________________________________________________ 
☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 22, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Forfor the quarterlytransition period ended January 21, 2018from ________to________.
Commission File Number: 1-9390
image0a03.jpgjack-20230122_g1.jpgjack-20230122_g2.jpg

JACK IN THE BOX INC.
(Exact name of registrant as specified in its charter)
 _______________________________________________________________________________________
DELAWAREDelaware95-2698708
(State of Incorporation)(I.R.S. Employer Identification No.)
9330 BALBOA AVENUE, SAN DIEGO, CA92123
(Address of principal executive offices)(Zip Code)
9357 Spectrum Center Blvd.
San Diego, California 92123
(Address of principal executive offices)

Registrant’s telephone number, including area code (858) 571-2121

   _______________________________________________________________________________________Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockJACKNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes  þ    No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerþAccelerated filer¨
Non-accelerated filer
¨  (Do not check if a smaller reporting company)
Smaller reporting company¨☐
Accelerated filer☐Emerging growth company¨☐
Non-accelerated filer☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes  ¨☐    No  þ
As of the close of business February 16, 2018, 29,532,15523, 2023, 20,600,388 shares of the registrant’s common stock were outstanding.



JACK IN THE BOX INC. AND SUBSIDIARIES
INDEX
Page
PART I – FINANCIAL INFORMATION
Item 1.
2
Condensed Consolidated Statements of Earnings
3
4
5
6
Item 2.
2219
Item 3.
3630
Item 4.
3730
PART II – OTHER INFORMATION
Item 1.
3731
Item 1A.
3731
Item 2.
3731
Item 3.
3731
Item 4.
3731
Item 5.
3731
Item 6.
3832
3933


1

PART I. FINANCIAL INFORMATION
ITEM 1.    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
January 22,
2023		October 2,
2022
ASSETS
Current assets:
Cash$153,846 $108,890 
Restricted cash27,772 27,150 
Accounts and other receivables, net56,987 103,803 
Inventories5,070 5,264 
Prepaid expenses11,247 16,095 
Current assets held for sale4,600 17,019 
Other current assets4,828 4,772 
Total current assets264,350 282,993 
Property and equipment:
Property and equipment, at cost1,251,566 1,228,916 
Less accumulated depreciation and amortization(826,928)(810,752)
Property and equipment, net424,638 418,164 
Other assets:
Operating lease right-of-use assets1,327,654 1,332,135 
Intangible assets, net11,951 12,324 
Trademarks283,500 283,500 
Goodwill359,511 366,821 
Other assets, net235,414 226,569 
Total other assets2,218,030 2,221,349 
$2,907,018 $2,922,506 
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current maturities of long-term debt$30,110 $30,169 
Current operating lease liabilities168,946 171,311 
Accounts payable37,519 66,271 
Accrued liabilities224,740 253,932 
Total current liabilities461,315 521,683 
Long-term liabilities:
Long-term debt, net of current maturities1,793,395 1,799,540 
Long-term operating lease liabilities, net of current portion1,177,309 1,165,097 
Deferred tax liabilities42,084 37,684 
Other long-term liabilities135,983 134,694 
Total long-term liabilities3,148,771 3,137,015 
Stockholders’ deficit:
Preferred stock $0.01 par value, 15,000,000 shares authorized, none issued— — 
Common stock $0.01 par value, 175,000,000 shares authorized, 82,617,362 and 82,580,599 issued, respectively826 826 
Capital in excess of par value511,924 508,323 
Retained earnings1,886,980 1,842,947 
Accumulated other comprehensive loss(53,493)(53,982)
Treasury stock, at cost, 62,019,871 and 61,799,221 shares, respectively(3,049,305)(3,034,306)
Total stockholders’ deficit(703,068)(736,192)
$2,907,018 $2,922,506 
 January 21,
2018		 October 1,
2017
ASSETS   
Current assets:   
Cash$3,789
 $4,467
Accounts and other receivables, net36,303
 59,609
Inventories3,335
 3,445
Prepaid expenses16,423
 27,532
Current assets held for sale332,308
 42,732
Other current assets5,950
 1,493
Total current assets398,108
 139,278
Property and equipment:   
Property and equipment, at cost1,250,596
 1,262,117
Less accumulated depreciation and amortization(787,427) (777,841)
Property and equipment, net463,169
 484,276
Other Assets:   
Intangible assets, net1,348
 1,413
Goodwill51,050
 51,412
Non-current assets held for sale—
 280,796
Other assets, net243,894
 277,570
Total other assets296,292
 611,191
 $1,157,569
 $1,234,745
LIABILITIES AND STOCKHOLDERS’ DEFICIT   
Current liabilities:   
Current maturities of long-term debt$68,564
 $64,225
Accounts payable27,142
 28,366
Accrued liabilities102,866
 135,054
Current liabilities held for sale61,521
 34,345
Total current liabilities260,093
 261,990
Long-term liabilities:   
Long-term debt, net of current maturities1,036,642
 1,079,982
Non-current liabilities held for sale—
 32,078
Other long-term liabilities235,394
 248,825
Total long-term liabilities1,272,036
 1,360,885
Stockholders’ deficit:   
Preferred stock $0.01 par value, 15,000,000 shares authorized, none issued—
 —
Common stock $0.01 par value, 175,000,000 shares authorized, 81,943,562 and 81,843,483 issued, respectively819
 818
Capital in excess of par value457,772
 453,432
Retained earnings1,485,130
 1,485,820
Accumulated other comprehensive loss(127,842) (137,761)
Treasury stock, at cost, 52,411,407 shares(2,190,439) (2,190,439)
Total stockholders’ deficit(374,560) (388,130)
 $1,157,569
 $1,234,745

See accompanying notes to condensed consolidated financial statements.

2

JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Revenues:
Company restaurant sales$270,191 $120,056 
Franchise rental revenues108,830 103,099 
Franchise royalties and other76,390 60,755 
Franchise contributions for advertising and other services71,685 60,801 
527,096 344,711 
Operating costs and expenses, net:
Food and packaging81,933 37,537 
Payroll and employee benefits88,641 39,725 
Occupancy and other51,371 20,877 
Franchise occupancy expenses67,224 63,983 
Franchise support and other costs1,877 3,911 
Franchise advertising and other services expenses74,570 63,308 
Selling, general and administrative expenses50,142 25,029 
Depreciation and amortization19,402 12,496 
Pre-opening costs331 310 
Other operating (income) expenses, net(5,501)3,843 
Gains on the sale of company-operated restaurants(3,825)(48)
426,165 270,971 
Earnings from operations100,931 73,740 
Other pension and post-retirement expenses, net2,144 93 
Interest expense, net26,148 20,187 
Earnings before income taxes72,639 53,460 
Income taxes19,385 14,190 
Net earnings$53,254 $39,270 
Earnings per share:
Basic$2.55 $1.85 
Diluted$2.54 $1.85 
Cash dividends declared per common share$0.44 $0.44 

 Sixteen Weeks Ended
 January 21,
2018		 January 22,
2017
Revenues:   
Company restaurant sales$169,637
 $238,571
Franchise rental revenues77,217
 71,436
Franchise royalties and other47,609
 43,174
 294,463
 353,181
Operating costs and expenses, net:   
Company restaurant costs (excluding depreciation and amortization):   
Food and packaging48,864
 67,989
Payroll and employee benefits48,940
 70,183
Occupancy and other27,750
 38,941
Total company restaurant costs (excluding depreciation and amortization)125,554
 177,113
Franchise occupancy expenses (excluding depreciation and amortization)46,521
 42,190
Franchise support and other costs2,482
 2,537
Selling, general and administrative expenses34,625
 40,772
Depreciation and amortization19,157
 21,263
Impairment and other charges, net2,257
 2,654
Gains on the sale of company-operated restaurants(8,940) (137)
 221,656
 286,392
Earnings from operations72,807
 66,789
Interest expense, net12,780
 10,409
Earnings from continuing operations and before income taxes60,027
 56,380
Income taxes47,138
 21,831
Earnings from continuing operations12,889
 34,549
(Losses) earnings from discontinued operations, net of taxes(699) 1,381
Net earnings$12,190
 $35,930
    
Net earnings per share - basic:   
Earnings from continuing operations$0.44
 $1.07
(Losses) earnings from discontinued operations(0.02) 0.04
Net earnings per share (1)$0.41
 $1.12
Net earnings per share - diluted:   
Earnings from continuing operations$0.43
 $1.06
(Losses) earnings from discontinued operations(0.02) 0.04
Net earnings per share (1)$0.41
 $1.11
    
Weighted-average shares outstanding:   
Basic29,551
 32,168
Diluted29,853
 32,442
    
Cash dividends declared per common share$0.40
 $0.40
____________________________
(1)Earnings per share may not add due to rounding.
See accompanying notes to condensed consolidated financial statements.

3

JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Net earnings$53,254 $39,270 
Other comprehensive income:
Actuarial losses and prior service costs reclassified to earnings664 996 
664 996 
Tax effect(175)(258)
Other comprehensive income, net of taxes489 738 
Comprehensive income$53,743 $40,008 
 Sixteen Weeks Ended
 January 21,
2018		 January 22,
2017
Net earnings$12,190
 $35,930
Cash flow hedges:   
Net change in fair value of derivatives10,291
 23,086
Net loss reclassified to earnings1,674
 2,066
 11,965
 25,152
Tax effect(3,039) (9,731)
 8,926
 15,421
Unrecognized periodic benefit costs:   
Actuarial losses and prior service costs reclassified to earnings1,535
 1,978
Tax effect(542) (766)
 993
 1,212
    
Other comprehensive income, net of tax9,919
 16,633
    
Comprehensive income$22,109
 $52,563

See accompanying notes to condensed consolidated financial statements.



4

JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Cash flows from operating activities:
Net earnings$53,254 $39,270 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization19,402 12,496 
Amortization of franchise tenant improvement allowances and incentives1,215 1,234 
Deferred finance cost amortization1,616 1,722 
Tax deficiency from share-based compensation arrangements143 38 
Deferred income taxes3,385 2,317 
Share-based compensation expense3,534 1,018 
Pension and post-retirement expense2,144 93 
(Gains) losses on cash surrender value of company-owned life insurance(6,631)579 
Gains on the sale of company-operated restaurants(3,825)(48)
Gains on the disposition of property and equipment, net(10,009)(617)
Impairment charges and other483 919 
Changes in assets and liabilities, excluding acquisitions:
Accounts and other receivables37,813 19,910 
Inventories194 (351)
Prepaid expenses and other current assets6,953 2,720 
Operating lease right-of-use assets and lease liabilities11,281 10,218 
Accounts payable(31,285)(5,218)
Accrued liabilities(24,677)(47,849)
Pension and post-retirement contributions(1,688)(2,075)
Franchise tenant improvement allowance and incentive disbursements(527)(1,166)
Other(303)(1,159)
Cash flows provided by operating activities62,472 34,051 
Cash flows from investing activities:
Purchases of property and equipment(24,028)(9,401)
Proceeds from the sale of property and equipment22,103 2,245 
Proceeds from the sale and leaseback of assets— 1,576 
Proceeds from the sale of company-operated restaurants17,609 48 
Other— (1,305)
Cash flows provided by (used in) investing activities15,684 (6,837)
Cash flows from financing activities:
Principal repayments on debt(7,557)(223)
Payment of debt issuance costs— (2,090)
Dividends paid on common stock(9,154)(9,257)
Proceeds from issuance of common stock— 49 
Repurchases of common stock(14,999)— 
Payroll tax payments for equity award issuances(868)(795)
Cash flows used in financing activities(32,578)(12,316)
Net increase in cash and restricted cash45,578 14,898 
Cash and restricted cash at beginning of period136,040 73,568 
Cash and restricted cash at end of period$181,618 $88,466 
 Sixteen Weeks Ended
 January 21,
2018		 January 22,
2017
Cash flows from operating activities:   
Net earnings$12,190
 $35,930
(Losses) earnings from discontinued operations(699) 1,381
Income from continuing operations12,889
 34,549
Adjustments to reconcile net earnings to net cash provided by operating activities:   
Depreciation and amortization19,157
 21,263
Amortization of franchise tenant improvement allowances147
 25
Deferred finance cost amortization1,031
 1,123
Excess tax benefits from share-based compensation arrangements(802) (3,981)
Deferred income taxes33,542
 2,285
Share-based compensation expense2,937
 3,687
Pension and postretirement expense715
 1,297
(Gains) losses on cash surrender value of company-owned life insurance(2,163) 326
Gains on the sale of company-operated restaurants(8,940) (137)
Losses on the disposition of property and equipment, net183
 530
Impairment charges and other805
 467
Changes in assets and liabilities, excluding dispositions:   
Accounts and other receivables26,539
 25,208
Inventories110
 (111)
Prepaid expenses and other current assets7,419
 27,481
Accounts payable(371) (3,458)
Accrued liabilities(32,667) (37,940)
Pension and postretirement contributions(1,710) (1,440)
Franchise tenant improvement allowance disbursements(1,761) —
Other(3,330) (1,376)
Cash flows provided by operating activities53,730
 69,798
Cash flows from investing activities:   
Purchases of property and equipment(10,793) (8,581)
Purchases of assets intended for sale and leaseback(1,411) (1,717)
Proceeds from the sale and leaseback of assets4,949
 2,466
Proceeds from the sale of company-operated restaurants5,591
 138
Collections on notes receivable9,410

264
Proceeds from the sale of property and equipment589
 87
Funding of intercompany operations(13,122) (5,805)
Other2,969
 (35)
Cash flows used in investing activities(1,818) (13,183)
Cash flows from financing activities:   
Borrowings on revolving credit facilities106,200
 231,000
Repayments of borrowings on revolving credit facilities(130,800) (167,000)
Principal repayments on debt(14,208) (14,398)
Dividends paid on common stock(11,736) (12,963)
Proceeds from issuance of common stock—
 4,756
Repurchases of common stock—
 (115,354)
Excess tax benefits from share-based compensation arrangements—
 3,981
Change in book overdraft(129) 7,804
Tax payments for equity award issuances(4,244) (5,706)
Cash flows used in financing activities(54,917) (67,880)
Cash flows used in continuing operations(3,005) (11,265)
Net cash provided by operating activities of discontinued operations16,785
 12,668
Net cash used in investing activities of discontinued operations(13,648) (12,304)
Net cash used in financing activities of discontinued operations(43) (40)
Net cash provided by discontinued operations3,094

324
Cash at beginning of period4,467
 13,906
Cash at end of period$3,789
 $2,641


See accompanying notes to condensed consolidated financial statements.
5
JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)






1.BASIS OF PRESENTATION
Nature of operations — Founded in 1951, Jack in the Box Inc. (the “Company”), together with its consolidated subsidiaries, develops, operates, and franchises quick-service restaurants under the Jack in the Box® quick-service restaurants. The following table summarizes and Del Taco® restaurant brands.
On March 8, 2022, the numberCompany acquired Del Taco Restaurants, Inc. (“Del Taco”) for cash according to the terms and conditions of the Agreement and Plan of Merger, dated as of December 5, 2021. Del Taco is a nationwide operator and franchisor of restaurants asfeaturing fresh and fast Mexican and American inspired cuisines.
As of January 22, 2023, there were 140 company-operated and 2,046 franchise-operated Jack in the end of each period:
 January 21,
2018		 January 22,
2017
Company-operated255
 419
Franchise1,995
 1,842
Total system2,250
 2,261
Box restaurants and 273 company-operated and 319 franchise-operated Del Taco restaurants.
References to the Company throughout these notes to condensed consolidated financial statements are made using the first person notations of “we,” “us” and “our.”
Basis of presentation — The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”).
These financial statements should be read in conjunction with the consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended October 1, 20172, 2022 (“20172022 Form 10-K”). The accounting policies used in preparing these condensed consolidated financial statements are the same as those described in our 20172022 Form 10-K with the exception of two new accounting pronouncements adopted in fiscal 2018, which are described below.10-K.
On December 19, 2017, we entered into a definitive agreement to sell Qdoba Restaurant Corporation (“Qdoba”), a wholly owned subsidiary of the Company which operates and franchises more than 700 Qdoba Mexican Eats® fast-casual restaurants, to certain funds managed by affiliates of Apollo Global Management, LLC (together with its consolidated subsidiaries, the “Buyer”). All assets being sold and liabilities being conveyed to the Buyer are presented as “held for sale” on the condensed consolidated balance sheets. Additionally, for all periods presented in our condensed consolidated statements of earnings, all sales, costs, expenses and income taxes attributable to Qdoba, except as related to the impact of the decrease in the federal statutory tax rate (see Note 7, Income Taxes), have been aggregated under the caption “(losses) earnings from discontinued operations, net of income taxes.” Cash flows used in or provided by Qdoba operations have been aggregated in the condensed consolidated statement of cash flows as part of discontinued operations. Prior year results have been recast to conform with the current presentation. Refer to Note 2, Discontinued Operations, for additional information.
During fiscal 2012, we entered into an agreement to outsource our Jack in the Box distribution business and the related results of operations for this business are also reported as discontinued operations for all periods presented. Refer to Note 2, Discontinued Operations, for additional information.
Unless otherwise noted, amounts and disclosures throughout these notes to condensed consolidated financial statements relate to our continuing operations. In our opinion, all adjustments considered necessary for a fair presentation of financial condition and results of operations for these interim periods have been included. Operating results for one interim period are not necessarily indicative of the results for any other interim period or for the full year.
Segment reportingFiscal year — Prior to the decision to sell Qdoba, we had two reporting segments, Jack in the Box restaurant operations and Qdoba restaurant operations. The reportable segments did not include an allocation of the costs related to shared corporate service functions; nor did they include unallocated costs such as pension expense, share-based compensation and restructuring expense. As a result of the decision to sell Qdoba, which has been classified as discontinued operations, we now have one reporting segment. Revenues and costs related to our Jack in the Box restaurant operations, including indirect corporate overhead costs, are reported within results from continuing operations. See Note 2, Discontinued Operations, for additional information regarding the planned sale of Qdoba.
Reclassifications and adjustments — Certain prior year amounts in the condensed consolidated financial statements have been reclassified due to our Board of Director’s approval to sell Qdoba. See Note 2, Discontinued Operations, for further information regarding this planned sale and the resulting prior year reclassifications. We recorded certain adjustments in 2018 upon the adoption of a new accounting pronouncement; see details regarding the effects of the adoption on our condensed consolidated financial statements below. Further, in 2018, we began presenting depreciation and amortization as a separate line item on our condensed consolidated statements of earnings to better align with similar presentation made by many of our peers and to provide additional disclosure that is meaningful for our investors. The prior year condensed consolidated statement of earnings was adjusted to conform with this new presentation. Depreciation and amortization were previously presented within company restaurant costs, franchise occupancy expenses, selling,
JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



general and administrative expenses, and impairment and other charges, net on our condensed consolidated statement of earnings.
Fiscal year — OurCompany’s fiscal year is 52 or 53 weeks ending the Sunday closest to September 30. Our Del Taco subsidiary operates on a fiscal year ending the Tuesday closest to September 30. Fiscal years 20182023 and 20172022 include 52 weeks. Our first quarter includes 16-weeks16 weeks and all other quarters include 12-weeks.12 weeks. All comparisons between 20182023 and 20172022 refer to the 16-weeks16 weeks (“quarter”) ended January 21, 201822, 2023 and January 22, 2017,23, 2022, respectively, unless otherwise indicated.
Principles of consolidation — The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and the accounts of any variable interest entities (“VIEs”) where we are deemed the primary beneficiary. All significant intercompany accounts and transactions are eliminated. The financial results and position of our VIE are immaterial to our condensed consolidated financial statements.
Use of estimates — In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make certain assumptions and estimates that affect reported amounts of assets, liabilities, revenues, expenses and the disclosure of contingencies. In making these assumptions and estimates, management may from time to time seek advice and consider information provided by actuaries and other experts in a particular area. Actual amounts could differ materially from these estimates.
On December 22, 2017, the SEC issued guidance under Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) directing taxpayers to consider the impact of the U.S. legislation as “provisional” when it does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax law, or if in certain cases, the U.S. Treasury is expected to issue further guidance on the application of certain provisions of the U.S. legislation. See Note 7, Income Taxes, for additional details on the provisional tax expense recognized in accordance with SAB 118.
Advertising costs — We administer a marketing fund which includesfunds at each of our restaurant brands that include contractual contributions. In 2018, the2023 and 2022, marketing fund contributions from Jack in the Box franchise and company-operated restaurants were approximately 5.0% of gross revenues. We recordsales, and marketing fund contributions from franchisees as a liability includedDel Taco franchise and company-operated restaurants were approximately 4.0% of sales. Year-to-date incremental contributions made by the Company were less than $0.1 million in accrued liabilities2023. No incremental contributions were made in the accompanying condensed consolidated balance sheets until such funds are expended. The contributions to the marketing fund are designated for sales driving and marketing-related initiatives and advertising, and we act as an agent for the franchisees with regard to these contributions. Therefore, we do not reflect franchisee contributions to the funds in our condensed consolidated statements of earnings.2022.
Production costs of commercials, programming and other marketing activities are charged to the marketing fund when the advertising is first used for its intended purpose, and the costs of advertising are charged to operations as incurred. Total contributions and other marketing expensesmade by the Company are included in selling,“Selling, general, and administrative expensesexpenses” in the accompanying condensed consolidated statements of earnings. In 2018earnings and 2017, advertising and promotions were $8.9for the quarter totaled $12.2 million and $12.0$6.1 million in 2023 and 2022, respectively.
EffectAllowance for credit losses — The Company closely monitors the financial condition of new accounting pronouncements adopted in fiscal 2018 — In March 2016,our franchisees and estimates the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718):Improvements to Employee Share-Based Payment Accounting. This standard is intended to simplify various aspects of accountingallowance for share-based compensation arrangements, including the income tax impact, classificationcredit losses based on the statementlifetime expected loss on receivables. These estimates are based on historical collection experience with our franchisees as well as other factors, including current market conditions and events. Credit quality is monitored through the timing of cash flowspayments compared to predefined aging criteria and forfeitures. This standard is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. As such, we adopted this standard inknown facts regarding the first quarter of fiscal 2018. Upon the adoptionfinancial condition of the standard we prospectively reclassified excess tax benefits from share-based compensation arrangements of $0.8 million as a discrete item within income tax expense onfranchisee or customer. Account balances are charged off against the condensed consolidated statements of earnings, rather than recognizing such excess income tax benefitsallowance after recovery efforts have ceased.
The following table summarizes the activity in capital our allowance for doubtful accounts (in excess of par value on the condensed consolidated balance sheet. This also impacted the related classification on our condensed consolidated statements of cash flows as excess tax benefits from share-based compensation arrangements is only reported in cash flows from operating activities on a prospective basis, rather than as previously reported in cash flows from operating activities and cash flows used in financing activities. Upon adoption of the standard we also began reporting cash paid to a taxing authority on an employee’s behalf when we directly withhold equivalent shares for taxes as cash flows used in financing activities with the related tax withholding classified as a change in accounts and other receivables in cash flows from operating activities on our condensed consolidated statements of cash flows. We retrospectively applied this new reporting of tax payments for equity award issuances on our condensed consolidated statements of cash flows. The standard also impacted our earnings per share calculation on a prospective basis as the estimate of dilutive common share equivalents under the treasury stock method no longer assumes that the estimated tax benefits realized when an award is settled are used to repurchase shares. Lastly, the Company elected to account for forfeitures as they occur, and a cumulative-effect adjustment was made in the amount of $0.2 million and recorded in retained earnings as of October 2, 2017 on the condensed consolidated balance sheet.thousands):
Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Balance as of beginning of period$(5,975)$(6,292)
Provision for expected credit losses1,445 (1,036)
Balance as of end of period$(4,530)$(7,328)
6
JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Business combinations — We account for acquisitions using the acquisition method of accounting. Accordingly, assets acquired and liabilities assumed are recorded at their estimated fair values at the acquisition date. The excess of purchase price over fair value of net assets acquired, including the amount assigned to identifiable intangible assets, is recorded as goodwill.

In December 2016, the FASBRecent accounting pronouncements — The Company reviewed all recently issued ASU 2016-19, Technical Correctionsaccounting pronouncements and Improvements. This standard contains amendmentsconcluded that affect a wide variety of topics in the Accounting Standards Codification (“ASC”). The amendments include differences between original FASB guidance and the ASC, guidance clarification and reference corrections, simplifications and minor improvements. This standard is effective for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. As such, we adopted this standard in the first quarter of fiscal 2018. This standard didthey were either not applicable or not expected to have a significant effect on our accounting policies orimpact on our condensed consolidated financial statementsstatements.

2.REVENUE
Nature of products and related disclosures.services — We derive revenue from retail sales at Jack in the Box and Del Taco company-operated restaurants and rental revenue, royalties, advertising, and franchise and other fees from franchise-operated restaurants.
EffectOur franchise arrangements generally provide for an initial franchise fee per restaurant for a 20-year term, and generally require that franchisees pay royalty and marketing fees based upon a percentage of gross sales. The agreements also require franchisees to pay technology fees, as well as sourcing fees for Jack in the Box franchise agreements.
Disaggregation of revenue — The following table disaggregates revenue by segment and primary source for the quarter ended January 22, 2023 (in thousands):
Sixteen Weeks Ended
Jack in the BoxDel TacoTotal
Company restaurant sales$126,142 $144,049 $270,191 
Franchise rental revenues106,096 2,734 108,830 
Franchise royalties67,569 6,934 74,503 
Marketing fees60,344 5,654 65,998 
Technology and sourcing fees4,969 718 5,687 
Franchise fees and other services1,797 90 1,887 
Total revenue$366,917 $160,179 $527,096 
The following table disaggregates revenue by segment and primary source for the quarter ended January 23, 2022 (in thousands):
Sixteen Weeks Ended
Jack in the BoxDel TacoTotal
Company restaurant sales$120,056 $— $120,056 
Franchise rental revenues103,099 — 103,099 
Franchise royalties57,648 — 57,648 
Marketing fees55,801 — 55,801 
Technology and sourcing fees5,000 — 5,000 
Franchise fees and other services3,107 — 3,107 
Total revenue$344,711 $— $344,711 
In October 2022, a franchise operator paid the Company $7.3 million in order to sell his restaurants to a new accounting pronouncementsfranchisee at the current standard royalty rate, which is lower than the royalty rate in the existing franchise agreements. The payment represented the difference between the existing royalty rate and the new royalty rate based on projected future sales for the remaining term of the existing agreements. The payment is non-refundable and not subject to be adopted inany adjustments based on actual future periods — In May 2014,sales. The Company determined the FASB issued ASU No. 2014-09, Revenue Recognition - Revenue from Contracts with Customers (Topic 606), which provides a comprehensive new revenue recognition model that requires an entity to recognize revenue in an amount that reflectstransaction represented the considerationtermination of the entity expects to receive forexisting agreement rather than the transfer of promised goods or services to its customers. The standard also requires additional disclosure regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Further, in March 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which clarifies the guidance in ASU No. 2014-09 when evaluating when another party, along with the entity, is involved in providing a good or service to a customer.In April 2016, the FASB issued ASU No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which clarifies the guidance in ASU No. 2014-09 regarding assessing whether promises to transfer goods or services are distinct, and whether an entity's promise to grant a license provides a customer with a right to use, or right to access the entity's intellectual property. In December 2016, the FASB issued ASU No. 2016-20,Technical Corrections and Improvements to Revenue from Contracts with Customers (Topic 606). This ASU clarifies the guidance in ASU 2014-09, providing technical corrections and improvements to clarify guidance and correct unintended applications of the guidance. All standards are effective for annual periods beginning after December 15, 2017, and interim periods within that reporting period.agreement between franchisees. As such, we will be required to adopt these standardsthe $7.3 million was recognized in franchise royalty revenue during the first quarter of fiscal 2019. These standards2023.
Contract liabilities — Our contract liabilities consist of deferred revenue resulting from initial franchise and development fees received from franchisees for new restaurant openings or new franchise terms, which are to be applied retrospectively or using a cumulative effect transition method,recognized over the franchise term. We classify these contract liabilities as “Accrued liabilities” and early adoption is not permitted. We do not believe the new revenue recognition standard will impact our recognition of restaurant sales, rental revenues or royalty fees from franchisees. However, we are still evaluating the impact that this pronouncement will have on the recognition of certain transactions“Other long-term liabilities” in our consolidated financial statements, including the initial franchise fees currently recognized upon the opening of a franchise restaurant and our advertising arrangements with franchisees currently reported on a net versus gross basis in our consolidated statements of earnings, and the effect it will have on our disclosures. We have not yet selected a transition method.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which requires a lessee to recognize assets and liabilities on the balance sheet for those leases classified as operating leases under previous guidance. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. As such, we will be required to adopt this standard in the first quarter of fiscal 2020. This standard requires adoption based upon a modified retrospective transition approach, with early adoption permitted. Based on a preliminary assessment, we expect that most of our operating lease commitments will be subject to the new guidance and recognized as operating lease liabilities and right-of-use assets upon adoption, resulting in a significant increase in the assets and liabilities on ourcondensed consolidated balance sheets. In January 2018, the FASB issued ASU No.2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842, which affects the guidance in ASU 2016-02. The standard permits the election of an optional transition practical expedient to not evaluate land easements that exist or expired before the adoption of Topic 842 and that were not previously accounted for as leases under Topic 840. The effective date and transition requirements are the same as ASU 2016-02. We are continuing our evaluation, which may identify additional impacts this standard will have on our consolidated financial statements and related disclosures.
In March 2016, the FASB issued ASU No. 2016-04, Liabilities-Extinguishment of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products, which is designed to provide guidance and eliminate diversity in the accounting for the derecognition of financial liabilities related to certain prepaid stored-value products using a revenue-like breakage model. This standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. As such, we will be required to adopt this standard in the first quarter of fiscal 2019. This standard is to be applied retrospectively or using a cumulative effect transition method as of the date of adoption. We are currently evaluating which transition method to use, but believe the impact this standard will have on our consolidated financial statements and related disclosures will be immaterial upon adoption.
7
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This standard is intended to address eight classification issues related to the statement of cash flows to reduce diversity in practice in how certain transactions are classified. This standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. As such, we will be required to adopt this standard in the first quarter of fiscal 2019. This standard requires adoption
JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


A summary of significant changes in our contract liabilities is presented below (in thousands):

Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Deferred franchise and development fees at beginning of period$46,449 $40,435 
Revenue recognized(1,639)(1,742)
Additions2,240 680 
Deferred franchise and development fees at end of period$47,050 $39,373 
basedAs of January 22, 2023, approximately $6.1 million of development fees related to unopened stores are included in deferred revenue. Timing of revenue recognition is dependent upon a retrospective transition method. the timing of store openings and are recognized over the franchise term at the date of opening.
The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied as of January 22, 2023 (in thousands):
Remainder of 2023$3,508 
20244,897 
20254,661 
20264,334 
20273,976 
Thereafter19,583 
$40,959 
We are currently evaluating this standard, but dohave applied the optional exemption, as provided for under ASC Topic 606, Revenue from Contracts with Customers, which allows us to not believe it will have a material impact ondisclose the classification of cash flows within our statement of cash flows.
In October 2016, the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory. This standard requires that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventorytransaction price allocated to unsatisfied performance obligations when the transfer occurs, rather than deferringtransaction price is a sales-based royalty.

3.BUSINESS COMBINATION
On March 8, 2022, the recognition untilCompany acquired 100% of the asset has been soldoutstanding equity interest of Del Taco for cash according to an outside party. This standard is effective for fiscal years beginning afterthe terms and conditions of the Agreement and Plan of Merger, dated as of December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. As such, we will be required to adopt this standard5, 2021. Jack in the first quarter of fiscal 2019. The standard requires adoption onBox acquired Del Taco as a modified retrospective basis through a cumulative-effect adjustment to retained earnings. We are currently evaluating this standard, but do not believe it will have a material impact on our consolidated financial statements.
In February 2017, the FASB issued ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets. The standard provides clarification about the term “in substance nonfinancial asset” and guidance for recognizing gains and losses from the transfer of nonfinancial assets and for partial sales of nonfinancial assets. The standard is required to be adopted retrospectively, in conjunction with ASU 2014-09. As such, we will be required to adopt this standard in the first quarter of fiscal 2019. This standard is not expected to have a material impact on our consolidated financial statements.
In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This standard requires the presentationpart of the service cost component of net benefit costCompany’s goal to be ingain greater scale and accelerate growth. Refer to our Annual Report on Form 10-K for the same line itemfiscal year ended October 2, 2022 for further discussion regarding the acquisition, including the purchase consideration, purchase price allocation, goodwill and identifiable intangible assets.
Unaudited pro forma results — The following unaudited pro forma combined financial information presents the Company’s results as other compensation costs arising from services rendered bythough Del Taco and the pertinent employees during the period. All other components of net benefit cost should be presented separately from the service cost component and outside of a subtotal of earnings from operations, or separately disclosed. The standard is effective for annual and interim periods beginning after December 15, 2017 and must be adopted retrospectively. Early adoption is permittedCompany had been combined as of the beginning of an annual period, but we plan to adopt this standard in the first quarter of fiscal 2019. Upon adoption of this standard, we will separately present the components of net periodic benefit cost, excluding the service cost component, outside of earnings from operations. Net periodic benefit cost, excluding the service cost component, was $0.1 million and $0.6 million year 2021 (in 2018 and 2017, respectively.thousands):
In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. This standard provides guidance that clarifies when changes to the terms or conditions of a share-based payment award require the application of modification accounting under ASC 718. This new guidance will allow for certain changes to be made to awards without accounting for them as modifications. The standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The standard is required to be applied prospectively to awards modified on or after the adoption date. We will be required to adopt this standard in the first quarter of fiscal 2019. This standard is not expected to have a significant effect on our accounting policies or on our consolidated financial statements and related disclosures.
Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Total revenue$527,096 $503,036 
Net earnings$53,254 $28,866 

8
2.DISCONTINUED OPERATIONS
Distribution business — During fiscal 2012, we entered into an agreement with a third party distribution service provider pursuant to a plan approved by our Board of Directors to sell our Jack in the Box distribution business. During fiscal 2013, we completed the transition of our distribution centers. The operations and cash flows of the business have been eliminated, and in accordance with the provisions of the FASB authoritative guidance on the presentation of financial statements, the results are reported as discontinued operations for all periods presented.
In 2018 and 2017, the results of discontinued operations related to our distribution business were immaterial to our condensed consolidated results of operations. Our liability for lease commitments related to our distribution centers is immaterial to our condensed consolidated balance sheet as of October 1, 2017, and relates to one distribution center lease that expired in July 2017.
Qdoba — On December 19, 2017, we entered into a stock purchase agreement (the “Qdoba Purchase Agreement”) with Quidditch Acquisition, Inc., a Delaware corporation and affiliate of certain funds managed by affiliates of Apollo Global Management, LLC (the “Buyer”). Pursuant to the Qdoba Purchase Agreement, the Buyer has agreed to purchase from the Company all issued and outstanding shares of Qdoba (the “Shares”) for an aggregate purchase price of approximately $305.0 million in cash, subject to customary closing conditions and adjustments set forth in the Qdoba Purchase Agreement (the “Qdoba Sale”). Our Board of Directors unanimously approved the Qdoba Purchase Agreement after its comprehensive evaluation of potential alternatives with respect to Qdoba, which began in 2017.
JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



The Buyer has obtained guarantees with respect to its obligations under the Qdoba Purchase Agreement. The closing of the Qdoba Sale is anticipated to occur by April 2018, subject to customary closing conditions set forth in the Qdoba Purchase Agreement.
In addition to the purchase of the Shares, the Company and the Buyer will enter into a Transition Services Agreement pursuant to which the Buyer will receive certain services (the “Services”) to enable it to operate the Qdoba business from and after the closing of the Qdoba Sale. The Services will includeunaudited pro forma financial information technology, finance and accounting, human resources, supply chain and other corporate support services. The Services will be provided at a cost for a period of up to 12 months, with two 3 month extensions available for certain services.
The Company and the Buyer will also enter into an Employee Agreement pursuant to which the Company will continue to employ all Qdoba employees who will transfer employment to the Buyer (the “Qdoba Employees”) from the closing of the Qdoba Sale through the earlier of: (a) following 30 days written notice from the Buyer of termination of the Employee Agreement, or (b) nine months following the closing of the Qdoba Sale. Upon termination of the Employee Agreement, the Qdoba employees will effectively become employees of the Buyer. During the term of the Employee Agreement, the Company will pay all wages and benefits of the Qdoba Employees and will receive reimbursement of these costs from the Buyer.
As the Qdoba Sale represents a strategic shift that will have a major effect on our operations and financial results, in accordance with the provisions of FASB authoritative guidance on the presentation of financial statements, Qdoba results are classified as discontinued operations in our condensed consolidated statements of earnings and our condensed consolidated statements of cash flows for all periods presented. Prior yearpresented includes the business combination accounting effects resulting from the acquisition, mainly including adjustments to reflect additional amortization expense from acquired intangibles, incremental depreciation expense from the fair value property and equipment, elimination of historical interest expense associated with both Del Taco’s and the Company’s historical indebtedness, additional interest expense associated with the new Del Taco revolving credit facility and the Company’s new borrowings as part of the refinancing to fund the acquisition, adjusted rent expense reflecting the acquired right-of-use assets and liabilities to their estimated acquisition-date values based upon valuation of related lease intangibles and remaining payments, as well as the fair value adjustments made to leasehold improvements, certain material non-recurring adjustments and the tax-related effects as though Del Taco was combined as of the beginning of fiscal 2021. The unaudited pro forma financial information as presented above is for informational purposes only and is not necessarily indicative of the results of operations that would have been recastachieved if the acquisition had taken place at the beginning of fiscal 2021, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, conform withdifferences between the current presentation.assumptions used to prepare the pro forma information, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.
In 2018, we recognized deferred tax benefitsFor the sixteen weeks ended January 22, 2023, Del Taco had total revenues of $0.5$160.2 million on the excessand net earnings of the tax basis over the book basis in our investment in Qdoba as a result of its pending disposition as it is probable that the temporary difference will reverse in the foreseeable future.$5.2 million.

4.SUMMARY OF REFRANCHISINGS AND FRANCHISE ACQUISITIONS
Refranchisings — The following table summarizes the Qdoba resultsnumber of restaurants sold to franchisees and gains recognized (dollars in thousands):
Sixteen Weeks Ended
January 22,
2023		January 23, 2022 (2)
Restaurants sold to Jack in the Box franchisees5— 
Restaurants sold to Del Taco franchisees16— 
Proceeds from the sale of company-operated restaurants$17,609 $48 
Net assets sold (primarily property and equipment)(4,093)— 
Goodwill related to the sale of company-operated restaurants(7,310)— 
Franchise fees(577)— 
Sublease liabilities(1,197)— 
Lease termination(393)— 
Other (1)(214)— 
Gains on the sale of company-operated restaurants$3,825 $48 
________________________
(1)Amount in 2023 includes $0.2 million related to prior year refranchising transactions.
(2)Amount in 2022 relates to additional proceeds received in connection with the extension of franchise and lease agreements from the sale of restaurants in prior years.
Franchise acquisitions — In 2023, we did not acquire any franchise restaurants. In 2022, we acquired four Jack in the Box franchise restaurants. We account for each period (in thousands, except per share data):the acquisition of franchised restaurants using the acquisition method of accounting for business combinations. The purchase price allocations were based on fair value estimates determined using significant unobservable inputs (Level 3). These acquisitions were not material to our condensed consolidated financial statements.
 Sixteen Weeks Ended
 January 21,
2018		 January 22,
2017
Company restaurant sales$125,770
 $128,699
Franchise revenues5,986
 6,053
Company restaurant costs (excluding depreciation and amortization)(108,618) (105,716)
Franchise costs (excluding depreciation and amortization)(1,408) (1,173)
Selling, general and administrative expenses(12,264) (12,429)
Depreciation and amortization(5,012) (6,695)
Impairment and other charges, net(1,669) (3,904)
Interest expense, net(3,212) (2,515)
(Losses) earnings from discontinued operations before income taxes(427) 2,320
Income taxes(205) (876)
(Losses) earnings from discontinued operations, net of income taxes$(632) $1,444
    
Net (losses) earnings per share from discontinued operations:   
Basic$(0.02) $0.05
Diluted$(0.02) $0.05
Selling, general and administrative expenses include corporate costs directly in support of Qdoba operations. All other corporate costs areAssets held for sale — Assets classified in results of continuing operations. Our credit facility requires us to make a mandatory prepaymentas held for sale on our borrowings upon closingcondensed consolidated balance sheets as of January 22, 2023 and January 23, 2022, primarily relate to closed restaurant properties and owned properties which we are actively marketing for sale and/or sales and leaseback within the Qdoba Sale. In accordancenext 12 months with FASB authoritative guidance on financial statement presentation, interest expense associated with our credit facility has been allocated to discontinued operations based on our estimatecarrying amounts of the mandatory prepayment that will be made upon closing of the Qdoba Sale.$4.6 million and $17.0 million, respectively.



9
JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


5.GOODWILL AND INTANGIBLE ASSETS, NET

The changes in the carrying amount of goodwill during fiscal 2023 and 2022 were as follows (in thousands):

Jack in the BoxDel TacoTotal
Balance at October 2, 2022$136,099 $230,722 $366,821 
Sale of Del Taco company-operated restaurants to franchisees— (7,238)(7,238)
Sale of Jack in the Box company-operated restaurants to franchisees(72)— (72)
Balance at January 22, 2023$136,027 $223,484 $359,511 
The net carrying amounts of intangible assets other than goodwill with definite lives are as follows (in thousands):
January 22,
2023		October 2,
2022
Gross AmountAccumulated AmortizationNet AmountGross AmountAccumulated AmortizationNet Amount
Definite-lived intangible assets:
Sublease assets$2,671 $(214)$2,457 $2,671 $(139)$2,532 
Franchise contracts9,700 (476)9,224 9,700 (311)9,389 
Reacquired franchise rights376 (106)270 530 (127)403 
$12,747 $(796)$11,951 $12,901 $(577)$12,324 
Indefinite-lived intangible assets:
Del Taco trademark$283,500 $— $283,500 $283,500 $— $283,500 
$283,500 $— $283,500 $283,500 $— $283,500 
The following is a summarytable summarizes, as of January 22, 2023, the estimated amortization expense for each of the unaudited quarterly resultsnext five fiscal years (in thousands):
Remainder of 2023$556 
2024$804 
2025$804 
2026$804 
2027$804 

6.LEASES
Nature of Qdoba operationsleases — We own restaurant sites and we also lease restaurant sites from third parties. Some of these owned or leased sites are leased and/or subleased to franchisees. Initial terms of our real estate leases are generally 20 years, exclusive of options to renew, which are generally exercisable at our sole discretion for fiscal 2017 (1 to 20 years. In some instances, our leases have provisions for contingent rentals based upon a percentage of defined revenues. Many of our restaurants also have rent escalation clauses and require the payment of property taxes, insurance, and maintenance costs. Variable lease costs include contingent rent, cost-of-living index adjustments, and payments for additional rent such as real estate taxes, insurance, and common area maintenance, which are excluded from the measurement of the lease liability.
As lessor, our leases and subleases primarily consist of restaurants that have been leased to franchisees in thousands, except per share data):connection with refranchising transactions. Revenues from leasing arrangements with our franchisees are presented in “Franchise rental revenues” in the accompanying condensed consolidated statements of earnings, and the related expenses are presented in “Franchise occupancy expenses.”
10
 Sixteen Weeks Ended Twelve Weeks Ended
 January 22,
2017		 April 16,
2017		 July 9,
2017		 October 1,
2017
Company restaurant sales$128,699
 $98,793
 $107,067
 $102,000
Franchise revenues6,053
 4,711
 4,678
 4,622
Company restaurant costs (excluding depreciation and amortization)(105,716) (80,713) (84,747) (86,194)
Franchise costs (excluding depreciation and amortization)(1,173) (910) (879) (2,031)
Selling, general and administrative expenses(12,429) (7,956) (8,232) (8,089)
Depreciation and amortization(6,695) (5,057) (5,023) (4,725)
Impairment and other charges, net(3,904) (3,811) (1,815) (5,531)
Interest expense, net(2,515) (2,044) (2,229) (2,237)
(Losses) earnings from discontinued operations before income taxes2,320
 3,013
 8,820
 (2,185)
Income taxes(876) (1,181) (3,398) 937
(Losses) earnings from discontinued operations, net of income taxes$1,444
 $1,832
 $5,422
 $(1,248)
        
Net (losses) earnings per share from discontinued operations:       
Basic$0.05
 $0.06
 $0.18
 $(0.04)
Diluted$0.05
 $0.06
 $0.18
 $(0.04)
JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



Assets being sold and liabilities being assumed by the Buyer in the Qdoba Sale include substantially all assets and liabilities associated with Qdoba, and are classified as held for sale on our condensed consolidated balance sheets. Prior year balances have been recast to conform with the current presentation. Upon classification of the Qdoba assets as held for sale, in accordance with the FASB authoritative guidance on financial statement presentation, the assets are no longer depreciated. The following table summarizes the major categories of assets and liabilities classified as held for salepresents rental income (in thousands):
Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Operating lease income - franchise$73,520 $71,357 
Variable lease income - franchise35,235 31,742 
Amortization of favorable and unfavorable sublease contracts, net75 — 
Franchise rental revenues$108,830 $103,099 
Operating lease income - closed restaurants and other (1)$2,240 $1,658 
____________________________
(1)Primarily relates to closed restaurant properties included in “Other operating (income) expenses, net” in our condensed consolidated balance sheets asstatements of the end of each period (in thousands):earnings.

7.FAIR VALUE MEASUREMENTS
 January 21,
2018		 October 1,
2017
Cash$3,942
 $3,175
Accounts receivable, net8,529
 9,086
Inventories3,168
 3,202
Prepaid expenses and other current assets5,144
 8,802
Property and equipment, net161,643
 148,715
Intangible assets, net12,517
 12,660
Goodwill117,636
 117,636
Other assets, net1,735
 1,785
Total assets classified as held for sale (1)$314,314
 $305,061
    
Accounts payable$5,903
 $8,936
Accrued liabilities24,472
 25,251
Current maturities of long-term debt175
 158
Straight-line rent accrual14,319
 13,347
Deferred income tax liability (2)5,444
 6,421
Other long-term liabilities11,208
 12,310
Total liabilities classified as held for sale$61,521
 $66,423
____________________________
(1)Current assets held for sale on our condensed consolidated balance sheets include Jack in the Box assets held for sale of $18.0 million and $18.5 million as of January 21, 2018 and October 1, 2017, respectively.
(2)Prior to held for sale presentation, Qdoba’s deferred income tax liability as of January 22, 2017 was netted against the Jack in the Box deferred income tax assets in other assets, net on our condensed consolidated balance sheet.
Our liability for Qdoba lease commitments is included in current liabilities held for sale as of January 21, 2018 and is included in current and non-current liabilities held for sale as of October 1, 2017 in the accompanying condensed consolidated balance sheets and has changed as follows in 2018 (in thousands):
Balance as of October 1, 2017$2,473
Adjustments (1)193
Cash payments(800)
Balance as of January 21, 2018 (2)$1,866
____________________________
(1)Adjustments relate to revisions to certain sublease assumptions due to changes in market conditions and includes interest expense.
(2)The weighted average remaining lease term related to these commitments is approximately 2 years.

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



3.    SUMMARY OF REFRANCHISINGS AND FRANCHISEE DEVELOPMENT
Refranchisings and franchisee development — The following table summarizes the number of restaurants sold to franchisees, the number of restaurants developed by franchisees, and the related fees and gains recognized in each period (dollars in thousands):
 Sixteen Weeks Ended
 January 21,
2018		 January 22,
2017
Restaurants sold to franchisees22
 —
New restaurants opened by franchisees5
 7
    
Initial franchise fees$995
 $290
    
Proceeds from the sale of company-operated restaurants:   
       Cash (1)$5,591
 $138
       Short-term notes receivable (2)9,084
 —
 14,675
 138
    
Net assets sold (primarily property and equipment)(3,637) —
Goodwill related to the sale of company-operated restaurants(153) (1)
Other (3)(1,945) —
Gains on the sale of company-operated restaurants$8,940
 $137
____________________________
(1)Amounts in 2018 and 2017 include additional proceeds of $1.2 million and $0.1 million, respectively, related to restaurants sold in prior years.
(2)These notes were collected during 2018.
(3)Amount primarily relates to $1.5 million of remodel credits.
As of the end of the first 2018 quarter, we had signed non-binding letters of intent with franchisees to sell an additional 10 company-operated restaurants. Pre-tax gross proceeds related to these sales are estimated at $2.0 million to $3.0 million. Equipment of $0.8 million related to these sales has been classified as assets held for sale on our January 21, 2018 and October 1, 2017 condensed consolidated balance sheets.

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



4.FAIR VALUE MEASUREMENTS
Financial assets and liabilities — The following table presents our financial assets and liabilities measured at fair value on a recurring basis (in thousands):
TotalQuoted Prices
in Active
Markets for
Identical
Assets (2)
(Level 1)		Significant
Other
Observable
Inputs (2)
(Level 2)		Significant
Unobservable
Inputs (2)
(Level 3)
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 January 21, 2018:       
Fair value measurements as of January 22, 2023:Fair value measurements as of January 22, 2023:
Non-qualified deferred compensation plan (1)$(38,007) $(38,007) $—
 $—
Non-qualified deferred compensation plan (1)$15,992 $15,992 $— $— 
Interest rate swaps (Note 5) (2) (10,962) —
 (10,962) —
Total liabilities at fair value$(48,969) $(38,007) $(10,962) $—
Total liabilities at fair value$15,992 $15,992 $— $— 
Fair value measurements as of October 1, 2017:       
Fair value measurements as of October 2, 2022:Fair value measurements as of October 2, 2022:
Non-qualified deferred compensation plan (1)$(37,575) $(37,575) $—
 $—
Non-qualified deferred compensation plan (1)$13,820 $13,820 $— $— 
Interest rate swaps (Note 5) (2) (22,927) —
 (22,927) —
Total liabilities at fair value$(60,502) $(37,575) $(22,927) $—
Total liabilities at fair value$13,820 $13,820 $— $— 
____________________________
(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. The obligation is included in accrued liabilities and other long-term liabilities on our condensed consolidated balance sheets.
(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.

(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. The obligation is included in “Accrued liabilities” and “Other long-term liabilities” on our condensed consolidated balance sheets.
(2)We did not have any transfers in or out of Level 1, 2 or 3.
The following table presents the carrying value and estimated fair value of our Class A-2 Notes as of January 22, 2023 and October 2, 2022 (in thousands):
January 22,
2023		October 2,
2022
Carrying AmountFair ValueCarrying AmountFair Value
Series 2019 Class A-2 Notes$712,313 $652,923 $714,125 $641,851 
Series 2022 Class A-2 Notes$1,083,500 $930,347 $1,089,000 $917,428 
The fair valuesvalue of our debt instruments arethe Class A-2 Notes was estimated using Level 2 inputs based on the amountquoted market prices in markets that are not considered active markets. As of future cash flows associated with each instrument discounted usingJanuary 22, 2023, we had $50.0 million of outstanding borrowings under our borrowing rate. At January 21, 2018, theVariable Funding Notes. The fair value of these loans approximates their carrying value due to the variable rate nature of all financial instruments was not materially different from fair value, as the borrowings are prepayable without penalty. The estimated fair values of our capital lease obligations approximated their carrying values as of January 21, 2018.these borrowings.
Non-financial assets and liabilities — Our non-financial instruments, which primarily consist of property and equipment, operating lease right-of-use assets, goodwill and intangible assets, are reported at carrying value and are not required to be measured at fair value on a recurring basis. However, on an annual basis, or whenever events or changes in circumstances indicate that their carrying value may not be recoverable, non-financial instruments are assessed for impairment. If applicable, the carrying values are written down to fair value.
In connection with our impairment reviews performed during 2018, we recorded $0.5 million of additional impairment charges resulting from changes in market2023, no material fair value from three previously closed restaurants, and $0.2 million in charges related to our landlord’s sale of a restaurant property to a franchisee. Refer to Note 6, Impairment and Other Charges, Net, for additional information regarding impairment charges.adjustments were required.


11
JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


8.OTHER OPERATING (INCOME) EXPENSES, NET

5.DERIVATIVE INSTRUMENTS
Objectives and strategies — We are exposed to interest rate volatility with regard to our variable rate debt. In April 2014, to reduce our exposure to rising interest rates, we entered into nine forward-starting interest rate swap agreements that effectively converted $300.0 million of our variable rate borrowings to a fixed-rate basis from October 2014 through October 2018. Additionally, in June 2015, we entered into eleven forward-starting interest rate swap agreements that effectively converted an additional $200.0 million of our variable rate borrowings to a fixed rate from October 2015 through October 2018, and $500.0 million from October 2018 through October 2022.
These agreements have been designated as cash flow hedges under the terms of the FASB authoritative guidance for derivatives and hedging. To the extent that they are effective in offsetting the variability of the hedged cash flows, changes in the fair values of the derivatives are not included in earnings, but are included in other comprehensive income (“OCI”). These changes in fair value are subsequently reclassified into net earnings as a component of interest expense as the hedged interest payments are made on our variable rate debt.
Financial position — The following derivative instruments were outstanding as of the end of each period (in thousands):
 
Balance
Sheet
Location
 Fair Value
  January 21,
2018		 October 1, 2017
Derivatives designated as cash flow hedging instruments:     
Interest rate swapsAccrued liabilities $(2,422) $(4,777)
Interest rate swapsOther long-term liabilities (8,540) (18,150)
Total derivatives (Note 4)  $(10,962) $(22,927)
Financial performance — The following table summarizes the OCI activity related to our interest rate swap derivative instruments (in thousands):
 Location in Income Sixteen Weeks Ended
  January 21,
2018		 January 22,
2017
Gain recognized in OCIN/A $10,291
 $23,086
Loss reclassified from accumulated OCI into net earningsInterest expense, net $1,674
 $2,066
Amounts reclassified from accumulated OCI into interest expense represent payments made to the counterparties for the effective portions of the interest rate swaps. During the periods presented, our interest rate swaps had no hedge ineffectiveness.

6.IMPAIRMENT AND OTHER CHARGES, NET
Impairment and other charges,Other operating (income) expenses, net in the accompanying condensed consolidated statements of earnings is comprised of the following (in thousands):
Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Acquisition, integration, and restructuring costs (1)$1,651 $3,013 
Costs of closed restaurants and other (2)2,589 1,072 
Accelerated depreciation268 375 
Gains on disposition of property and equipment, net (3)(10,009)(617)
$(5,501)$3,843 
________________________
(1)Acquisition, integration, and restructuring costs are related to the acquisition and integration of Del Taco.
(2)Costs of closed restaurants primarily include impairment charges as a result of our decision to close restaurants, ongoing costs associated with closed restaurants, and canceled project costs.
(3)In 2023, gains on disposition of property and equipment relate to the sale of Jack in the Box restaurant properties to franchisees who were leasing the properties from us prior to the sale.

9.SEGMENT REPORTING
Our principal business consists of developing, operating and franchising our Jack in the Box and Del Taco restaurant brands, each of which we consider a reportable operating segment. This segment reporting structure reflects our current management structure, internal reporting method and financial information used in deciding how to allocate our resources. Based upon certain quantitative thresholds, each operating segment is considered a reportable segment.
We measure and evaluate our segments based on segment revenues and segment profit. Our measure of segment profit excludes depreciation and amortization, share-based compensation, company-owned life insurance (“COLI”) gains/losses, net of changes in our non-qualified deferred compensation obligation supported by these policies, acquisition, integration, and restructuring costs, gains on the sale of company-operated restaurants, and amortization of favorable and unfavorable leases and subleases, net. The following table provides information related to our operating segments in each period (in thousands):
12
 Sixteen Weeks Ended
 January 21,
2018		 January 22,
2017
Costs of closed restaurants and other$1,375
 $1,839
Restructuring costs358
 183
Operating restaurant impairment charges (1)291
 —
Losses on disposition of property and equipment, net183
 530
Accelerated depreciation50
 102
 $2,257
 $2,654
____________________________
(1)Impairment charges are due primarily to our landlord’s sale of a restaurant property to a franchisee.

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Revenues by segment:
Jack in the Box$366,917 $344,711 
Del Taco160,179 — 
Consolidated revenues$527,096 $344,711 
Segment operating profit:
Jack in the Box$104,426 $90,664 
Del Taco12,084 — 
Total segment operating profit$116,510 $90,664 
Depreciation and amortization19,402 12,496 
Acquisition, integration, and restructuring costs1,651 3,013 
Share-based compensation3,534 1,018 
Net COLI (gains) losses(5,724)445 
Gains on the sale of company-operated restaurants(3,825)(48)
Amortization of favorable and unfavorable leases and subleases, net541 — 
Earnings from operations$100,931 $73,740 
Total capital expenditures by segment:
Jack in the Box$15,256 $9,401 
Del Taco8,772 — 
Total capital expenditures$24,028 $9,401 
Total depreciation and amortization by segment:
Jack in the Box$11,029 $12,496 
Del Taco8,373 — 
Total depreciation and amortization$19,402 $12,496 

CostsWe do not evaluate, manage or measure performance of closed restaurantssegments using asset, interest income and other — Costs of closed restaurants in 2018 and 2017 include future lease commitment charges and expected ancillary cost, net of anticipated sublease rentals. Costs in 2018 also include $0.5 million of additional impairment charges resulting from changes in market value from three previously closed restaurants.
Accrued restaurant closing costs, included in accrued liabilities and other long-term liabilities on our condensed consolidated balance sheets, changed as follows during 2018 (in thousands):
Balance as of October 1, 2017 $6,175
Additions 135
Adjustments (1) 347
Interest expense 545
Cash payments (1,592)
Balance as of January 21, 2018 (2) (3) $5,610
___________________________
(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 4 years.
(3)
This balance excludes $2.8 million of restaurant closing costs that are included in accrued liabilities and other long-term liabilities on our condensed consolidated balance sheets, which were initially recorded as losses on the sale of company-operated restaurants upon sale to Jack in the Box franchisees in prior years.
Restructuring costs — Restructuring charges in 2018 and 2017 include costs resulting from a plan that management initiated in fiscal 2016 to reduce our general and administrative costs. This plan includes cost saving initiatives from workforce reductions and refranchising initiatives. Restructuring charges in 2018 also include costs related to the evaluation of potential alternatives with respect to the Qdoba brand (the “Qdoba Evaluation”), which resulted in the Board of Director’s approval to sell Qdoba. Refer to Note 2, Discounted Operations, for additional information regarding the Qdoba Sale.

The following is a summary of our restructuring costs (in thousands):
 Sixteen Weeks Ended
 January 21,
2018		 January 22,
2017
Qdoba Evaluation retention bonus$587
 $—
Qdoba Evaluation consulting costs (1)226
 —
Employee severance and related costs (2)(456) 92
Other1
 91
 $358
 $183
____________________________
(1)Qdoba Evaluation consulting costs are primarily related to third party advisory services.
(2)2018 reflects a reduction in severance and related costs due to a change in the number of employees to be terminated in connection with our restructuring activities.
At this time, we are unable to estimate additional charges to be incurred.
Total accrued severance costs related to our restructuring activities are included in accrued liabilities and changed as follows during 2018 (in thousands):
Balance as of October 1, 2017 $648
Adjustments (1) (456)
Cash payments (150)
Balance as of January 21, 2018 $42
____________________________
(1)Adjustments in accrued severance costs are the result of the change in number of employees to be terminated in connection with our restructuring activities.
JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



Accelerated depreciation — When a long-lived asset will be replacedexpense, or otherwise disposed of prior to the end of its estimated useful life, the useful life of the asset is adjusted based on the estimated disposal date and accelerated depreciation is recognized. In 2018, accelerated depreciation was primarily related to exterior enhancements at our company-operated restaurants. In 2017, accelerated depreciation primarily related to the anticipated closure of two restaurants.

7.INCOME TAXES

Our tax rates for the quarter ended January 21, 2018 was impacted by the Tax Cuts and Jobs Act (the “Tax Act”), which was enacted into law on December 22, 2017. As a fiscal year taxpayer, certain provisions of the Tax Act impacted us in fiscal year 2018, including a reduction in the U.S. federal statutory corporate income tax rate (the “Tax Rate”), while other provisions will be effective starting at the beginning of fiscal year 2019. The Tax Rate reduction was effective as of January 1, 2018, and will be phased in, resulting in a statutory federal tax rate of 24.5% for our fiscal year ending September 30, 2018, and 21.0% for subsequent fiscal years.information; accordingly, this information by segment is not prepared or disclosed.


As of January 21, 2018, we provisionally accounted for the results of the Tax Act. The provision for income taxes is based on a reasonable estimate of the effects on our existing deferred tax balances. A tax expense of $30.6 million, including a $2.3 million benefit related to Qdoba, was recognized and is included as a component of income taxes from continuing operations. This tax expense consists primarily of a $30.7 million re-measurement of our deferred tax assets and liabilities due to the enactment of the Tax Act. The impact of the Tax Act is based upon estimates and interpretations which may be refined as further authoritative guidance is issued and is expected to be completed by the first quarter of fiscal year 2019.

10.INCOME TAXES
The income tax provisions reflect year-to-date effective tax ratesrate of 78.5%26.7%, compared with 26.5% in 2018 and 38.7% in 2017.fiscal year 2022. The major components of the changeincrease in these tax rates were the one-time, non-cash impact of the enactment of the Tax Act, including the revaluation of all deferred tax assets and liabilities at the reduced federal statutory tax rate partiallywere non-deductible goodwill decrements in the current year offset by the decreasenon-taxable gains in the federal statutory tax rate andcurrent year versus non-deductible losses in the excess tax benefit on 2018 stock compensation. The final annual tax rate cannot be determined untilprior year from the endmarket performance of the fiscal year; therefore, the actual annual 2018 rate could differ from our current estimates.insurance products used to fund certain non-qualified retirement plans.


The following is a summary of the components of each tax rate (in thousands):
11.RETIREMENT PLANS
 Sixteen Weeks Ended
 January 21,
2018		 January 22,
2017
Income tax expense at statutory rate$17,192
 28.6 % $21,740
 38.6%
One-time, non-cash impact of the Tax Act30,627
 51.0 % —
 —%
Stock compensation excess tax benefit(802) (1.3)% —
 —%
Other121
 0.2 % 91
 0.2%
(1)$47,138
 78.5 % $21,831
 38.7%
____________________________
(1)Percentages may not add due to rounding.

8.RETIREMENT PLANS
Defined benefit pension plans — We sponsor two defined benefit pension plans, a frozen “Qualified Plan” covering substantially all full-time employees hired prior to January 1, 2011, and an unfunded supplemental executive retirement plan (“SERP”) which provides certain employees additional pension benefits and was closed to new participants effective January 1, 2007. In fiscal 2011, the Board of Directors approved the sunset of our Qualified Plan whereby participants no longer accrue benefits effective December 31, 2015. Benefits under both plans are based on the employee’s years of service and compensation over defined periods of employment.
PostretirementPost-retirement healthcare plans — We also sponsor two healthcare plans, closed to new participants, that provide postretirementpost-retirement medical benefits to certain employees who have met minimum age and service requirements. The plans are contributory;contributory, with retiree contributions adjusted annually, and they contain other cost-sharing features such as deductibles and coinsurance.
13
JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



Net periodic benefit cost — The components of net periodic benefit cost in each period were as follows (in thousands):
Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Defined benefit pension plans:
Interest cost$5,913 $4,517 
Expected return on plan assets(4,648)(5,570)
Actuarial losses (1)944 1,187 
Amortization of unrecognized prior service costs (1)6 6 
Net periodic benefit cost$2,215 $140 
Post-retirement healthcare plans:
Interest cost$215 $150 
Actuarial gains (1)(286)(197)
Net periodic benefit cost$(71)$(47)
  
Sixteen Weeks Ended
  
January 21,
2018		 January 22,
2017
Defined benefit pension plans:   
Interest cost$6,879
 $6,996
Service cost687
 673
Expected return on plan assets(8,680) (8,659)
Actuarial loss (1)1,498
 1,881
Amortization of unrecognized prior service costs (1)45
 47
Net periodic benefit cost$429
 $938
Postretirement healthcare plans:   
Interest cost$294
 $309
Actuarial (gain) loss (1)(8) 50
Net periodic benefit cost$286
 $359
________________________
___________________________
(1)Amounts were reclassified from accumulated OCI into net earnings as a component of selling, general and administrative expenses.

(1)Amounts were reclassified from accumulated other comprehensive income into net earnings as a component of “Other pension and post-retirement expenses, net.”
Future cash flows — Our policy is to fund our plans at or above the minimum required by law. As of January 1, 2017,2022, the date of our last actuarial funding valuation, there was no minimum contribution funding requirement.requirement for the Qualified Plan. Details regarding 20182023 contributions are as follows (in thousands):
SERP 
Postretirement
Healthcare Plans
SERPPost-Retirement
Healthcare Plans
Net year-to-date contributions$1,100
 $610
Net year-to-date contributions$1,311 $377 
Remaining estimated net contributions during fiscal 2018$3,300
 $700
Remaining estimated net contributions during fiscal 2023Remaining estimated net contributions during fiscal 2023$3,902 $735 
We continue to evaluate contributions to our Qualified Plan based on changes in pension assets as a result of asset performance in the current market and the economic environment. We do not anticipate making any contributions to our Qualified Plan in fiscal 2018.2023.


9.SHARE-BASED COMPENSATION
We offer share-based compensation plans to attract, retain and motivate key officers, employees and non-employee directors to work towards the financial success12.STOCKHOLDERS’ DEFICIT
Summary of changes in stockholders’ deficit— A reconciliation of the Company. During 2018, we granted the following shares related to our share-based compensation awards:beginning and ending amounts of stockholders’ deficit is presented below (in thousands):
Number
of Shares		AmountCapital in
Excess of
Par Value		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		Treasury
Stock		Total
Balance at October 2, 202282,581 $826 $508,323 $1,842,947 $(53,982)$(3,034,306)$(736,192)
Shares issued under stock plans, including tax benefit36 — — — — — — 
Share-based compensation— — 3,534 — — — 3,534 
Dividends declared— — 67 (9,221)— — (9,154)
Purchases of treasury stock— — — — — (14,999)(14,999)
Net earnings— — — 53,254 — — 53,254 
Other comprehensive income— — — — 489 — 489 
Balance at January 22, 202382,617 $826 $511,924 $1,886,980 $(53,493)$(3,049,305)$(703,068)
14
Nonvested stock units43,459
Performance share awards22,040
The components of share-based compensation expense recognized in each period are as follows (in thousands):
 Sixteen Weeks Ended
 January 21,
2018		 January 22,
2017
Nonvested stock units$1,778
 $2,069
Performance share awards663
 790
Stock options482
 801
Nonvested stock awards14
 27
Total share-based compensation expense$2,937
 $3,687

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Number
of Shares		AmountCapital in
Excess of
Par Value		Retained
Earnings		Accumulated
Other
Comprehensive
Loss		Treasury
Stock		Total
Balance at October 3, 202182,536 $825 $500,441 $1,764,412 $(74,254)$(3,009,306)$(817,882)
Shares issued under stock plans, including tax benefit28 1 48 — — — 49 
Share-based compensation— — 1,018 — — — 1,018 
Dividends declared— — 63 (9,320)— — (9,257)
Net earnings— — — 39,270 — — 39,270 
Other comprehensive income— — — — 738 — 738 
Balance at January 23, 202282,564 $826 $501,570 $1,794,362 $(73,516)$(3,009,306)$(786,064)

10.STOCKHOLDERS’ EQUITY
Repurchases of common stock— In 2018, we have not The Company repurchased any0.2 million shares of its common shares.stock in the first quarter of fiscal 2023 for an aggregate cost of $15.0 million. As of January 21, 2018,22, 2023, there was approximately $181.0$160.0 million remaining under Board-authorized stock buybackshare repurchase programs authorized by the Board of Directors which expire in November 2018.2023.
Dividends— In 2018,During the first quarter of 2023, the Board of Directors declared onea cash dividend of $0.40$0.44 per common share which was paid on December 15, 2017 to shareholders of record as of the close of business on December 4, 2017 and totaled $11.8totaling $9.2 million. Future dividends are subject to approval by our Board of Directors.


11.AVERAGE SHARES OUTSTANDING
Our basic earnings per share calculation is computed based on the weighted-average number of common shares outstanding. Our diluted earnings per share calculation is computed based on the weighted-average number of common shares outstanding adjusted by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued. Potentially dilutive common shares include stock options, nonvested stock awards and units, and non-management director stock equivalents. Performance share awards are included in the average diluted shares outstanding each period if the performance criteria have been met at the end of the respective periods.

13.AVERAGE SHARES OUTSTANDING
The following table reconciles basic weighted-average shares outstanding to diluted weighted-average shares outstanding (in thousands):
Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Weighted-average shares outstanding – basic20,921 21,205 
Effect of potentially dilutive securities:
Nonvested stock awards and units79 40 
Stock options— 2 
Performance share awards— — 
Weighted-average shares outstanding – diluted21,000 21,247 
Excluded from diluted weighted-average shares outstanding:
Antidilutive23 15 
Performance conditions not satisfied at the end of the period112 25 

14.COMMITMENTS AND CONTINGENCIES
 Sixteen Weeks Ended
 January 21,
2018		 January 22,
2017
Weighted-average shares outstanding – basic29,551
 32,168
Effect of potentially dilutive securities:   
Nonvested stock awards and units229
 181
Stock options64
 76
Performance share awards9
 17
Weighted-average shares outstanding – diluted29,853
 32,442
Excluded from diluted weighted-average shares outstanding:   
Antidilutive90
 44
Performance conditions not satisfied at the end of the period74
 79

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)



12.    CONTINGENCIES AND LEGAL MATTERS 
Legal matters— We assess contingencies, including litigation contingencies, to determine the degree of probability and range of possible loss for potential accrual in our financial statements. An estimated loss contingency is accrued in the financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable, assessing contingencies is highly subjective and requires judgments about future events. When evaluating litigation contingencies, we may be unable to provide a meaningful estimate due to a number of factors, including the procedural status of the matter in question, the availability of appellate remedies, insurance coverage related to the claim or claims in question, the presence of complex or novel legal theories, and/orand the ongoing discovery and development of information important to the matter. In addition, damage amounts claimed in litigation against us may be unsupported, exaggerated, or unrelated to possible outcomes, and as such are not meaningful indicators of our potential liability or financial exposure. We regularly review contingencies to determine the adequacy of the accruals and related disclosures. The ultimate amount of loss may differ from these estimates. Any estimate is not an indication of expected loss, if any, or of the Company’s maximum possible loss exposure and the ultimate amount of loss may differ materially from these estimates in the near term.
15
JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Gessele v. Jack in the Box Inc.— In August 2010, five former Jack in the Box employees instituted litigation in federal court in Oregon alleging claims under the federal Fair Labor Standards Act and Oregon wage and hour laws. The plaintiffs alleged that Jack in the CompanyBox failed to pay non-exempt employees for certain meal breaks and improperly made payroll deductions for shoe purchases and for workers’ compensation expenses, and later added additional claims relating to timing of final pay and related wage and hour claims involving employees of a franchisee. In 2016, the court dismissed the federal claims and those relating to franchise employees. In June 2017, the court granted class certification with respect to state law claims of improper deductions and late payment of final wages. The parties participated in a voluntary mediation on March 16, 2020, but the matter did not settle. On October 24, 2022, a jury awarded plaintiffs approximately $6.4 million in damages and penalties, in addition to interest and attorney fees to be determined by the court at a later date. The Company continues to dispute liability and the damage award and will defend against both through post-trial motions and all other available appellate remedies. As of January 22, 2023, the Company has accrued the settlement amount, and included it within “Accrued liabilities” on our condensed consolidated balance sheet.
Torrez — In fiscal 2012,March 2014, a former Del Taco employee filed a purported Private Attorneys General Act claim and class action alleging various causes of action under California’s labor, wage, and hour laws. The plaintiff generally alleges Del Taco did not appropriately provide meal and rest breaks and failed to pay wages and reimburse business expenses to its California non-exempt employees. On November 12, 2021, the court granted, in part, the plaintiff's motion for class certification. The parties participated in a voluntary mediation on May 24, 2022 and June 3, 2022. On June 4, 2022, we entered into a Settlement Memorandum of Understanding (the “Agreement”) which obligates the Company to pay a gross settlement amount of $50.0 million, for which in exchange we will be released from all claims by the parties. The Agreement contains no admission of wrongdoing and is contingent upon various conditions, including, but not limited to, court approvals. There can be no assurance that the Agreement will be approved by the court nor upheld if challenged on appeal. As of January 22, 2023, the Company has accrued the settlement amount, and included it within “Accrued liabilities” on our condensed consolidated balance sheet.
J&D Restaurant Group — On April 17, 2019, the trustee for a single claimbankrupt former franchisee filed a complaint seeking to recover assets in the form of actual and exemplary damages for which we believethe bankruptcy trust and generally alleging the Company wrongfully terminated the franchise agreements and unreasonably denied two perspective purchasers that the former franchisee presented. The parties participated in a loss is both probablemediation in April 2021, and estimable; this accrued loss contingencyagain in December 2022, but the matter did not havesettle. Trial in this matter commenced on January 9, 2023. On February 8, 2023, the jury returned a material effectverdict finding that the Company had not breached any contracts in terminating the franchise agreements or denying the proposed buyers. While the jury also found that the Company had not violated the California Unfair Practices Act, it found for the plaintiff on the breach of implied covenant of good faith and fair dealing claim, and awarded $8.0 million in damages. The Company continues to dispute liability and the damage award and will defend against both through post-trial motions and all other available appellate remedies. As of January 22, 2023, the Company has accrued the verdict, and included it within “Accrued liabilities” on our results of operations. We continue to believe that no additional losses are probable beyond this accrual and cannot estimate a possible loss contingency or range of reasonably possible loss contingencies beyond the accrual. We plan to vigorously defend against this lawsuit. Nonetheless, an unfavorable resolution of this matter in excess of our current accrued loss contingencies could have a material adverse effect on our business, results of operations, liquidity or financial condition.consolidated balance sheet.
Other legal matters— In addition to the mattermatters described above, we are subject to normal and routine litigation brought by former current or prospectivecurrent employees, customers, franchisees, vendors, landlords, shareholders, or others. We intend to defend ourselves in any such matters. Some of these matters may be covered, at least in part, by insurance. Our insurance or other third-party indemnity obligation. We record receivables from third party insurers when recovery has been determined to be probable.
Lease guarantees — We remain contingently liable for certain leases relating to our former Qdoba business which we sold in fiscal 2018. Under the Qdoba Purchase Agreement, the buyer has indemnified the Company of all claims related to these guarantees. As of January 22, 2023, the maximum potential liability (undiscounted)of future undiscounted payments under these leases is approximately $23.0 million. The lease terms extend for a maximum of approximately 15 more years and reserves are established in part by using independent actuarial estimateswe would remain a guarantor of expected losses for reported claims and for estimating claims incurred but not reported. We believe that the ultimate determination of liability in connection with legal claims pending against us, if any, in excess of amounts already provided for such mattersleases in the condensed consolidated financial statements, willevent the leases are extended for any established renewal periods. In the event of default, we believe the exposure is limited due to contractual protections and recourse available in the lease agreements, as well as the Qdoba Purchase Agreement, including a requirement of the landlord to mitigate damages by re-letting the properties in default, and indemnity from the Buyer. The Company has not haverecorded a material adverse effect on our business, our annual resultsliability for these guarantees as we believe the likelihood of operations, liquidity or financial position; however, itmaking any future payments is possible that our business, results of operations, liquidity, or financial condition could be materially affected in a particular future reporting period by the unfavorable resolution of one or more matters or contingencies during such period.remote.


13.
SUPPLEMENTAL CONSOLIDATED CASH FLOW INFORMATION (in thousands)
16
 Sixteen Weeks Ended
 January 21,
2018		 January 22,
2017
Cash paid during the year for:   
Interest, net of amounts capitalized$12,632
 $9,691
Income tax payments$1,344
 $47
Decrease in obligations for purchases of property and equipment$4,201
 $2,841
Decrease in obligations for treasury stock repurchases$—
 $7,208
Non-cash transactions:   
Increase in notes receivable from the sale of company-operated restaurants$9,084
 $—
Increase in franchise tenant improvement allowances$5,325
 $—
Increase in dividends accrued or converted to common stock equivalents$78
 $74
Decrease in capital lease obligations from the termination of equipment and building leases$685
 $87
Equipment capital lease obligations incurred$39
 $59

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


15.SUPPLEMENTAL CONSOLIDATED CASH FLOW INFORMATION (in thousands)
Sixteen Weeks Ended
 January 22,
2023		January 23,
2022
Non-cash investing and financing transactions:
Decrease in obligations for purchases of property and equipment$4,147 $952 
Increase in accrued debt issuance costs$— $3,955 
Increase in dividends accrued or converted to common stock equivalents$68 $63 
Right-of use assets obtained in exchange for operating lease obligations$54,246 $69,789 
Right-of use assets obtained in exchange for finance lease obligations$— $20 

17

14.
SUPPLEMENTAL CONSOLIDATED BALANCE SHEET INFORMATION (in thousands)
JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 January 21,
2018		 October 1,
2017
Accounts and other receivables, net:   
Trade$31,688
 $55,108
Notes receivable766
 988
Other5,020
 5,672
Allowance for doubtful accounts(1,171) (2,159)
 $36,303
 $59,609
Prepaid expenses:   
Prepaid rent$4,761
 $—
Prepaid income taxes4,190
 16,928
Other7,472
 10,604
 $16,423
 $27,532
Other assets, net:   
Company-owned life insurance policies$109,791
 $110,057
Deferred tax assets67,033
 105,117
Deferred rent receivable47,345
 46,962
Other19,725
 15,434
 $243,894
 $277,570
Accrued liabilities:   
Insurance$37,095
 $39,011
Payroll and related taxes24,390
 23,361
Advertising11,047
 18,493
Deferred rent income5,681

18,961
Sales and property taxes3,242
 7,275
Gift card liability2,516
 2,237
Deferred franchise fees425
 450
Other18,470
 25,266
 $102,866
 $135,054
Other long-term liabilities:   
Defined benefit pension plans$104,798
 $107,011
Straight-line rent accrual33,047
 33,749
Other97,549
 108,065
 $235,394
 $248,825
16.SUPPLEMENTAL CONSOLIDATED BALANCE SHEET INFORMATION (in thousands)

January 22,
2023		October 2,
2022
Accounts and other receivables, net:
Trade$51,178 $90,105 
Notes receivable, current portion1,702 8,643 
Income tax receivable871 878 
Other7,766 10,152 
Allowance for doubtful accounts(4,530)(5,975)
$56,987 $103,803 
Property and equipment, net
Land$92,860 $86,134 
Buildings971,935 960,984 
Restaurant and other equipment168,865 163,527 
Construction in progress17,906 18,271 
1,251,566 1,228,916 
Less accumulated depreciation and amortization(826,928)(810,752)
$424,638 $418,164 
Other assets, net:
Company-owned life insurance policies$115,556 $108,924 
Deferred rent receivable43,114 43,891 
Franchise tenant improvement allowance35,456 32,429 
Notes receivable, less current portion11,099 11,624 
Other30,189 29,701 
$235,414 $226,569 
Accrued liabilities:
Legal accruals$65,115 $59,165 
Payroll and related taxes35,032 43,837 
Insurance32,580 32,272 
Sales and property taxes18,676 30,947 
Deferred rent income4,722 18,525 
Advertising13,267 11,028 
Deferred franchise and development fees5,775 5,647 
Other49,573 52,511 
$224,740 $253,932 
Other long-term liabilities:
Defined benefit pension plans$51,337 $51,679 
Deferred franchise and development fees41,275 40,802 
Other43,371 42,213 
$135,983 $134,694 
15.SUBSEQUENT EVENTS


17.SUBSEQUENT EVENTS
Dividends — On February 19, 2018,24, 2023, the Board of Directors declared a cash dividend of $0.40$0.44 per common share, to be paid on March 16, 201828, 2023, to shareholders of record as of the close of business on March 5, 2018.15, 2023.

18
Subsequent to the end of the first quarter of 2018, we signed non-binding letters of intent with franchisees to sell approximately 50 company-operated restaurants in several markets. Pre-tax gross proceeds related to these sales are estimated at $25.0 million to $27.0 million.




ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
All comparisons between 20182023 and 20172022 refer to the 16-weeks16 weeks (“quarter”) ended January 21, 201822, 2023 and January 22, 2017,23, 2022, respectively, unless otherwise indicated.
For an understanding of the significant factors that influenced our performance during 20182023 and 2017,2022, our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should be read in conjunction with the condensed consolidated financial statements and related notes included in this Quarterly Report and our Annual Report on Form 10-K for the fiscal year ended October 1, 2017.2, 2022.
Our MD&A consists of the following sections:
•Overview — a general description of our business and 2018 highlights.
business.
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 pension and postretirement health contributions, capital expenditures, sale of company-operated restaurants, our credit facility, share repurchase activity, dividends, and known trends that may impact liquidity and the impact of inflation, if applicable.
liquidity.
•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.
We have included in our MD&A certain performance metrics that management uses to assess company performance and which we believe will be useful in analyzing and understanding our results of operations. These metrics include:
•Changes in sales at restaurants open more than one year (“same-store sales”), systemwide sales, franchised restaurant sales, and average unit volumes (“AUVs”). Same-store sales, restaurant sales, and 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, marketing fees and percentage rent revenues are calculated based on a percentage of franchise sales. We believe franchise and system same-store sales, franchised and system restaurant sales,and AUV information isare useful to investors as they have a significant indicator ofdirect effect on the overall strength of our business.Company’s profitability.
•Adjusted EBITDA which represents net earnings on a generally accepted accounting principles (“GAAP”) basis excluding gains or losses from discontinued operations, income taxes, interest expense, net, gains on the sale of company-operated restaurants, impairment and other charges,operating expenses, net, depreciation and amortization, amortization of favorable and theunfavorable leases and subleases, net, and amortization of tenant improvement allowances.allowances and incentives.We are presenting Adjusted EBITDA because we believe that it provides a meaningful supplement to net earnings of the Company's core business operating results, as well as a comparison to those of other similar companies. Management believes that Adjusted EBITDA, when viewed with the Company's results of operations in accordance with GAAP and the accompanying reconciliations within MD&A, provides useful information about operating performance and period-over-period change, and provides additional information that is useful for evaluating the operating performance of the Company's core business without regard to potential distortions. Additionally, management believes that Adjusted EBITDA permits investors to gain an understanding of the factors and trends affecting our ongoing cash earnings, from which capital investments are made and debt is serviced.
Same-store sales, systemwide sales, franchised restaurant sales, AUVs, and Adjusted EBITDA are not measurements determined in accordance with GAAP and should not be considered in isolation, or as an alternative to earnings from operations, or other similarly titled measures of other companies.

19

OVERVIEW
Our Business
Founded in 1951, Jack in the Box Inc. (the “Company”) operates and franchises Jack in the Box® and Del Taco quick-service restaurants. As of January 21, 2018,22, 2023, we operated and franchised 2,2502,186 Jack in the Box quick-service restaurants, primarily in the western and southern United States, including one in Guam, and 738 Qdoba fast-casual592 Del Taco quick-service restaurants operating primarily throughout the United States and Canada, which are currently held for sale.across 16 states, including one in Guam.
Our primary source ofWe derive revenue is from retail sales at Jack in the Box company-operated restaurants. We also derive revenue from Jack in the Box franchise restaurants includingand rental revenue, royalties (based upon a percent of sales) and franchise fees. In addition, we recognize gains or losses from the sale of company-operated restaurants to franchisees, which are included as a line item within operating costs and expenses, net in the accompanying condensed consolidated statements of earnings.
The following summarizes the most significant events occurring year-to-date in fiscal 2018, and certain trends compared to a year ago:
Same-Store Sales — Same-store sales decreased 0.2% at Jack in the Box system restaurants compared with a year ago primarily driven by a decrease in traffic at both company-operated and franchise-operated restaurants, partially offset by increases in menu price and favorable mix.
Company Restaurant Operations — Jack in the Box company restaurant costs as a percentage of company restaurant sales decreased in 2018 to 74.0% from 74.2% a year ago primarily due to the benefit of refranchising, partially offset by an increase in food and packaging costs as a percentage of sales resulting from commodity inflation.
Franchise Operations — Jack in the Box franchise costs as a percentage of franchise revenues increased in 2018 to 39.3%, from 39.0% in the prior year, primarily due to reduced royalties for certain restaurants sold to franchisees in 2017, and a 0.3% decrease in same-store sales at franchised restaurants, which were partially offset by additional franchise fees resulting from our refranchising strategy.
Jack in the Box Franchising Program— Franchisees opened a total of 5 restaurants. As part of our refranchising strategy, we sold 22 company-operated restaurants to franchisees in several different markets during 2018 resulting in proceeds of approximately $14.7 million. In fiscal year 2018, we expect approximately 25 Jack in the Box restaurants to open system-wide, the majority of which will be franchise locations. Our Jack in the Box system was 89% franchised as of January 21, 2018. We plan to increase franchise ownership of the Jack in the Box system to over 90%. Prior and subsequent to the end of the first quarter of 2018, we signed non-binding letters of intent with franchisees to sell approximately 60 company-operated restaurants in several markets. Pre-tax gross proceeds related to these sales are estimated at $27.0 million to $30.0 million, and we have classified $0.8 million of equipment, related to sales under letters executed prior to quarter-end, as assets heldcontributions for sale in our January 21, 2018 condensed consolidated balance sheet.
Restructuring Costs (including costs related to the Qdoba Evaluation) — In 2016, we announced a plan to reduce our general and administrative costs, and in the third quarter of 2017, we began an evaluation of potential alternatives with respect to the Qdoba brand (the “Qdoba Evaluation”), which ultimately resulted in the Board’s approval to sell Qdoba. In connection with these activities, we have recorded $0.4 million of restructuring charges in 2018, which includes $0.8 million related to the Qdoba Evaluation, offset by a $0.4 million adjustment to severance costs. These costs are included in impairmentadvertising and other costs, net in the accompanying condensed consolidated statements of earnings.
services from franchisees.
Return of Cash to Shareholders— We returned cash to shareholders in the form of cash dividends. We declared one cash dividend of $0.40 per share totaling $11.8 million. We have not repurchased any shares of our common stock in 2018.
Adjusted EBITDA — Adjusted EBITDA decreased in 2018 to $85.4 million from $90.6 million in 2017 due to the previously mentioned changes in company restaurant operations and franchise operations.

Tax Reform — TheTax Cuts and Jobs Act (the “Tax Act”) was enacted into law on December 22, 2017, resulting in an estimated annual statutory federal tax rate of 24.5% for fiscal 2018, and 21% for subsequent fiscal years. Due to the Tax Act, a tax expense of $30.6 million was recognized and is included as a component of income taxes from continuing operations in 2018.

FINANCIAL REPORTING
During fiscal 2012, we entered into an agreement to outsource our Jack in the Box distribution business. In fiscal 2018, the Board of Directors approved, and we entered into, a Stock Purchase Agreement to sell all issued and outstanding shares of the Qdoba Restaurant Corporation (“Qdoba”) as the result of the Qdoba Evaluation. All results related to our distribution business and Qdoba operations are reported as discontinued operations for all periods presented. Refer to Note 2, Discontinued Operations, in the notes to condensed consolidated financial statements for additional information. Unless otherwise noted, amounts and disclosures throughout our MD&A relate to our continuing operations.
In the first quarter of fiscal 2018, we prospectively adopted an Accounting Standards Update (“ASU”) which is intended to simplify various aspects of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. Upon adoption, we reclassified the excess tax benefits from share-based compensation arrangements of $0.8 million as a discrete item within income tax expense on the condensed consolidated statements of earnings, rather than recognizing such excess income tax benefits in capital in excess of par value on the condensed consolidated balance sheet. This reclassification also impacted the related classification on our condensed consolidated statements of cash flows as excess tax benefits from share-based compensation arrangements is only reported in cash flows from operating activities rather than as previously reported in cash flows from operating activities and cash flows used in investing activities. Upon adoption of the standard, we also began reporting cash paid to a taxing authority on an employee’s behalf when we directly withhold equivalent shares for taxes as cash flows used in financing activities. The standard also impacts the Company’s earnings per share calculation as the estimate of dilutive common share equivalents under the treasury stock method no longer assumes that the estimated tax benefits realized when an award is settled are used to repurchase shares. Lastly, the Company elected to account for forfeitures as they occur. A cumulative-effect adjustment was made in the amount of $0.2 million and recorded in 2018 retained earnings on the condensed consolidated balance sheet. Refer to Note 1, Basis of Presentation, in the notes to condensed consolidated financial statements for more information.


RESULTS OF OPERATIONS
Thefollowing table presents certain income and expense items included in our condensed consolidated statements of earnings as a percentage of total revenues, unless otherwise indicated. Percentages may not add due to rounding.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS DATA
 Sixteen Weeks Ended
 January 21, 2018 January 22, 2017
Revenues:   
Company restaurant sales57.6% 67.5%
Franchise rental revenues26.2% 20.2%
Franchise royalties and other16.2% 12.2%
Total revenues100.0% 100.0%
Operating costs and expenses, net:   
Company restaurant costs (excluding depreciation and amortization):   
Food and packaging (1)28.8% 28.5%
Payroll and employee benefits (1)28.8% 29.4%
Occupancy and other (1)16.4% 16.3%
Total company restaurant costs (excluding depreciation and amortization) (1)74.0% 74.2%
Franchise occupancy expenses (excluding depreciation and amortization) (2)60.2% 59.1%
Franchise support and other costs (3)5.2% 5.9%
Selling, general and administrative expenses11.8% 11.5%
Depreciation and amortization6.5%
6.0%
Impairment and other charges, net0.8% 0.8%
Gains on the sale of company-operated restaurants(3.0)% — %
Earnings from operations24.7% 18.9%
Income tax rate (4) 78.5% 38.7%
____________________________
(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.


CHANGES IN SAME-STORE SALES
 Sixteen Weeks Ended
 Fiscal Basis Calendar Basis (1)
 January 21, 2018 January 22, 2017 January 22, 2017
Company0.2 % —% 0.6%
Franchise(0.3)% 3.3% 3.9%
System(0.2)% 2.5% 3.1%
____________________________
(1)Due to the transition from a 53-week year in fiscal 2016 to a 52-week year in fiscal 2017, year-over-year fiscal period comparisons are off by one week. The change in same-store sales presented in the Calendar Basis column uses comparable calendar periods to balance the one-week shift from fiscal 2016 and to provide a clearer year-over-year comparison.
The following table summarizes the changes in same-store sales for Jack in the Box company-operated, same-store sales:franchised, and system restaurants:
Sixteen Weeks Ended
Jack in the Box:January 22,
2023		January 23,
2022
Company12.6 %(0.3)%
Franchise7.4 %1.4 %
System7.8 %1.2 %
 Sixteen Weeks Ended
 Fiscal Basis Calendar Basis
 January 21, 2018 January 22, 2017 January 22, 2017
Average check (1)2.6 % 4.7 % 4.9 %
Transactions(2.4)% (4.7)% (4.3)%
Change in same-store sales0.2 % — % 0.6 %
____________________________
(1)Amounts on a fiscal basis in 2018 and 2017 include price increases of approximately 1.6% and 2.9%, respectively. Amount in 2017 on a calendar basis includes a price increase of approximately 2.9%.
The following table summarizes the changes in the number and mix of Jack in the Box company and franchise restaurants:
20232022
Jack in the Box:CompanyFranchiseTotalCompanyFranchiseTotal
Beginning of year146 2,035 2,181 163 2,055 2,218 
New— 6 6 — 2 2 
Acquired from franchisees— — — 4 (4)— 
Refranchised(5)5 — — — — 
Closed(1)— (1)(2)(10)(12)
End of period140 2,046 2,186 165 2,043 2,208 
% of system6 %94 %100 %7 %93 %100 %
The following table summarizes restaurant sales for Jack in the Box company-operated, franchised, and systemwide sales (in thousands):
Sixteen Weeks Ended
Jack in the Box:January 22,
2023		January 23,
2022
Company-operated restaurant sales$126,142 $120,056 
Franchised restaurant sales (1)1,208,983 1,117,676 
Systemwide sales (1)$1,335,125 $1,237,732 
________________________
(1)Franchised restaurant sales represent sales at franchised restaurants and are revenues of our franchisees. System sales include company and franchised restaurant sales. We do not record franchised sales as revenues; however, our royalty revenues, marketing fees and percentage rent revenues are calculated based on a percentage of franchised sales. We believe franchised and system restaurant sales information is useful to investors as they have a direct effect on the Company's profitability.
20

 2018 2017
 Company Franchise Total Company Franchise Total
Beginning of year276

1,975

2,251

417

1,838

2,255
New1

5

6

2

7

9
Refranchised(22)
22

—

—

—

—
Closed—

(7)
(7)
—

(3)
(3)
End of period255

1,995

2,250

419

1,842

2,261
% of system11% 89% 100% 19% 81% 100%

Below is a reconciliation of Non-GAAP Adjusted EBITDA to the most directly comparable GAAP measure, net earnings:earnings (in thousands):
ADJUSTED EBITDA
Sixteen Weeks Ended
Consolidated:January 22,
2023		January 23,
2022
Net earnings - GAAP$53,254 $39,270 
Income tax expense19,385 14,190 
Interest expense, net26,148 20,187 
Gains on the sale of company-operated restaurants(3,825)(48)
Other operating (income) expenses, net(5,501)3,843 
Depreciation and amortization19,402 12,496 
Amortization of favorable and unfavorable leases and subleases, net541 — 
Amortization of franchise tenant improvement allowances and incentives1,215 1,234 
Adjusted EBITDA - Non-GAAP$110,619 $91,172 
  Sixteen Weeks Ended
  January 21, 2018 January 22, 2017
 Net earnings - GAAP $12,190
 $35,930
 Losses (earnings) from discontinued operations, net of taxes 699
 (1,381)
 Income taxes 47,138
 21,831
 Interest expense, net 12,780
 10,409
 Earnings from operations $72,807
 $66,789
 Gains on the sale of company-operated restaurants (8,940) (137)
 Impairment and other charges, net 2,257
 2,654
 Depreciation and amortization 19,157
 21,263
Amortization of franchise tenant improvement allowances 147
 25
 Adjusted EBITDA - Non-GAAP $85,428
 $90,594


Jack in the Box Brand
Company Restaurant Operations
The following table presents Jack in the Box company restaurant sales and costs, and restaurant costs as a percentage of the related sales. Percentages may not add due to rounding sales (dollars in thousands):
Sixteen Weeks Ended
January 22, 2023January 23, 2022
Company restaurant sales$126,142 $120,056 
Company restaurant costs:
Food and packaging$41,326 32.8 %$37,537 31.3 %
Payroll and employee benefits$39,438 31.3 %$39,725 33.1 %
Occupancy and other$20,377 16.2 %$20,877 17.4 %
 Sixteen Weeks Ended
 January 21, 2018 January 22, 2017
Company restaurant sales$169,637
   $238,571
  
Company restaurant costs (excluding depreciation and amortization):       
Food and packaging48,864
 28.8% 67,989
 28.5%
Payroll and employee benefits48,940
 28.8% 70,183
 29.4%
Occupancy and other27,750
 16.4% 38,941
 16.3%
Total company restaurant costs (excluding depreciation and amortization)$125,554
 74.0% $177,113
 74.2%

Company restaurant sales decreased $68.9increased $6.1 million in 2018 asor 5.1% compared withto the prior year, primarily drivendue to average check and traffic growth, partially offset by a decreasedecline in the average number of restaurants resulting from the execution of our refranchising strategy and, to a lesser extent, by a decrease in traffic, which was more than offset by menu price increases and favorable product mix.company-operated restaurants. The following table presents the approximate impact of these (decreases) increasesitems on company restaurant sales (in 2018 (in thousandsmillions):
Sixteen Weeks Ended
January 22,
2023
AUV increase$14.0 
Decrease in the average number of restaurants(7.9)
Total change in company restaurant sales$6.1 
Decrease in the average number of restaurants$(96.1)
AUV increase27.2
Total change in company restaurant sales$(68.9)
Fiscal basis same-storeSame-store sales at company-operated restaurants increased 0.2% as12.6% compared with priorto a year primarily due to menu price increases and favorable mix, partially offset by a decline in transactions.ago. The following table summarizes the change in company-operated same-store sales:versus a year ago:
 Sixteen Weeks Ended
 January 21, 2018 January 22, 2017
Average check (1)2.6 % 4.7 %
Transactions(2.4)% (4.7)%
Change in same-store sales0.2 % — %
____________________________
(1)Amounts on a fiscal basisSixteen Weeks Ended
January 22,
2023
Average check (1)7.7 %
Transactions4.9 %
Change in 2018 and 2017 include price increases of approximately 1.6% and 2.9%, respectively.same-store sales12.6 %
________________________
(1)Includes price increases of approximately 10.3% compared to the prior year.
Food and packaging costs as a percentage of company restaurant sales increased 1.5% compared to 28.8% in 2018, compared with 28.5% in 2017. The increase was driven bythe prior year primarily due to higher commodity costs and unfavorable menu item mix, partially offset by favorable product mix andan increase in menu price increases. pricing.
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Commodity costs increased 5.2%by approximately 15.5% compared to a year ago.the prior year. The increase was driven by higher costs for beef, pork,inflation we have experienced is across nearly all categories with the greatest impact seen in produce, sauce and beverages. Beef, our most significantpotatoes. For fiscal 2023, we expect annual commodity increased approximately approximatelycost inflation to be up 9% to 11% compared with the prior year. For fiscal 2018, we currently expect commodity costs to be up approximately 3% compared with fiscal 2017.2022.
Payroll and employee benefit costs as a percentage of company restaurant sales decreased to 28.8% in 2018 compared with 29.4% in 2017 due primarily to the benefits of refranchising, partially offset by wage inflation resulting from an increase in the minimum wage in certain markets and a highly competitive labor market.
Occupancy and other costs decreased $11.2 million in 20181.8% compared to the prior year primarily due to higher average restaurant sales as a decreaseresult of a change in restaurant mix and menu price increases, as well as a reduction in workers’ compensation and group insurance. Labor inflation was approximately 9.9% for the average number of restaurants, impacting occupancycurrent fiscal year. For fiscal 2023, we expect annual wage inflation to be up 3% to 6% compared with fiscal 2022.
Occupancy and other costs, by approximately $15.7 million,as a percentage of company restaurant sales, decreased 1.2% compared to the prior year primarily due to higher average restaurant sales as a result of a change in restaurant mix and menu price increases, partially offset by higher utilities costs as well as maintenance and repair expenses.costs compared with fiscal 2022.

Jack in the Box Franchise Operations
The following table presents Jack in the Box franchise revenues and costs in each period and other information we believe is useful in analyzing the change in franchise operating results (dollars in thousands):
Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Franchise rental revenues$106,096$103,099
Royalties67,56957,648
Franchise fees and other1,7973,107
Franchise royalties and other69,36660,755
Franchise contributions for advertising and other services65,31360,801
Total franchise revenues$240,775$224,655
Franchise occupancy expenses$64,555$63,983
Franchise support and other costs1,4163,911
Franchise advertising and other services expenses67,95863,308
Total franchise costs$133,929$131,202
Franchise costs as a percentage of total franchise revenues55.6%58.4%
Average number of franchise restaurants2,0332,039
% decrease(0.3)%
Franchised restaurant sales$1,208,983$1,117,676
Franchised restaurant AUVs$595$548
Royalties as a percentage of total franchised restaurant sales5.6%(1)5.2%
 Sixteen Weeks Ended
 January 21, 2018 January 22, 2017
Franchise rental revenues$77,217
 $71,436
    
Royalties46,293
 42,588
Franchise fees and other1,316
 586
Franchise royalties and other47,609
 43,174
Total franchise revenues$124,826
 $114,610
    
Franchise occupancy expenses (excluding depreciation and amortization)$46,521
 $42,190
Franchise support and other costs2,482
 2,537
Total franchise costs$49,003
 $44,727
Franchise costs as a % of total franchise revenues39.3 % 39.0%
    
Average number of franchise restaurants1,975
 1,839
% increase7.4 %  
(Decrease) increase in franchise-operated same-store sales(0.3)% 3.3%
Franchise restaurant AUVs$455
 $453
Royalties as a percentage of total franchise restaurant sales5.1 % 5.1%
________________________
(1)Excluding the impact of the $7.3 million termination fee discussed below, royalties as a percentage of total franchised restaurant sales would be 5.0% for the sixteen weeks ended January 22, 2023.
Franchise rental revenues increased $5.8$3.0 million, or 8.1%, as2.9% compared with ato the prior year ago. This increase is primarily due to $6.3higher percentage rent of $2.4 million of additional rental revenues in 2018 resulting from the net increase in the average number of restaurants leased or subleased from the Company due to our refranchising strategy, partially offsetdriven by a decline inhigher franchise restaurant same-store sales resulting in a decrease in revenues from percentage rent.sales.
Franchise royalties and other increased $4.4$8.6 million, or 10.3% in 2018 versus14.2% compared to the prior year primarily due to a year ago primarily reflecting$7.3 million termination fee paid by a $4.1 million increase infranchise operator who sold his restaurants to a new franchisee, as well as higher royalties driven by a net increase inhigher franchise restaurant sales. Refer to Note 2, Revenue, of the average number of franchise restaurants primarily resulting from our refranchising strategy, andnotes to the condensed consolidated financial statements for additional franchise fees of $0.8 millioninformation related to the sale of 22 company-operated restaurants to franchisees during 2018. These increases were partially offset by a decrease in royalties related$7.3 million termination fee.
Franchise contributions for advertising and other services revenues increased $4.5 million, or 7.4% compared to the decline in same-storeprior year primarily driven by higher franchise restaurant sales.
Franchise occupancy expenses, principally rents,primarily rent, increased $4.3$0.6 million, in 2018 versus aor 0.9% compared to the prior year agoprimarily due primarily to a net increase in the average number of franchise-operated restaurants resulting from our refranchising strategy, contributing additionalrent increases, partially offset by lower real estate taxes.
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Franchise support and other costs of approximately $3.7decreased $2.5 million andcompared to a lesser extent, routine rent increases.
Depreciation and Amortization
Depreciation and amortization decreased by $2.1 million in 2018 as compared with the prior year primarily due to a decrease in equipment depreciationfranchisee bad debt expense.
Franchise advertising and other service expenses increased $4.7 million, or 7.3% compared to the prior year primarily driven by a decreasehigher franchise sales.
Del Taco Brand
As of January 22, 2023, there were 273 company-operated and 319 franchise-operated Del Taco restaurants. System same-store sales increased 3.0% and total revenues and segment operating profit were $160.2 million and $12.1 million, respectively, during the quarter.
Company-Wide Results
Depreciation and Amortization
Depreciation and amortization increased $6.9 million compared to the prior year primarily due to the acquisition of Del Taco, contributing an additional $8.4 million of depreciation; more than offsetting lower Jack in the average numberBox depreciation as a result of company-operated restaurants resulting from our refranchising activities in 2017 and 2018. To a lesser extent, a decline in depreciation resulting from ourcertain franchise building assetsbuildings becoming fully depreciated also contributed to the decrease.

depreciated.
Selling, General and Administrative (“SG&A”) Expenses
The following table presents the change in 2018 SG&A expenses compared with the prior year (in thousands):
 (Decrease) / Increase
Advertising$(3,109)
Cash surrender value of COLI policies, net(1,248)
Region administration(892)
Pension and postretirement benefits(582)
Incentive compensation (including share-based compensation and related payroll taxes)(203)
Other (including savings related to our restructuring plan)(113)
 $(6,147)
Increase/(Decrease)
Sixteen Weeks Ended
January 22,
2023
Advertising$6,086 
Incentive compensation (including share-based compensation and related payroll taxes)5,381 
Cash surrender value of COLI policies, net(6,168)
Litigation matters5,987 
Other13,827 
$25,113 
Advertising costs at our Jack in the Box brand are primarilyrepresent company contributions to our marketing fundfunds and are generally determined as a percentage of grosscompany-operated restaurant sales. Advertising costs decreased $3.1increased $6.1 million compared to the prior year primarily due to the acquisition of Del Taco which resulted in 2018higher advertising costs of $5.8 million.
Incentive compensation increased $5.4 million compared with ato the prior year agoprimarily due to a decrease$2.9 million increase in the numberannual incentives mainly as a result of company-operated restaurants resultinghigher achievement levels compared to the prior year, as well as a $2.5 million increase in share-based compensation mainly from our refranchising efforts.the timing of annual grants compared to the prior year.
The cash surrender value of our Company-ownedcompany-owned life insurance (“COLI”) policies, net of changes in our non-qualified deferred compensation obligation supported by these policies, are subject to market fluctuations. The changes in market values had a positive impact of $0.3$6.2 million in 2018 and a negative impact of $0.9 million in 2017.
Region administration costs decreased in 2018 as compared to 2017 due primarily to workforce reductions related to our refranchising efforts.
Pension and postretirement benefit costs decreased primarily due to an increase in the discount rates and higher than expected return on assets (“ROA”) inversus the prior year, partially offset by a decrease in the ROA assumption from 6.5% to 6.2% in 2018.year.
Incentive compensation decreasedLitigation matters increased $6.0 million primarily due to a decrease in share-based compensation related to the timing of award grants and a decrease in payroll taxes, partially offset by higher levels of performance in the current year versus the prior year as compared to target bonus levels.
Impairment and Other Charges, Net
Impairment and other charges, net is comprised of the following (in thousands):
 Sixteen Weeks Ended
 January 21, 2018 January 22, 2017
Costs of closed restaurants and other$1,375
 $1,839
Restructuring costs358
 183
Restaurant impairment charges291
 —
Losses on disposition of property and equipment, net183
 530
Accelerated depreciation50
 102
 $2,257
 $2,654
Impairment and other charges, net decreased $0.4 million in 2018 compared with a year ago. The decrease was primarily driven by a $0.9 million reduction in costs associated with closed restaurant properties related to revisions of certain sublease assumptions for our lease obligations and a $0.4 million gain on sale of a closed restaurant property in 2018. These decreases were partially offset by $0.5 million of impairment charges in 2018 related to a reduction in the value of three previously closed properties.J&D Restaurant Group litigation. Refer to Note 6, Impairment14, Commitments and Other Charges, NetContingencies, of the notes to the condensed consolidated financial statements for additional information regarding these costs.information.

The increase in other is primarily due to the acquisition of Del Taco in the prior year which resulted in an increase of additional general and administrative costs of $12.0 million.
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Other Operating Expenses, Net
Other operating expenses, net is comprised of the following (in thousands):
Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Acquisition, integration, and restructuring costs$1,651 $3,013 
Costs of closed restaurants and other2,589 1,072 
Accelerated depreciation268 375 
Gains on disposition of property and equipment, net(10,009)(617)
$(5,501)$3,843 
Other operating expenses, net decreased $9.3 million compared to the prior year, primarily due to $9.5 million of gains recognized in the current year from the sale of Jack in the Box restaurant properties to franchisees who were leasing the properties from us prior to the sale.
Gains on the Sale of Company-Operated Restaurants (dollars
In fiscal 2023, the Company sold five Jack in thousands)
Gains on the sale ofBox company-operated restaurants and 16 Del Taco company-operated restaurants to franchisees and recognized a net are detailed in the following table (dollars in thousands):
 Sixteen Weeks Ended
 January 21, 2018 January 22, 2017
Number of restaurants sold to Jack in the Box franchisees22
 —
    
Gains on the sale of company-operated restaurants$8,940
 $137
Gains are impacted by the numbergain of restaurants sold and changes in average gains or losses recognized, which primarily relate to the specific sales and cash flows of those restaurants. Gains in 2018 and 2017 include additional proceeds of $1.2 million and $0.1 million, respectively, related to restaurants sold in a prior year.$3.8 million. Refer to Note 3, 4, Summary of Refranchisings and Franchisee DevelopmentFranchise Acquisitions, of the notes to the condensed consolidated financial statements for additional information regarding these gains.transactions. In fiscal 2022, no company-operated restaurants were sold to franchisees. Amounts included in “Gains on the sale of company-operated restaurants” in 2022 related to additional proceeds received in connection with the extension of franchise and lease agreements form the sale of restaurants in prior years.
Interest Expense, Net
Interest expense, net is comprised of the following (in thousands):
Sixteen Weeks Ended Sixteen Weeks Ended
January 21, 2018 January 22, 2017 January 22,
2023		January 23,
2022
Interest expense$12,811
 $10,436
Interest expense$26,537 $20,273 
Interest income(31) (27)Interest income(389)(86)
Interest expense, net$12,780
 $10,409
Interest expense, net$26,148 $20,187 
Interest expense, net increased $2.4$6.0 million in 2018 compared with ato the prior year ago primarily due to higher average interest rates and average borrowings which contributed additionalresulting in higher interest expense of approximately $1.6$7.3 million, and $1.3 million, respectively.partially offset by lower average borrowing rates.
Income TaxesTax Expense
The Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law on December 22, 2017. The Tax Act included a reduction in the U.S. federal statutory corporate income tax rate (the “Tax Rate”) from 35% to 21% and introduced new limitations on certain business deductions. As a result, we recognized a one-time, non-cash $30.6 million tax provision expense impact primarily related to the re-measurement of our deferred tax assets and liabilities due to the reduced Tax Rate.
Theprovisions reflect year-to-date effective tax rate in 2018 is 78.5%of 26.7%, compared with 38.7%26.5% in 2017.fiscal year 2022. The major components of the changeincrease in tax ratesrate were non-deductible goodwill decrements in the one-time, non-cash impact of the enactment of the Tax Cuts and Jobs Act, including the revaluation of all deferred tax assets and liabilities at the reduced federal statutory rate, partiallycurrent year offset by the decreasenon-taxable gains in the federal statutory tax rate and the excess tax benefit on year-to-date stock compensation expense. We expect the fiscalcurrent year tax rate to be approximately 41.0%. As discussed in Note 1, Basis of Presentation, upon the adoption of ASU 2016-09, Compensation-Stock Compensation (Topic 718):Improvements to Employee Share-Based Payment Accounting, we are including the excess tax benefit of our stock based compensation as a discrete item within income tax expense on the condensed consolidated statements of earnings, which may cause volatility in our quarterly tax rate. The final annual tax rate cannot be determined until the end of the fiscal year; therefore, the actual 2018 rate could differ from our current estimates. Refer to Note 7, Income Taxes, of the notes to the condensed consolidated financial statements for additional information regarding income taxes.
(Losses) Earnings from Discontinued Operations, Net
As described in Note 2, Discontinued Operations,versus non-deductible losses in the notesprior year from the market performance of insurance products used to condensed consolidated financial statements, the results of operations from our distribution business and Qdoba have been reported as discontinued operations for all periods presented. Refer to Note 2 for additional information regarding discontinued operations.fund certain non-qualified retirement plans.



LIQUIDITY AND CAPITAL RESOURCES
General
Our primary sources of liquidity and capital resources are cash flows from operations and borrowings available under our securitized financing facility. Our cash requirements consist principally of working capital, general corporate needs, capital expenditures, income tax payments, debt service requirements, franchise tenant improvement allowance and incentive distributions, dividend payments, and obligations related to our benefit plans. We generally reinvest available cash flows from operations to invest in our business, service our debt obligations, pay dividends and repurchase shares of our common stock.
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Our primary sources of short-term and long-term liquidity are expected to be cash flows from operations and available borrowings under our credit facilities. As of January 22, 2023, the Company had $181.6 million of cash and restricted cash on its consolidated balance sheet and available borrowings of $122.0 million under our $150.0 million Variable Funding Notes and our $75.0 million revolving bank credit facility.
We generally reinvest available The Company continually assesses the optimal sources and uses of cash flows from operationsfor our business. Since closing the Del Taco acquisition, we have undertaken a process to develop new restaurants or enhance existing restaurants, to reduce debt, to repurchase sharesreview our balance sheet for any undervalued assets, and pursue opportunities for capital sources, including the sale of our common stock,owned Jack in the Box properties, and to pay cash dividends. Our cash requirements consist principally of:
working capital;
capital expendituresrefranchising, primarily for new restaurant construction and restaurant renovations;
income tax payments;
debt service requirements; and
obligations related to our benefit plans.Del Taco in the near term.
Based upon current levels of operations and anticipated growth, we expect that cash flows from operations, combined with otherour securitized financing alternatives in place or available,facility and revolving credit facility, will be sufficient to meet our capital expenditure, working capital and debt service requirements for at least the next twelve months and the foreseeable future.
As is common in the restaurant industry, we maintain relatively low levels of accounts receivable and inventories, and our vendors grant trade credit for purchases such as food and supplies. We also continually invest in our business through the addition of new units and refurbishment of existing units, which are reflected as long-term assets and not as part of working capital. As a result, we may at times maintain current liabilities in excess of current assets, which results in a working capital deficit.
Cash Flows
The table below summarizes our cash flows from continuing operations (in thousands):
 Sixteen Weeks Ended
 January 22,
2023		January 23,
2022
Total cash provided by (used in):
Operating activities$62,472 $34,051 
Investing activities15,684 (6,837)
Financing activities(32,578)(12,316)
Net cash flows$45,578 $14,898 
 Sixteen Weeks Ended
 January 21, 2018 January 22, 2017
Total cash provided by (used in):   
Operating activities$53,730
 $69,798
Investing activities(1,818) (13,183)
Financing activities(54,917) (67,880)
Net cash flows$(3,005) $(11,265)
Operating Activities.Activities. Operating cash flows in 2018 decreased $16.1increased $28.4 million compared with a year ago, primarily due to a favorable change in working capital of $22.7 million as a result of the timing of Octoberminimum rent collections, lower bonus payments and timing of $15.4 million, and a decrease in earnings from continuing operations in 2018.media payments, partially offset by timing of minimum rent payments.
Pension and Postretirement Contributions post-retirement contributions — Our policy is to fund our pension plans at or above the minimum required by law. As of January 1, 2017,2022, the date of our last actuarial funding valuation, there was no minimum contribution funding requirement for our qualified pension plan. We continue to evaluate contributions to our Qualified Plan based on changes in pension assets as a result of asset performance in the current market and the economic environment. We do not anticipate making any contributions to our Qualified Plan in fiscal 2018. Year-to-date 2018,In 2023, we contributed $1.7 million to our non-qualified pension plan and postretirementpost-retirement plans.

Investing Activities. Cash used inflows from investing activities decreased $11.4increased by $22.5 million compared with a year ago, primarily due to $14.7 million inhigher proceeds from the sale of 22 company-operatedproperty and equipment of $19.9 million, which resulted from the sale of Jack in the Box restaurantsrestaurant properties to franchisees and $10.0 million received in 2018, which includes $9.1 million in collections of notes receivable issued in connection with the 2018 sales, and an additional $2.5 million incurrent year related to a prior year transaction, as well as higher proceeds from the sale and leaseback of assets in 2018. These increases in cash werecompany-operated restaurants of $17.6 million, partially offset by a $7.3 million increase in Qdoba inter-company transfers in 2018.higher purchases of property and equipment of $14.6 million.
Capital Expenditures— The composition of capital expenditures in each period follows (in thousands):
Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Restaurants:
Remodel / refresh programs$3,473 $921 
Restaurant facility expenditures9,046 4,374 
Purchases of assets intended for sale and leaseback3,497 1,877 
Restaurant information technology5,906 968 
21,922 8,140 
Corporate Services:
Information technology1,877 52 
Corporate facilities229 1,209 
2,106 1,261 
Total capital expenditures$24,028 $9,401 
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 Sixteen Weeks Ended
 January 21, 2018 January 22, 2017
Jack in the Box:   
Restaurant facility expenditures$8,554
 $5,128
New restaurants555
 2,000
Other, including information technology657
 410
 9,766
 7,538
Corporate Services:   
Information technology1,017
 1,037
Other, including facility improvements10
 6
 1,027
 1,043
    
Total capital expenditures$10,793
 $8,581
Our capital expenditure program includes, among other things, investments in new locations and equipment, restaurant remodeling, and information technology enhancements. Capital expenditures increased $2.2 million compared to a year ago primarily resulting from a $3.4 million increase in spending related to Jack in the Box facility expenditures, primarily capital maintenance and restaurant innovation, partially offset by a $1.4 million decrease in spending related to building new Jack in the Box restaurants primarily resulting from our refranchising initiative. We expect fiscal 2018 capital expenditures to be approximately $30.0 million to $35.0 million.
Assets Held for Sale and Leaseback— We use sale and leaseback financing to limit the initial cash investment in our restaurants to the cost of the equipment, whenever possible. In 2018, we did not exercise our right of first refusal for any leased properties. During 2017, we exercised our right of first refusal related to one leased property, which we intend to sell and leaseback within 12 months of the balance sheet date. The following table summarizes the cash flow activity related to sale and leaseback transactions in each period (dollars in thousands):
 Sixteen Weeks Ended
 January 21, 2018 January 22, 2017
Number of restaurants sold and leased back2
 1
    
Purchases of assets intended for sale and leaseback$(1,411) $(1,717)
Proceeds from the sale and leaseback of assets$4,949
 $2,466
As of January 21, 2018, we had investments of $10.1 million relating to four restaurant properties that we expect to sell and leaseback during the next 12 months.
Sale of Company-Operated Restaurants— We continuehave 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 in each period (dollars in thousands):
Sixteen Weeks Ended
January 22,
2023		January 23,
2022
Number of Jack in the Box restaurants sold to franchisees5 — 
Number of Del Taco restaurants sold to franchisees16 — 
Total proceeds$17,609 $48 
 Sixteen Weeks Ended
 January 21, 2018 January 22, 2017
Number of restaurants sold to franchisees22
 —
    
Proceeds from the sale of company-operated restaurants$14,675
 $138

In the first quarter of fiscal 2023, proceeds include $0.2 million related to prior year refranchising transactions. Proceeds in 2018the first quarter of fiscal 2022 were received in connection with the extension of franchise and 2017 include additional gainslease agreements from the sale of $1.2 million and $0.1 million, respectively, related to restaurants sold in previousprior years. For additional information, refer to Note 3, Summary of Refranchisings, Franchisee Development and Acquisitions, of the notes to condensed consolidated financial statements.
Financing Activities. Cash flows used in financing activities decreased $13.0increased by $20.3 million in 2018 compared with a year ago, primarily due toas a decrease in cash used to repurchaseresult of share repurchases of $15.0 million.
Repurchases of common stock— The Company repurchased 0.2 million shares of its common stock and proceeds from the issuance of our common stock, partially offset by a net increase in payments under our credit facility.
Credit Facility — Our credit facility consists of (i) a $900.0 million revolving credit agreement and (ii) a $700.0 million term loan. Both the revolving credit agreement and the term loan have maturity dates of March 19, 2019. 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 our net borrowing capacity under the agreement. As of January 21, 2018, we had $625.7 million outstanding under the term loan, borrowings under the revolving credit agreement of $472.4 million, and letters of credit outstanding of $31.4 million.
The interest rate on our credit facility is based on our leverage ratio and can range from the London Interbank Offered Rate (“LIBOR”) plus 1.25% to 2.25% with a 0% floor on LIBOR. The current interest rate is LIBOR plus 2.00%.
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 and dividend payments, and requirements to maintain certain financial ratios as defined in the credit agreement. We were in compliance with all covenants asfirst quarter of January 21, 2018.
Interest Rate Swaps— To reduce our exposure to fluctuating interest rates under our credit facility, we consider interest rate swaps. In April 2014, we entered into nine forward-starting interest rate swap agreements that effectively converted $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 converted an additional $200.0 million of our 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 5, Derivative Instruments, of the notes to our condensed consolidated financial statements and Item 3, Quantitative and Qualitative Disclosures About Market Risk, of this report.
Repurchases of Common Stock— We have not repurchased any common shares during 2018. In 2017 we repurchased 1.0 million common shares atfiscal 2023 for an aggregate cost of $108.1$15.0 million. As of January 21, 2018,22, 2023, there was approximately $181.0$160.0 million remaining under Board-authorized stock-buybackshare repurchase programs authorized by the Board of Directors which expire in November 2018. In our condensed consolidated statement of cash flows for 2017, repurchases of common stock includes $7.2 million related to repurchase transactions traded in the prior fiscal year that settled in 2017.2023.
Dividends — During 2018,the first quarter of 2023, the Board of Directors declared a cash dividend of $0.40$0.44 per common share totaling $11.8$9.2 million. Future dividendsOn February 24, 2023, the Board of Directors declared a cash dividend of $0.44 per common share, to be paid on March 28, 2023, to shareholders of record as of the close of business on March 15, 2023.
Securitized Refinancing Transaction —On February 11, 2022, the Company completed the sale of $550.0 million of its Series 2022-1 3.445% Fixed Rate Senior Secured Notes, Class A-2-I (the “Class A-2-I Notes”) and $550.0 million of its Series 2022-1 4.136% Fixed Rate Senior Secured Notes, Class A-2-II (the “Class A-2-II Notes” and, together with the Class A-2-I Notes, the “2022 Notes”). Interest payments on the 2022 Notes are payable on a quarterly basis. The anticipated repayment dates of the 2022 Class A-2-I Notes and the Class A-2-II Notes will be February 2027 and February 2032, respectively, unless earlier prepaid to the extent permitted under the indenture that governs the 2022 Notes. The anticipated repayment dates of the existing 2019-1 Class A-2-II Notes and the Class A-2-III Notes are August 2026 and August 2029, respectively.
The Company also entered into a revolving financing facility of Series 2022-1 Variable Funding Senior Secured Notes (the “Variable Funding Notes”), which permits borrowings up to a maximum of $150.0 million, subject to certain borrowing conditions, a portion of which may be used to issue letters of credit. As of January 22, 2023, we had outstanding borrowings of $50.0 million and available borrowing capacity of $60.0 million under our Variable Funding Notes, net of letters of credits issued of $40.0 million.
The 2022 Notes were issued in a privately placed securitization transaction pursuant to which certain of the Company’s revenue-generating assets, consisting principally of franchise-related agreements, real estate assets, and intellectual property and license agreements for the use of intellectual property, are held by the Master Issuer and certain other limited-purpose, bankruptcy remote, wholly owned indirect subsidiaries of the Company that act as Guarantors of the Notes and that have pledged substantially all of their assets, excluding certain real estate assets and subject to certain limitations, to secure the Notes. The 2022 Notes are subject to approvalthe same covenants and restrictions as the Series 2019-1 Notes.
The quarterly principal payment on the Class A-2 Notes may be suspended when the specified leverage ratio, which is a measure of outstanding debt to earnings before interest, taxes, depreciation, and amortization, adjusted for certain items (as defined in the Indenture), is less than or equal to 5.0x. Exceeding the leverage ratio of 5.0x does not violate any covenant related to the Class A-2 Notes. Subsequent to closing the issuance of the 2022 Notes, the Company has had a leverage ratio of greater than 5.0x and, accordingly, the Company resumed making the scheduled amortization payments on its 2022 Notes and Series 2019-1 Notes beginning in the second quarter of 2022.
Restricted cash — In accordance with the terms of the Indenture, certain cash accounts have been established with the Indenture trustee for the benefit of the note holders and are restricted in their use. As of January 22, 2023, the Company had restricted cash of $27.8 million, which primarily represented cash collections and cash reserves held by the trustee to be used for payments of interest and commitment fees required for the Class A-1 and A-2 Notes.
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Covenants and restrictions— The Notes are subject to a series of covenants and restrictions customary for transactions of this type, including (i) that the Master Issuer maintains specified reserve accounts to be used to make required payments in respect of the Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, including specified make-whole payments in the case of the Class A-2 Notes under certain circumstances, (iii) certain indemnification payments in the event, among other things, the assets pledged as collateral for the Notes are in stated ways defective or ineffective and (iv) covenants relating to recordkeeping, access to information and similar matters. The Notes are also subject to customary rapid amortization events provided for in the Indenture, including events tied to failure to maintain stated debt service coverage ratios, the sum of gross sales for specified restaurants being below certain levels on certain measurement dates, certain manager termination events, an event of default, and the failure to repay or refinance the Class A-2 Notes on the applicable scheduled maturity date. The Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal, or other amounts due on or with respect to the Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective, and certain judgments. As of January 22, 2023, we were in compliance with all of our Boarddebt covenant requirements and were not subject to any rapid amortization events.
Revolving credit facility — In connection with the Del Taco acquisition, Del Taco’s existing debt of Directors.
Off-Balance Sheet Arrangements
We have$115.2 million related to a Syndicated Credit Facility dated August 5, 2015, was repaid and extinguished on the Closing Date. On the Closing Date, Del Taco entered into certain off-balance sheet contractual obligationsa new syndicated credit facility with an aggregate principal amount of up to $75.0 million, maturing on March 7, 2023. The revolving credit facility, as amended, includes a limit of $20.0 million for letters of credit. As of January 22, 2023, we had no outstanding borrowings and commitments inavailable borrowing capacity of $61.9 million under the ordinary coursefacility, net of business, which are recognized in our condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles. There has been no material change in these arrangements as disclosed in our Management’s Discussion and Analysisletters of Financial Condition and Resultscredit of Operations included in our Annual Report on Form 10-K for the fiscal year ended October 1, 2017. We are not a party to any other off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, results of operations, liquidity, capital expenditures or capital resources.$13.1 million.

DISCUSSION OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Critical accounting policies and estimates are those that we believe are most important for the portrayal of the Company’s financial condition and results, and that require management’s most subjective and complex judgments. Judgments and uncertainties regarding the application of these policies may result in materially different amounts being reported under various conditions or using different assumptions. There have been no material changes to the critical accounting policies and estimates previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended October 1, 2017.2, 2022.

NEW ACCOUNTING PRONOUNCEMENTS
Refer to Note 1, Basis of Presentation, of the notes to condensed consolidated financial statements.

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CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of the federal securities laws.laws, including further impacts that COVID-19 pandemic may have on our future operations. Any statements contained herein that are not historical facts may be deemed to be forward-looking statements. Forward-looking statements may be identified by words such as “anticipate,” “assume,” “believe,” “estimate,” “expect,” “forecast,” “goals,” “guidance,” “intend,” “plan,” “project,” “may,” “will,” “would”, “should” and similar expressions. These statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate. These estimates and assumptions involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. Factors that may cause our actual results to differ materially from any forward-looking statements include, but are not limited to:

•The COVID-19 pandemic has disrupted and may continue to disrupt our business, which has affected and could continue to materially affect our operations, financial condition, and results of operations for an extended period of time.
•Changes in the availability of and the cost of labor could adversely affect our business.
•Changes in consumer confidence and declines in general economic conditions could negatively impact our financial results.
We face significant competition in the food service industry and our inability to compete may adversely affect our business.
Changes in demographic trends and in customer tastes and preferences could cause sales to decline.
•Increases in food and commodity costs could decrease our profit margins or result in a modified menu, which could adversely affect our financial results.
•Failure to receive scheduled deliveries of high qualityhigh-quality food ingredients and other supplies could harm our operations.operations and reputation.
•Inability to attract, train and retain top-performing personnel could adversely impact our financial results or business.
•Our business could be adversely affected by increased labor costs.
•Unionization activities or labor disputes may disrupt our operations and affect our profitability.
•Our insurance may not provide adequate levels of coverage against claims.
•We face significant competition in the food service industry and our inability to compete may adversely affect our business.
•Changes in demographic trends and in customer tastes and preferences could cause sales and the royalties we receive from franchisees to decline.
•Negative publicity relating to our business or industry could adversely impact our reputation.
•We may not have the same resources as our competitors for marketing, advertising and promotion.
•We may be adversely impacted by severe weather conditions, natural disasters, terrorist acts or civil unrest that could result in property damage, injury to employees and staff, and lost restaurant sales.
•Food safety and food-borne illness concerns may have an adverse effect on our business by reducing demand and increasing costs.
•We may not achieve our development goals.
•Our business and Del Taco’s business may not be integrated successfully, or such integration may be more difficult, time consuming, or costly than expected. Operating costs, customer loss, and business disruptions, including difficulties maintaining relationships with employees, customers, suppliers or vendors, may be greater than expected.
•Our highly franchised business model presents a number of risks, and the failure of our franchisees to operate successful and profitable restaurants could negatively impact our business.
•We are subject to financial and regulatory risks associated with our owned and leased properties and real estate development projects.
•We have a limited number of suppliers for our major products and rely on a distribution network with a limited number of distribution partners for the majority of our national distribution program in the United States.program. If our suppliers or distributors are unable to fulfill their obligations under their contracts, it could harm our operations.
Food safety•Increasing regulatory and food-borne illness concerns may have an adverse effect on our business by reducing demand and increasing costs.
Negative publicity relating to our business or industry could adversely impact our reputation.
Our business could be adversely affected by increased labor costs or difficulties in finding and retaining top-performing personnel.
We may not have the same resources as our competitors for advertising and promotion.
We may be adversely impacted by severe weather conditions, natural disasters, terrorist acts or civil unrest that could result in property damage, injury to employees and staff, and lost restaurant sales.
Our business is subject to seasonal fluctuations.
We may not achieve our development goals.
The failure of our franchisees to operate successful and profitable restaurants could negatively impact our business.
We are subject to land risks and regulations with respect to our owned and leased properties and real estate development projects.
Estimated values of our property, fixtures, and equipment or operating results that are lower than our current estimates at certain restaurant locations may cause us to incur impairment charges on certain long-lived assets; such chargeslegal complexity may adversely affect our results of operations.
Our tax provision may fluctuate due to changes in expected earnings.
We may incur costs as a result of certain restructuring activities which may negatively impactrestaurant operations and our financial results.
We may experience cyber security breaches or other similar incidents.
We may not be able to adequately protect our intellectual property, which could harm the value of our brands and adversely affect our business.
We adjust our capital structure from time to time and we may increase our debt leverage which would make us more sensitive to the effects of economic downturns.
The trading volatility and price of our common stock may be affected by many factors.
Changes in accounting standards may negatively impact our results of operations.
We may be subject to claims or litigation that are costly and could result in our payment of substantial damages or settlement costs.
Unionization activities or labor disputes may disrupt our operations and affect our profitability.
Our insurance may not provide adequate levels of coverage against claims.

Our bylaws contain an exclusive forum provision that may discourage lawsuits against us and our directors and officers.
•Governmental regulation may adversely affect our existing and future operations and results, including by harming our ability to profitably operate our restaurants.
•The proliferation of federal, state, and local regulations increases our compliance risks, which in turn could adversely affect our business.
Changes to healthcare laws in the United States or the repeal of existing healthcare laws may negatively impact our financial results in future periods.
•Legislation and regulations regarding our products and ingredients, including the nutritional content of our products, could impact customer preferences and negatively impact our financial results.
Failure
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•We may not be able to obtainadequately protect our intellectual property, which could harm the value of our brand and adversely affect our business.
•We are subject to increasing legal complexity and may be subject to claims or lawsuits that are costly to defend and could result in our payment of substantial damages or settlement costs.
•If we fail to maintain required licensesan effective system of internal controls, we may not be able to accurately determine our financial results or prevent fraud. As a result, the Company’s stockholders could lose confidence in our financial results, which would harm our business and permitsthe value of the Company’s common shares.
•Changes in tax laws, interpretations of existing tax law, or adverse determinations by tax authorities could adversely affect our income tax expense and income tax payments.
•We may be subject to risk associated with disagreements with key stakeholders, such as franchisees.
•Actions of activist stockholders could cause us to incur substantial costs, divert management’s attention and resources, and have an adverse effect on our business.
•We are subject to the risk of cybersecurity breaches, intrusions, data loss, or other data security incidents.
•We are subject to risks associated with our increasing dependence on digital commerce platforms and technologies to maintain and grow sales, and we cannot predict the impact that these digital commerce platforms and technologies, other new or improved technologies or alternative methods of delivery may have on consumer behavior and our financial results.
•We are dependent on information technology and digital service providers and any material failure, misuse or interruption of our computer systems, supporting infrastructure, consumer-facing digital capabilities or social media platforms could adversely affect our business.
•The securitized debt instruments issued by certain of our wholly-owned subsidiaries have restrictive terms, and any failure to comply with food control regulationssuch terms could lead toresult in default, which could harm the lossvalue of our food service licensesbrand and thereby, harmadversely affect our business.
Delay•We have a significant amount of debt outstanding. Such indebtedness, along with the other contractual commitments of our Company or its subsidiaries, could adversely affect our business, financial condition and results of operations, as well as the ability of certain of our subsidiaries to meet debt payment obligations.
•The securitization transaction documents impose certain restrictions on our activities or the activities of our subsidiaries, and the failure in closing the pending sale of Qdoba.to comply with such restrictions could adversely affect our business.


These and other factors are identified and described in more detail in our filings with the Securities and Exchange Commission, including, but not limited to: the “Discussion of Critical Accounting Estimates,” and other sections in this Form 10-Q and the “Risk Factors” section of our most recent Annual Report on Form 10-K for the fiscal year ended October 1, 20172, 2022 (“Form 10-K”). These documents may be read free of charge on the SEC’s website at www.sec.gov. Potential investors are urged to consider these factors, more fully described in our Form 10-K, carefully in evaluating any forward-looking statements, and are cautioned not to place undue reliance on the forward-looking statements. All forward-looking statements are made only as of the date issued, and we do not undertake any obligation to update any forward-looking statements.



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ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our primary exposure to risks relating to our financial instruments isThere have been no material changes in interest rates. Our credit facility is comprised of a revolving credit facilityour quantitative and a term loan, bearing interest at a rate equal to the prime rate or LIBOR plus an applicable margin basedqualitative market risks set forth in Part II, Item 7A “Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on a financial leverage ratio. As of January 21, 2018, the applicable marginForm 10-K for the LIBOR-based revolving loans and term loan was set at 2.00%.fiscal year ended October 2, 2022.
We use interest rate swap agreements to reduce exposure to interest rate fluctuations. In April 2014, we entered into nine forward-starting interest rate swap agreements that effectively converted $300.0 million of our variable rate borrowings to a fixed-rate basis from October 2014 through October 2018. Additionally, in June 2015, we entered into eleven forward-starting interest rate swap agreements that effectively converted an additional $200.0 million of our variable rate borrowings to a fixed-rate from October 2015 through October 2018, and $500.0 million from October 2018 through October 2022. Based on the applicable margin in effect as of January 21, 2018, these twenty interest rate swaps would yield average fixed rates of 4.41%, 4.62%, 4.89%, 5.07%, 5.17% in years 2018 through 2022, respectively. For additional information related to our interest rate swaps, refer to Note 5, Derivative Instruments, of the notes to condensed consolidated financial statements.
We are also exposed to the impact of commodity and utility price fluctuations. Many of the ingredients we use are commodities or ingredients that are affected by the price of other commodities, weather, seasonality, production, availability and various other factors outside our control. In order to minimize the impact of fluctuations in price and availability, we monitor the primary commodities we purchase and may enter into purchasing contracts and pricing arrangements when considered to be advantageous. However, certain commodities remain subject to price fluctuations. We are exposed to the impact of utility price fluctuations related to unpredictable factors such as weather and various other market conditions outside our control. Our ability to recover increased costs for commodities and utilities through higher prices is limited by the competitive environment in which we operate.
ITEM 4.        CONTROLS AND PROCEDURES
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
Based on an evaluation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended), as of the end of the Company’s quarter ended January 21, 2018,22, 2023, the Company’s Chief Executive Officer and Chief Financial Officer (its principal executive officer and principal financial officer, respectively) have concluded that the Company’s disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended January 21, 201822, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.


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PART II. OTHER INFORMATION
There is no information required to be reported for any items under Part II, except as follows:


ITEM 1.        LEGAL PROCEEDINGS
See Note 12, Contingencies14, Commitments and Legal MattersContingencies, of the notes to the condensed consolidated financial statements for a discussion of our contingencies and legal matters.


ITEM 1A.    RISK FACTORS
When evaluating our business and our prospects, you should consider the risks and uncertainties described under Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended October 1, 2017,2, 2022, which we filed with the SEC on November 29, 2017.22, 2022, as updated in this Item 1A. You should also consider the risks and uncertainties discussed under the heading “Cautionary Statements Regarding Forward-Looking Statements” in Item 2 of this Quarterly Report on Form 10-Q. You should also refer to the other information set forth in this Quarterly Report and in our Annual Report on Form 10-K for the fiscal year ended October 1, 2017,2, 2022, including our financial statements and the related notes. There have been no material changes from the risk factors as previously disclosed in our Annual Report on Form 10-K for the fiscal year ended October 1, 2017. These risks and uncertainties are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently consider immaterial may also impair our business operations. If any of the risks or uncertainties actually occurs,occur, our business and financial results could be harmed. In that case, the market price of our common stock could decline.


ITEM 2.        UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Our credit agreement provides for the potential payment of cash dividends and stock repurchases, subject to certain limitations based on our leverage ratio as defined in our credit agreement.
Stock Repurchases— We have notIn the first quarter of 2023, we repurchased any0.2 million shares of our common stock in 2018.for an aggregate cost of $15.0 million. As of January 21, 2018, there was approximately $181.022, 2023, this leaves $160.0 million remaining under stock-buybackshare repurchase programs whichauthorized by the Board of Directors that expire in November 2018.2023.

(a)
Total number of shares purchased		(b)
Average price paid per share		(c)
Total number of shares purchased as part of publicly announced programs		(d)
Maximum dollar value that may yet be purchased under these programs
(in thousands)
$175,000 
October 3, 2022 - October 30, 2022— $— — $175,000 
October 31, 2022 - November 27, 2022— $— — $175,000 
November 28, 2022 - December 25, 2022220,650 $67.98 220,650 $160,000 
December 26, 2023 - January 22, 2023— $— — $160,000 
Total220,650 220,650 

ITEM 3.        DEFAULTS UPONOF SENIOR SECURITIES
None.

ITEM 4.        MINE SAFETY DISCLOSURES
Not applicable.

ITEM 5.        OTHER INFORMATION
Item 5.03.    None.

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ITEM 6.        EXHIBITS
NumberDescriptionFormFiled with SEC
3.110.2.28*8-K10-Q9/24/2007Filed herewith
3.231.110-QFiled herewith
3.3
Stock Purchase Agreement by and among Jack in the Box Inc., as the Seller, Qdoba Restaurant Corporation, as the Company, and Quidditch Acquisition, Inc., as the Buyer, dated as of December 19, 2017
8-K12/20/2017
10.2.6
Jack in the Box Inc. Chief Financial Officer Offer Letter, dated January 11, 2018

8-K1/16/2018
10.2.7
Jack in the Box Inc. Vice President, Chief Operating Officer Offer Letter, dated January 22, 2018
8-K1/26/2018
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
—Filed herewith
31.2—Filed herewith
32.1—Filed herewith
32.2—Filed herewith
101.INSXBRLiXBRL Instance Document
101.SCHXBRLiXBRL Taxonomy Extension Schema Document
101.CALXBRLiXBRL Taxonomy Extension Calculation Linkbase Document
101.DEFXBRLiXBRL Taxonomy Extension Definition Linkbase Document
101.LABXBRLiXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRLiXBRL Taxonomy Extension Presentation Linkbase Document
104Cover Page Interactive Data File formatted in iXBRL
*Management contract or compensatory plan.plan

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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
JACK IN THE BOX INC.
JACK IN THE BOX INC.
By:
/S/    JERRY P. REBEL        DAWN HOOPER
Jerry P. RebelDawn Hooper
ExecutiveSenior Vice President, and Chief Financial OfficerController (principal financial officer)

(Duly Authorized Signatory)
Date: February 22, 2018

March 1, 2023
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