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 endedApril 17, 201115, 2012
Commission File Number:1-9390
 ____________________________________________________ 
JACK IN THE BOX INC.
(Exact name of registrant as specified in its charter)
 ____________________________________________________
DELAWARE 95-2698708
(State of Incorporation) (I.R.S. Employer Identification No.)
   
9330 BALBOA AVENUE, SAN DIEGO, CA 92123
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code(858) 571-2121
  ____________________________________________________
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.
Yesþ    Noo¨
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).
Yesþ    Noo¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filerþþAccelerated filero¨
Non-accelerated filero
Smaller reporting company¨o
(Do  (Do not check if a smaller reporting company)Smaller reporting company¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yeso¨    Noþ
As of the close of business May 13, 2011, 49,697,53711, 2012, 44,219,044 shares of the registrant’s common stock were outstanding.



JACK IN THE BOX INC. AND SUBSIDIARIES
INDEX

2



2


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

JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
(Unaudited)
         
  April 17,  October 3, 
  2011  2010 
 
ASSETS        
Current assets:        
Cash and cash equivalents $14,712  $10,607 
Accounts and other receivables, net  60,061   81,150 
Inventories  36,830   37,391 
Prepaid expenses  30,223   36,100 
Deferred income taxes  46,328   46,185 
Assets held for sale  51,349   59,897 
Other current assets  3,882   3,592 
       
Total current assets  243,385   274,922 
       
Property and equipment, at cost  1,551,432   1,562,729 
Less accumulated depreciation and amortization  (685,614)  (684,690)
       
Property and equipment, net  865,818   878,039 
Other assets, net  293,992   254,131 
       
  $1,403,195  $1,407,092 
       
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Current maturities of long-term debt $18,695  $13,781 
Accounts payable  68,900   101,216 
Accrued liabilities  173,471   168,186 
       
Total current liabilities  261,066   283,183 
       
Long-term debt, net of current maturities  388,672   352,630 
Other long-term liabilities  255,377   250,440 
Deferred income taxes  41   376 
Stockholders’ equity:        
Preferred stock $0.01 par value, 15,000,000 shares authorized, none issued      
Common stock $0.01 par value, 175,000,000 shares authorized, 74,812,157 and 74,461,632 issued, respectively  748   745 
Capital in excess of par value  196,668   187,544 
Retained earnings  1,021,623   982,420 
Accumulated other comprehensive loss, net  (74,541)  (78,787)
Treasury stock, at cost, 25,116,010 and 21,640,400 shares, respectively  (646,459)  (571,459)
       
Total stockholders’ equity  498,039   520,463 
       
  $1,403,195  $1,407,092 
       
 April 15,
2012
 October 2,
2011
ASSETS   
Current assets:   
Cash and cash equivalents$11,308
 $11,424
Accounts and other receivables, net89,824
 86,213
Inventories33,718
 38,931
Prepaid expenses24,018
 18,737
Deferred income taxes44,914
 45,520
Assets held for sale and leaseback62,511
 51,793
Other current assets1,139
 1,793
Total current assets267,432
 254,411
Property and equipment, at cost1,527,637
 1,518,799
Less accumulated depreciation and amortization(694,032) (663,373)
Property and equipment, net833,605
 855,426
Goodwill134,503
 105,872
Other assets, net225,268
 216,613
 $1,460,808
 $1,432,322
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Current maturities of long-term debt$21,849
 $21,148
Accounts payable67,131
 94,348
Accrued liabilities169,231
 167,487
Total current liabilities258,211
 282,983
Long-term debt, net of current maturities460,683
 447,350
Other long-term liabilities293,642
 290,723
Deferred income taxes5,310
 5,310
Stockholders’ equity:   
Preferred stock $0.01 par value, 15,000,000 shares authorized, none issued
 
Common stock $0.01 par value, 175,000,000 shares authorized, 75,280,508 and 74,992,487 issued, respectively753
 750
Capital in excess of par value208,668
 202,684
Retained earnings1,096,602
 1,063,020
Accumulated other comprehensive loss, net(91,602) (95,940)
Treasury stock, at cost, 31,072,631 and 30,746,099 shares, respectively(771,459) (764,558)
Total stockholders’ equity442,962
 405,956
 $1,460,808
 $1,432,322
See accompanying notes to condensed consolidated financial statements.


3



JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
                 
  Quarter  Year-to-Date 
  April 17,  April 11,  April 17,  April 11, 
  2011  2010  2011  2010 
Revenues:                
Company restaurant sales $321,242  $388,301  $758,152  $900,395 
Distribution sales  121,362   90,762   268,049   195,380 
Franchise revenues  62,531   50,643   143,652   115,249 
             
   505,135   529,706   1,169,853   1,211,024 
             
Operating costs and expenses, net:                
Company restaurant costs:                
Food and packaging  107,275   122,316   249,130   284,643 
Payroll and employee benefits  97,998   117,133   232,514   273,485 
Occupancy and other  76,393   89,888   181,802   210,041 
             
Total company restaurant costs  281,666   329,337   663,446   768,169 
Distribution costs  121,837   90,910   269,178   196,279 
Franchise costs  31,328   23,102   69,680   52,512 
Selling, general and administrative expenses  52,619   54,742   119,504   125,419 
Impairment and other charges, net  4,494   3,452   8,090   6,131 
Gains on the sale of company-operated restaurants  (878)  (2,987)  (28,750)  (12,367)
             
   491,066   498,556   1,101,148   1,136,143 
             
                 
Earnings from operations  14,069   31,150   68,705   74,881 
                 
Interest expense, net  3,945   3,873   8,556   9,308 
             
                 
Earnings before income taxes  10,124   27,277   60,149   65,573 
                 
Income taxes  3,322   9,597   20,946   23,645 
             
                 
Net earnings $6,802  $17,680  $39,203  $41,928 
             
                 
Net earnings per share:                
Basic $0.14  $0.32  $0.76  $0.75 
Diluted $0.13  $0.32  $0.75  $0.74 
                 
Weighted-average shares outstanding:                
Basic  50,183   54,972   51,265   55,711 
Diluted  50,984   55,797   52,069   56,499 
 Quarter Year-to-Date
 April 15,
2012
 April 17,
2011
 April 15,
2012
 April 17,
2011
Revenues:       
Company restaurant sales$290,803
 $321,242
 $654,905
 $758,152
Distribution sales140,146
 121,362
 334,940
 268,049
Franchise revenues75,681
 62,531
 169,500
 143,652
 506,630
 505,135
 1,159,345
 1,169,853
Operating costs and expenses, net:       
Company restaurant costs:       
Food and packaging94,910
 107,275
 217,017
 249,130
Payroll and employee benefits85,257
 97,998
 193,069
 232,514
Occupancy and other65,493
 76,393
 150,435
 181,802
Total company restaurant costs245,660
 281,666
 560,521
 663,446
Distribution costs140,146
 121,837
 334,940
 269,178
Franchise costs37,996
 31,328
 87,855
 69,680
Selling, general and administrative expenses54,497
 52,619
 120,214
 119,504
Impairment and other charges, net5,074
 4,494
 9,425
 8,090
Gains on the sale of company-operated restaurants(14,078) (878) (15,200) (28,750)
 469,295
 491,066
 1,097,755
 1,101,148
Earnings from operations37,335
 14,069
 61,590
 68,705
Interest expense, net4,534
 3,945
 10,591
 8,556
Earnings before income taxes32,801
 10,124
 50,999
 60,149
Income taxes11,169
 3,322
 17,417
 20,946
Net earnings$21,632
 $6,802
 $33,582
 $39,203
Net earnings per share:       
Basic$0.49
 $0.14
 $0.77
 $0.76
Diluted$0.48
 $0.13
 $0.75
 $0.75
Weighted-average shares outstanding:       
Basic43,937
 50,183
 43,896
 51,265
Diluted44,911
 50,984
 44,775
 52,069
See accompanying notes to condensed consolidated financial statements.


4



JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
         
  Year-to-Date 
  April 17,  April 11, 
  2011  2010 
 
Cash flows from operating activities:        
Net earnings $39,203  $41,928 
Adjustments to reconcile net earnings to net cash provided by operating activities:        
Depreciation and amortization  51,817   54,152 
Deferred finance cost amortization  1,350   724 
Deferred income taxes  (4,965)  (3,267)
Share-based compensation expense  4,972   5,500 
Pension and postretirement expense  12,840   15,661 
Gains on cash surrender value of company-owned life insurance  (7,841)  (6,026)
Gains on the sale of company-operated restaurants  (28,750)  (12,367)
Losses on the disposition of property and equipment, net  5,424   2,360 
Impairment charges  1,167   1,503 
Changes in assets and liabilities, excluding acquisitions and dispositions:        
Accounts and other receivables  (2,359)  (11,811)
Inventories  561   (93)
Prepaid expenses and other current assets  6,848   (19,833)
Accounts payable  (2,851)  (3,309)
Pension and postretirement contributions  (2,472)  (11,824)
Other  6,900   (26,652)
       
Cash flows provided by operating activities from continuing operations  81,844   26,646 
Cash flows used in operating activities from discontinued operations     (2,172)
       
Cash flows provided by operating activities  81,844   24,474 
       
         
Cash flows from investing activities:        
Purchases of property and equipment  (74,129)  (42,632)
Proceeds from the sale of company-operated restaurants  49,588   19,093 
Proceeds from assets held for sale and leaseback, net  6,669   8,889 
Collections on notes receivable  19,062   7,675 
Acquisition of franchise-operated restaurants  (21,477)   
Other  (6,618)  1,031 
       
Cash flows used in investing activities  (26,905)  (5,944)
       
         
Cash flows from financing activities:        
Borrowings on revolving credit facility  396,000   313,000 
Repayments of borrowings on revolving credit facility  (349,000)  (293,000)
Principal repayments on debt  (5,731)  (46,031)
Debt issuance costs  (989)   
Proceeds from issuance of common stock  3,376   2,445 
Repurchases of common stock  (75,000)  (50,000)
Excess tax benefits from share-based compensation arrangements  640   690 
Change in book overdraft  (20,130)  13,825 
       
Cash flows used in financing activities  (50,834)  (59,071)
       
         
Net increase (decrease) in cash and cash equivalents  4,105   (40,541)
Cash and cash equivalents at beginning of period  10,607   53,002 
       
Cash and cash equivalents at end of period $14,712  $12,461 
       
 Year-to-Date
 April 15,
2012
 April 17,
2011
Cash flows from operating activities:   
Net earnings$33,582
 $39,203
Adjustments to reconcile net earnings to net cash provided by operating activities:   
Depreciation and amortization51,874
 51,817
Deferred finance cost amortization1,431
 1,350
Deferred income taxes(2,560) (4,965)
Share-based compensation expense3,562
 4,972
Pension and postretirement expense14,372
 12,840
Gains on cash surrender value of company-owned life insurance(8,427) (7,841)
Gains on the sale of company-operated restaurants(15,200) (28,750)
Losses on the disposition of property and equipment, net2,858
 5,424
Impairment charges2,109
 1,167
Changes in assets and liabilities, excluding acquisitions and dispositions:   
Accounts and other receivables(8,680) (2,359)
Inventories5,213
 561
Prepaid expenses and other current assets(4,627) 6,848
Accounts payable(6,178) (2,851)
Accrued liabilities6,237
 11,987
Pension and postretirement contributions(6,573) (2,472)
Other595
 (5,087)
Cash flows provided by operating activities69,588
 81,844
Cash flows from investing activities:   
Purchases of property and equipment(40,609) (74,129)
Proceeds from (purchases of) assets held for sale and leaseback, net(12,688) 6,669
Proceeds from the sale of company-operated restaurants21,964
 49,588
Collections on notes receivable9,669
 19,062
Disbursements for loans to franchisees(3,977) (6,661)
Acquisitions of franchise-operated restaurants(39,195) (21,477)
Other244
 43
Cash flows used in investing activities(64,592) (26,905)
Cash flows from financing activities:   
Borrowings on revolving credit facility333,020
 396,000
Repayments of borrowings on revolving credit facility(308,324) (349,000)
Principal repayments on debt(10,662) (5,731)
Debt issuance costs(741) (989)
Proceeds from issuance of common stock2,015
 3,376
Repurchases of common stock(6,901) (75,000)
Excess tax benefits from share-based compensation arrangements287
 640
Change in book overdraft(13,806) (20,130)
Cash flows used in financing activities(5,112) (50,834)
Net increase (decrease) in cash and cash equivalents(116) 4,105
Cash and cash equivalents at beginning of period11,424
 10,607
Cash and cash equivalents at end of period$11,308
 $14,712
See accompanying notes to condensed consolidated financial statements.


5



JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1.
1.BASIS OF PRESENTATION
Nature of operations — Founded in 1951, Jack in the Box Inc. (the “Company”) operates and franchises Jack in the Box® quick-service restaurants and Qdoba Mexican Grill® (“Qdoba”) fast-casual restaurants in 44 states. The following table summarizes the number of restaurants as of the end of each period:
 April 15,
2012
 April 17,
2011
Jack in the Box:   
Company-operated601
 848
Franchise1,641
 1,372
Total system2,242
 2,220
Qdoba:   
Company-operated289
 221
Franchise316
 328
Total system605
 549
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 (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). 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.
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 2, 2011. The accounting policies used in preparing these condensed consolidated financial statements are the same as those described in our Form 10-K.
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 where we are deemed the primary beneficiary. All significant intercompany transactions are eliminated. For information related to the variable interest entity included in our condensed consolidated financial statements, refer to Note 11, Variable Interest Entities.
Fiscal year — Our fiscal year is 52 or 53 weeks ending the Sunday closest to September 30. Fiscal years 2012 and 2011 include 52 weeks. Our first quarter includes 16 weeks and all other quarters include 12 weeks. All comparisons between 2012 and 2011 refer to the 12-weeks (“quarter”) and 28-weeks (“year-to-date”) ended April 15, 2012 and April 17, 2011, respectively, unless otherwise indicated.
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.



6


Nature of operations— Founded in 1951, Jack in the Box Inc. (the “Company”) operates and franchises Jack in the Box® quick-service restaurants and Qdoba Mexican Grill® (“Qdoba”) fast-casual restaurants in 45 states. The following table summarizes the number of restaurants:
         
  April 17, April 11,
  2011 2010
Jack in the Box:
        
Company-operated  848   1,153 
Franchised  1,372   1,080 
         
Total system  2,220   2,233 
         
Qdoba:
        
Company-operated  221   160 
Franchised  328   345 
         
Total system  549   505 
         
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 (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). 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.
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 3, 2010. The accounting policies used in preparing these condensed consolidated financial statements are the same as those described in our Form 10-K, with the exception of new accounting pronouncements adopted in fiscal 2011.
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 where we are deemed the primary beneficiary. All significant intercompany transactions are eliminated. For information related to the variable interest entity included in our condensed consolidated financial statements, refer to Note 11,Variable Interest Entities.
Reclassifications and adjustments— Certain prior year amounts in the condensed consolidated financial statements have been reclassified to conform to the fiscal 2011 presentation. At the end of 2010, we separated impairment and other charges, net from selling, general and administrative expenses in our consolidated statements of earnings. We believe the additional detail provided is useful when analyzing our results of operations.
Fiscal year— Our fiscal year is 52 or 53 weeks ending the Sunday closest to September 30. Fiscal year 2011 includes 52 weeks while 2010 includes 53 weeks. Our first quarter includes 16 weeks and all other quarters include 12 weeks, with the exception of the fourth quarter of fiscal 2010, which includes 13 weeks. All comparisons between 2011 and 2010 refer to the twelve weeks (“quarter”) and twenty-eight weeks (“year-to-date”) ended April 17, 2011 and April 11, 2010, respectively, unless otherwise indicated.
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.

6


JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
2.SUMMARY OF REFRANCHISINGS, FRANCHISEEFRANCHISE DEVELOPMENT AND ACQUISITIONS
Refranchisings and franchisee developmentRefranchisings and franchise development — The following is a summary of the number of Jack in the Box restaurants sold to franchisees, the number of restaurants developed by franchisees and the related gains and fees recognized (dollars in thousands):
 Quarter Year-to-Date
 April 15,
2012
 April 17,
2011
 April 15,
2012
 April 17,
2011
Restaurants sold to franchisees37
 26
 37
 114
New restaurants opened by franchisees9
 11
 29
 28
        
Initial franchise fees$1,770
 $1,640
 $2,490
 $5,879
        
Proceeds from the sale of company-operated restaurants (1)$20,715
 $5,505
 $21,964
 $49,588
Net assets sold (primarily property and equipment)(5,754) (4,520) (5,833) (19,872)
Goodwill related to the sale of company-operated restaurants(604) (107) (652) (966)
Other(279) 
 (279) 
Gains on the sale of company-operated restaurants (1)$14,078
 $878
 $15,200
 $28,750
____________________________
(1)
Amounts in 2012 include additional proceeds and gains of $0.9 million in the quarter and $2.1 million year-to-date recognized upon the extension of the number ofunderlying franchise and lease agreements related to restaurants sold and developed by franchisees and the related gains and fees recognized (dollars in thousands):a prior year.
Franchise acquisitions — During fiscal 2012 and 2011, we acquired Qdoba franchise restaurants in select markets where we believe there is continued opportunity for restaurant development. We account for the acquisition of franchised restaurants using the purchase method of accounting for business combinations. The purchase price allocations were based on fair value estimates determined using significant unobservable inputs (Level 3). The goodwill recorded primarily relates to the sales growth potential of the markets acquired. The following table provides detail of the combined allocations in each period (dollars in thousands):
                 
  Quarter  Year-to-Date 
  April 17,  April 11,  April 17,  April 11, 
  2011  2010  2011  2010 
 
Number of restaurants sold to franchisees  26   30   114   53 
Number of new restaurants opened by franchisees  11   7   28   19 
                 
Initial franchise fees $1,640  $1,562  $5,879  $2,975 
                 
Cash $5,505  $7,518  $49,588  $19,093 
Notes receivable           2,730 
             
Total proceeds from the sale of company-operated restaurants  5,505   7,518   49,588   21,823 
Net assets sold (primarily property and equipment)  (4,520)  (4,375)  (19,872)  (9,012)
Goodwill related to the sale of company-operated restaurants  (107)  (156)  (966)  (444)
             
Gains on the sale of company-operated restaurants $878  $2,987  $28,750  $12,367 
             
 Year-to-Date
 April 15, 2012 April 17, 2011
Restaurants acquired from franchisees36
 22
Property and equipment$9,559
 $3,877
Reacquired franchise rights461
 232
Liabilities assumed(108) (71)
Goodwill29,283
 17,439
Total consideration$39,195
 $21,477


7



Franchise acquisitions— During the second quarter, we acquired 20 Qdoba franchise-operated restaurants in the Indianapolis market and two in Northern Florida, consistent with our strategy to opportunistically acquire franchise markets where we believe there is continued opportunity for restaurant development. The purchase price allocations were based on fair value estimates determined using significant unobservable inputs (Level 3). The following table provides detail of the allocations (in thousands):
     
Property and equipment $3,877 
Reacquired franchise rights  232 
Liabilities assumed  (71)
Goodwill  17,439 
    
Total $21,477 
    
The goodwill recorded relates primarily to the Indianapolis transaction and is largely attributable to the growth potential of the market.
3.FAIR VALUE MEASUREMENTS
Financial assets and liabilities— The following table presents the financial assets and liabilities measured at fair value on a recurring basis as of April 17, 2011 (in thousands):
                 
      Fair Value Measurements 
      Quoted Prices in  Significant    
      Active Markets  Other  Significant 
      for Identical  Observable  Unobservable 
      Assets  Inputs  Inputs 
  Total  (Level 1)  (Level 2)  (Level 3) 
 
Interest rate swaps (Note 4) (1) $457  $  $457  $ 
Non-qualified deferred compensation plan (2)  (37,803)  (37,803)      
             
Total assets (liabilities) at fair value $(37,346) $(37,803) $457  $ 
             
Financial assets and liabilities — The following table presents the financial assets and liabilities measured at fair value on a recurring basis at the end of each period (in thousands):
 Total       
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1) (3)
 
Significant
Other
Observable
Inputs
(Level 2) (3)
 
Significant
Unobservable
Inputs
(Level 3)
Fair value measurements as of April 15, 2012:       
Interest rate swaps (Note 4) (1) $(2,604) $
 $(2,604) $
Non-qualified deferred compensation plan (2)(38,107) (38,107) 
 
Total liabilities at fair value$(40,711) $(38,107) $(2,604) $
Fair value measurements as of October 2, 2011:       
Interest rate swaps (Note 4) (1) $(2,682) $
 $(2,682) $
Non-qualified deferred compensation plan (2)(34,288) (34,288) 
 
Total liabilities at fair value$(36,970) $(34,288) $(2,682) $
____________________________
(1)We entered into interest rate swaps to reduce our exposure to rising interest rates on our variable debt. The fair valuevalues of our interest rate swaps isare 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, interest rates and forward yield curves.
(2)We maintain an unfunded defined contribution plan for key executives and other members of management excluded from participation in our qualified savings plan. The fair value of this obligation is based on the closing market prices of the participants’ elected investments.
(3)The fair valuesWe did not have any transfers in or out of each of our long-term debt instruments are based on quoted market values, where available,Level 1 or on the amount of future cash flows associated with each instrument, discounted using our current borrowing rate for similar debt instruments of comparable maturity. The estimated fair values of our term loan and capital lease obligations approximated their carrying values as of April 17, 2011.Level 2.

7


JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)The fair values of each of our long-term debt instruments are based on quoted market values, where available, or on the amount of future cash flows associated with each instrument, discounted using our current borrowing rate for similar debt instruments of comparable maturity. The estimated fair values of our term loan and capital lease obligations approximated their carrying values as of April 15, 2012.
Non-financial assets and liabilities — The Company’s non-financial instruments, which primarily consist of property and equipment, 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 a periodic basis (at least annually for goodwill and semi-annually for property and equipment) 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 of the assets are written down to fair value.
In connection with our property and equipment impairment reviews during the 28-weeks ended April 15, 2012, six Jack in the Box restaurants determined to be underperforming or which we intend to close having a carrying amount of $2.1 million were written down to their implied fair value of $0.3 million, resulting in an impairment charge of $1.8 million. To determine fair value, we used the income approach, which assumes that the future cash flows reflect current market expectations. The future cash flows are generally based on the assumption that the highest and best use of the asset is to sell the store to a franchisee (market participant). These fair value measurements require significant judgment using Level 3 inputs, such as discounted cash flows, which are not observable from the market, directly or indirectly. Refer to Note 5, Impairment, Disposition of Property and Equipment, and Restaurant Closing Costs, for additional information regarding impairment charges.
Non-financial assets and liabilities— The Company’s non-financial instruments, which primarily consist of property and equipment, 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 a periodic basis (at least annually for goodwill and semi-annually for property and equipment) 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 of the assets are written down to fair value. In connection with our impairment review during fiscal 2011, no material fair value adjustments were required. Refer to Note 5,Impairment, Disposition of Property and Equipment, and Restaurant Closing Costs,for additional information regarding impairment charges.
4.DERIVATIVE INSTRUMENTS
Objectives and strategies — We are exposed to interest rate volatility with regard to our variable rate debt. To reduce our exposure to rising interest rates, in August 2010, we entered into two interest rate swap agreements that effectively convert $100.0 million of our variable rate term loan borrowings to a fixed-rate basis from September 2011 through September 2014.

8




Financial position — The following derivative instruments were outstanding as of the end of each period (in thousands):
 April 15, 2012 October 2, 2011
 
Balance
Sheet
Location
 
Fair
Value
 
Balance
Sheet
Location
 
Fair
Value
Derivatives designated as hedging instruments:       
Interest rate swaps (Note 3)
Accrued
liabilities
 $(2,604) 
Accrued
liabilities
 $(2,682)
Total derivatives  $(2,604)   $(2,682)
Financial performance — The following is a summary of the accumulated other comprehensive income (“OCI”) gain or loss activity related to our interest rate swap derivative instruments (in thousands):
 Location of Loss in Income Quarter Year-to-Date
  April 15,
2012
 April 17,
2011
 April 15,
2012
 April 17,
2011
Gain/(loss) recognized in OCI (Note 9)N/A $(214) $(247) $(619) $1,190
Loss reclassified from accumulated OCI into income (Note 9)
Interest
expense, net
 $299
 $
 $697
 $
Amounts reclassified from accumulated OCI into interest expense represent payments made to the counterparty for the effective portions of the interest rate swaps. During the periods presented, our interest rate swaps had no hedge ineffectiveness.

Objectives and strategies— We are exposed to interest rate volatility with regard to our variable rate debt. To reduce our exposure to rising interest rates, in August 2010, we entered into two interest rate swap agreements that will effectively convert $100.0 million of our variable rate term loan borrowings to a fixed-rate basis beginning September 2011 through September 2014. Previously, we held two interest rate swaps that effectively converted $200.0 million of our variable rate term loan borrowings to a fixed-rate basis from March 2007 to April 2010. These agreements have been designated as cash flow hedges under the terms of the Financial Accounting Standards Board (“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 value of the derivatives are not included in net 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 term debt.
We are also exposed to the impact of utility price fluctuations related to unpredictable factors such as weather and various other market conditions outside our control. From time to time, we enter into futures and option contracts to manage these fluctuations. These contracts have not been designated as hedging instruments under the FASB authoritative guidance for derivative instruments and hedging.
Financial position— The following derivative instruments were outstanding as of the end of each period(in thousands):
                 
  April 17, 2011  October 3, 2010 
  Balance      Balance    
  Sheet  Fair  Sheet  Fair 
  Location  Value  Location  Value 
 
Derivatives designated as hedging instruments:                
Interest rate swaps (Note 3) Other current
assets
 $457  Accrued
liabilities
 $(733)
               
Total derivatives     $457      $(733)
               
Financial performance— The following is a summary of the gains or losses recognized on our interest rate swap derivative instruments (Note 9) designated as cash flow hedges(in thousands):
                     
  Location of  Quarter  Year-to-Date 
  Loss  April 17,  April 11,  April 17,  April 11, 
  in Income  2011  2010  2011  2010 
 
Gain/(loss) recognized in OCI  N/A  $(247) $(2) $1,190  $(104)
 
Gain/(loss) reclassified from accumulated OCI into income Interest
expense, net
 $  $(1,871) $  $(4,719)
During 2011 and 2010, our interest rate swaps had no hedge ineffectiveness.
The following is a summary of the gains or losses recognized in income related to our derivative instruments not designated as hedging instruments(in thousands):
                     
  Location of  Quarter  Year-to-Date 
  Loss  April 17,  April 11,  April 17,  April 11, 
  in Income  2011  2010  2011  2010 
 
Natural gas contracts Occupancy and other $  $(40) $  $(99)

8


JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
5.IMPAIRMENT, DISPOSITION OF PROPERTY AND EQUIPMENT, AND RESTAURANT CLOSING COSTS
Impairment — When events and circumstances indicate that our long-lived assets might be impaired and their carrying amount is greater than the undiscounted cash flows we expect to generate from such assets, we recognize an impairment loss as the amount by which the carrying value exceeds the fair value of the assets. We typically estimate fair value based on the estimated discounted cash flows of the related asset using marketplace participant assumptions. Impairment charges in 2012 primarily represent charges to write down the carrying value of three underperforming Jack in the Box restaurants and three Jack in the Box restaurants we intend to or have closed.
Disposition of property and equipment — We also recognize accelerated depreciation and other costs on the disposition of property and equipment. When we decide to dispose of a long-lived asset, depreciable lives are adjusted based on the estimated disposal date, and accelerated depreciation is recorded. Other disposal costs primarily relate to charges from our ongoing re-image and logo program and normal capital maintenance activities.
The following impairment and disposal costs are included in impairment and other charges, net in the accompanying condensed consolidated statements of earnings (in thousands):
 Quarter Year-to-Date
 April 15,
2012
 April 17,
2011
 April 15,
2012
 April 17,
2011
Impairment charges$910
 $878
 $2,109
 $1,167
Losses on the disposition of property and equipment, net$1,775
 $2,628
 $2,858
 $5,424
Restaurant closing costs consist of future lease commitments, net of anticipated sublease rentals and expected ancillary costs, and are included in impairment and other charges, net in the accompanying condensed consolidated statements of earnings. Total accrued restaurant closing costs, included in accrued liabilities and other long-term liabilities, changed as follows (in thousands):

9


 Quarter Year-to-Date
 April 15,
2012
 April 17,
2011
 April 15,
2012
 April 17,
2011
Balance at beginning of period$21,228
 $23,938
 $21,657
 $25,020
Additions and adjustments666
 (21) 1,912
 784
Cash payments(1,727) (1,754) (3,402) (3,641)
Balance at end of quarter$20,167
 $22,163
 $20,167
 $22,163
Additions and adjustments in all periods primarily relate to revisions to certain sublease and cost assumptions.

Impairment— When events and circumstances indicate that our long-lived assets might be impaired and their carrying amount is greater than the undiscounted cash flows we expect to generate from such assets, we recognize an impairment loss as the amount by which the carrying value exceeds the fair value of the assets. We typically estimate fair value based on the estimated discounted cash flows of the related asset using marketplace participant assumptions. Impairment charges were not material in any period and primarily relate to certain excess Jack in the Box property and restaurants we have closed or plan to close. Additionally, these charges include the write-down of one underperforming Jack in the Box restaurant in the first quarter of 2010.
Disposition of property and equipment— We also recognize accelerated depreciation and other costs on the disposition of property and equipment. When we decide to dispose of a long-lived asset, depreciable lives are adjusted based on the estimated disposal date, and accelerated depreciation is recorded. Other disposal costs primarily relate to charges from our ongoing re-image program and normal capital maintenance activities.
The following impairment and disposal costs are included in impairment and other charges, net in the accompanying condensed consolidated statements of earnings (in thousands):
                 
  Quarter  Year-to-Date 
  April 17,  April 11,  April 17,  April 11, 
  2011  2010  2011  2010 
 
Impairment charges $878  $895  $1,167  $1,503 
Losses on the disposition of property and equipment, net $2,628  $1,178  $5,424  $2,360 
Restaurant closing costsconsist of future lease commitments, net of anticipated sublease rentals and expected ancillary costs, and are included in impairment and other charges, net. Total accrued restaurant closing costs, included in accrued liabilities and other long-term liabilities, changed as follows (in thousands):
                 
  Quarter  Year-to-Date 
  April 17,  April 11,  April 17,  April 11, 
  2011  2010  2011  2010 
 
Balance at beginning of period $23,938  $4,358  $25,020  $4,234 
Additions and adjustments  (21)  1,204   784   1,624 
Cash payments  (1,754)  (332)  (3,641)  (628)
             
Balance at end of period $22,163  $5,230  $22,163  $5,230 
             
Additions and adjustments primarily relate to revisions to sublease and cost assumptions and, in 2010, the closure of two Jack in the Box restaurants in the quarter and three year-to-date.
6.INCOME TAXES
The income tax provisions reflect year-to-date effective tax rates of 34.2% in 2012 and 34.8% in 2011. The final annual tax rate cannot be determined until the end of the fiscal year; therefore, the actual 2012 rate could differ from our current estimates.
At April 15, 2012, our gross unrecognized tax benefits associated with uncertain income tax positions were $0.9 million, which if recognized would favorably impact the effective income tax rate. The gross unrecognized tax benefits increased by $0.3 million from the end of fiscal year 2011 based on a preliminary assessment of a state income tax audit. It is reasonably possible that changes to the gross unrecognized tax benefits will be required within the next twelve months due to the possible settlement of state tax audits.
The major jurisdictions in which the Company files income tax returns include the United States and states in which we operate that impose an income tax. The federal statutes of limitations have not expired for fiscal years 2008 and forward. The statutes of limitations for California and Texas, which constitute the Company’s major state tax jurisdictions, have not expired for fiscal years 2001 and 2007, respectively, and forward. Generally, the statutes of limitations for the other state jurisdictions have not expired for fiscal years 2008 and forward.
The income tax provisions reflect year-to-date effective tax rates of 34.8% in 2011 and 36.1% in 2010. The final annual tax rate cannot be determined until the end of the fiscal year; therefore, the actual 2011 rate could differ from our current estimates.
At April 17, 2011, our gross unrecognized tax benefits associated with uncertain income tax positions were $0.6 million, which if recognized would favorably impact the effective income tax rate. The gross unrecognized tax benefits remain unchanged from the beginning of the fiscal year. It is reasonably possible that changes to the gross unrecognized tax benefits will be required within the next twelve months. These changes relate to the possible settlement of state tax audits.
The major jurisdictions in which the Company files income tax returns include the United States and states in which we operate that impose an income tax. The federal statutes of limitations have not expired for tax years 2006 and forward. The statutes of limitations for California and Texas, which constitute the Company’s major state tax jurisdictions, have not expired for tax years 2000 and 2006, respectively, and forward. Generally, the statutes of limitations for the other state jurisdictions have not expired for tax years 2006 and forward.

9


JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
7.RETIREMENT PLANS
Defined benefit pension plans — We sponsor a defined benefit pension plan covering substantially all full-time employees which will no longer accrue benefits effective December 31, 2015, and was closed to new participants effective January 1, 2011. We also sponsor an unfunded supplemental executive retirement plan which provides certain employees additional pension benefits and which was closed to new participants effective January 1, 2007. Benefits under both plans are based on the employees’ years of service and compensation over defined periods of employment.
Postretirement healthcare plans — We sponsor healthcare plans that provide postretirement medical benefits to certain employees who meet minimum age and service requirements. The plans are contributory, with retiree contributions adjusted annually, and contain other cost-sharing features such as deductibles and coinsurance.
Net periodic benefit cost — The components of net periodic benefit cost were as follows in each period (in thousands):
  
Quarter Year-to-Date
  
April 15,
2012
 April 17,
2011
 April 15,
2012
 April 17,
2011
Defined benefit pension plans:       
Service cost$2,175
 $2,490
 $5,075
 $5,809
Interest cost5,225
 4,980
 12,191
 11,620
Expected return on plan assets(4,612) (4,784) (10,761) (11,163)
Actuarial loss2,864
 2,266
 6,683
 5,289
Amortization of unrecognized prior service cost100
 113
 233
 263
Net periodic benefit cost$5,752
 $5,065
 $13,421
 $11,818
Postretirement healthcare plans:       
Service cost$14
 $18
 $33
 $42
Interest cost373
 366
 870
 854
Actuarial loss21
 47
 48
 109
Amortization of unrecognized prior service cost
 7
 
 17
Net periodic benefit cost$408
 $438
 $951
 $1,022

10


Future cash flows — Our policy is to fund our plans at or above the minimum required by law. As of the date of our last actuarial funding valuation, there was no minimum requirement. Details regarding 2012 contributions are as follows (in thousands):
 
Defined Benefit
Pension Plans
 
Postretirement
Healthcare Plans
Net year-to-date contributions$6,626
 $801
Remaining estimated net contributions during fiscal 2012$6,800
 $600
We will continue to evaluate contributions to our funded defined benefit pension plan based on changes in pension assets as a result of asset performance in the current market and economic environment.
8.SHARE-BASED COMPENSATION
We offer share-based compensation plans to attract, retain and motivate key officers, employees and non-employee directors to work toward the financial success of the Company. In fiscal 2012, we granted the following share-based compensation awards in connection with our annual award grants in November:
 Defined benefit pension plans— We sponsor a defined benefit pension plan covering substantially all full-time employees. In September 2010, the Board of Directors approved changes to this plan whereby participants will no longer accrue benefits effective December 31, 2015, and the plan was closed to new participants effective January 1, 2011. This change was accounted for as a plan “curtailment” in accordance with the authoritative guidance issued by the FASB. We also sponsor an unfunded supplemental executive retirement plan which provides certain employees additional pension benefits and which was closed to new participants effective January 1, 2007. Benefits under both plans are based on the employees’ years of service and compensation over defined periods of employment.Shares
Stock options485,057
Performance-vested stock awards234,258
Nonvested stock units83,552
The components of share-based compensation expense recognized in each period are as follows (in thousands):
 Quarter Year-to-Date
 April 15,
2012
 April 17,
2011
 April 15,
2012
 April 17,
2011
Stock options$785
 $1,174
 $1,975
 $2,686
Performance-vested stock awards172
 471
 502
 1,209
Nonvested stock awards135
 140
 315
 326
Nonvested stock units293
 348
 615
 578
Deferred compensation for non-mangement directors155
 173
 155
 173
Total share-based compensation expense$1,540
 $2,306
 $3,562
 $4,972

9.    STOCKHOLDERS’ EQUITY
Repurchases of common stock In May 2011, the Board of Directors approved a program to repurchase up to $100.0 million in shares of our common stock expiring November 2012. During the first quarter, we repurchased approximately 0.3 million shares at an aggregate cost of $6.4 million, completing the May 2011 authorization. In November 2011, the Board of Directors approved a new program to repurchase $100.0 million in shares of our common stock expiring November 2013. As of the end of the second quarter, $100.0 million remains available under this authorization.

11


Comprehensive income Our total comprehensive income, net of taxes, was as follows (in thousands):
 Quarter Year-to-Date
 April 15,
2012
 April 17,
2011
 April 15,
2012
 April 17,
2011
Net earnings$21,632
 $6,802
 $33,582
 $39,203
Cash flow hedges:       
Net change in fair value of derivatives(214) (247) (619) 1,190
Net loss reclassified to earnings299
 
 697
 
Total85
 (247) 78
 1,190
Tax effect(33) 95
 (31) (454)
 52
 (152) 47
 736
Unrecognized periodic benefit costs:       
Actuarial losses and prior service cost reclassified to earnings2,985
 2,433
 6,964
 5,678
Tax effect(1,146) (929) (2,673) (2,168)
 1,839
 1,504
 4,291
 3,510
Total comprehensive income$23,523
 $8,154
 $37,920
 $43,449
Accumulated other comprehensive loss The components of accumulated other comprehensive loss, net of taxes, were as follows at the end of each period (in thousands):
 April 15,
2012
 October 2,
2011
Unrecognized periodic benefit costs, net of tax benefits of $56,070 and $58,743, respectively$(89,997) $(94,288)
Net unrealized losses related to cash flow hedges, net of tax benefits of $999 and $1,030, respectively(1,605) (1,652)
Accumulated other comprehensive loss, net$(91,602) $(95,940)
Postretirement healthcare plans— We sponsor healthcare plans that provide postretirement medical benefits to certain employees who meet minimum age and service requirements. The plans are contributory, with retiree contributions adjusted annually, and contain other cost-sharing features such as deductibles and coinsurance.
Net periodic benefit cost— The components of net periodic benefit cost were as follows in each period (in thousands):
                 
  Quarter  Year-to-Date 
  April 17,  April 11,  April 17,  April 11, 
  2011  2010  2011  2010 
 
Defined benefit pension plans:
                
Service cost $2,490  $2,897  $5,809  $6,760 
Interest cost  4,980   4,778   11,620   11,150 
Expected return on plan assets  (4,784)  (4,087)  (11,163)  (9,538)
Actuarial loss  2,266   2,575   5,289   6,008 
Amortization of unrecognized prior service cost  113   136   263   317 
             
Net periodic benefit cost $5,065  $6,299  $11,818  $14,697 
             
                 
Postretirement healthcare plans:
                
Service cost $18  $24  $42  $57 
Interest cost  366   331   854   773 
Actuarial loss  47   43   109   100 
Amortization of unrecognized prior service cost  7   15   17   34 
             
Net periodic benefit cost $438  $413  $1,022  $964 
             
Future cash flows— Our policy is to fund our plans at or above the minimum required by law. Details regarding 2011 contributions are as follows (in thousands):
         
  Defined
Benefit
  Postretirement 
  Pension Plans  Healthcare Plans 
 
Net year-to-date contributions $1,560  $912 
Remaining estimated net contributions during fiscal 2011 $1,400  $300 
We will continue to evaluate contributions to our defined benefit pension plans based on changes in pension assets as a result of asset performance in the current market and economic environment.

10


JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
8.SHARE-BASED EMPLOYEE COMPENSATION
We offer share-based compensation plans to attract, retain and motivate key officers, employees and non-employee directors to work toward the financial success of the Company. In fiscal 2011, we granted share-based compensation awards in each period as follows:
                 
  Quarter  Year-to-Date 
      Weighted-      Weighted- 
      Average      Average 
      Grant Date      Grant Date 
  Shares  Fair Value  Shares  Fair Value 
 
Stock options    $   444,890  $8.25 
Performance-vested stock awards    $   220,343  $21.74 
Nonvested stock units  7,622  $24.02   68,784  $20.49 
The components of share-based compensation expense recognized in each period are as follows (in thousands):
                 
  Quarter  Year-to-Date 
  April 17,  April 11,  April 17,  April 11, 
  2011  2010  2011  2010 
 
Stock options $1,174  $1,667  $2,686  $3,743 
Performance-vested stock awards  471   341   1,209   712 
Nonvested stock awards  140   440   326   643 
Nonvested stock units  348   59   578   123 
Deferred compensation for non-management directors  173   188   173   279 
             
Total share-based compensation expense $2,306  $2,695  $4,972  $5,500 
             
9.STOCKHOLDERS’ EQUITY
Preferred stockWe have 15,000,000 shares of preferred stock authorized for issuance at a par value of $0.01 per share. No preferred shares have been issued.
Repurchases of common stockIn November 2010, the Board of Directors approved a program to repurchase up to $100.0 million in shares of our common stock expiring November 2011. During 2011, we repurchased approximately 3.5 million shares at an aggregate cost of $75.0 million. As of April 17, 2011, the aggregate remaining amount authorized for repurchase was $25.0 million. In May 2011, the Board of Directors authorized a new program to repurchase up to $100.0 million in shares of our common stock expiring November 2012.
Comprehensive incomeOur total comprehensive income, net of taxes, was as follows (in thousands):
                 
  Quarter  Year-to-Date 
  April 17,  April 11,  April 17,  April 11, 
  2011  2010  2011  2010 
 
Net earnings $6,802  $17,680  $39,203  $41,928 
Cash flow hedges:                
Net change in fair value of derivatives  (247)  (2)  1,190   (104)
Net loss reclassified to earnings     1,871      4,719 
             
Total  (247)  1,869   1,190   4,615 
Tax effect  95   (713)  (454)  (1,761)
             
   (152)  1,156   736   2,854 
Unrecognized periodic benefit costs:                
Actuarial losses and prior service cost reclassified to earnings  2,433   2,769   5,678   6,459 
Tax effect  (929)  (1,056)  (2,168)  (2,465)
             
   1,504   1,713   3,510   3,994 
             
Total comprehensive income $8,154  $20,549  $43,449  $48,776 
             

11


JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The components of accumulated other comprehensive loss, net of taxes, were as follows at the end of each period (in thousands):
         
  April 17,  October 3, 
  2011  2010 
 
Unrecognized periodic benefit costs, net of tax benefits of $46,211 and $48,379, respectively $(74,824) $(78,334)
Net unrealized gains (losses) related to cash flow hedges, net of tax benefit (expense) of ($174) and $280, respectively  283   (453)
       
Accumulated other comprehensive loss, net $(74,541) $(78,787)
       
10.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, non-management director stock equivalents and shares issuable under our employee stock purchase plan. Performance-vested stock awards are included in the weighted-average diluted shares outstanding each period if the performance criteria have been met at the end of the respective periods.

The following table reconciles basic weighted-average shares outstanding to diluted weighted-average shares outstanding (in thousands):
 Quarter Year-to-Date
 April 15,
2012
 April 17,
2011
 April 15,
2012
 April 17,
2011
Weighted-average shares outstanding – basic43,937
 50,183
 43,896
 51,265
Effect of potentially dilutive securities:       
Stock options470
 456
 403
 460
Nonvested stock awards and units264
 214
 261
 210
Performance-vested stock awards240
 131
 215
 134
Weighted-average shares outstanding – diluted44,911
 50,984
 44,775
 52,069
Excluded from diluted weighted-average shares outstanding:       
Antidilutive3,092
 3,054
 2,975
 2,968
Performance conditions not satisfied at the end of the period351
 366
 351
 366

Our basic earnings per share calculations are computed based on the weighted-average number of common shares outstanding. Our diluted earnings per share calculations are 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, non-management director stock equivalents and shares issuable under our employee stock purchase plan. Performance-vested stock awards are included in the weighted-average diluted shares outstanding each period if the performance criteria have been met at the end of the respective periods.
The following table reconciles basic weighted-average shares outstanding to diluted weighted-average shares outstanding (in thousands):
                 
  Quarter Year-to-Date
  April 17, April 11, April 17, April 11,
  2011 2010 2011 2010
 
Weighted-average shares outstanding — basic  50,183   54,972   51,265   55,711 
Effect of potentially dilutive securities:                
Stock options  456   569   460   532 
Nonvested stock awards and units  214   178   210   177 
Performance-vested stock awards  131   78   134   79 
                 
Weighted-average shares outstanding — diluted  50,984   55,797   52,069   56,499 
                 
                 
Excluded from diluted weighted-average shares outstanding:                
Antidilutive  3,054   3,225   2,968   3,102 
Performance conditions not satisfied at the end of the period  366   244   366   244 
11.VARIABLE INTEREST ENTITIES (“VIEs”)
We formed Jack in the Box Franchise Finance, LLC (“FFE”) for the purpose of operating a franchisee lending program

12


which may provide up to $100.0 million to assist Jack in the Box franchisees in re-imaging their restaurants. We are the sole equity investor in FFE. The $100.0 million lending program is comprised of a $20.0 million commitment from the Company in the form of a capital note and an $80.0 million Senior Secured Revolving Securitization Facility (“FFE Facility”) entered into with a third party. The FFE Facility is a revolving loan and security agreement bearing a variable interest rate. The revolving period has been extended and is set to expire in June 2012. We may make additional contributions to FFE and FFE may incur additional borrowings under its credit facility during the extended lending period.
In January 2011, we formed an entity, Jack in the Box Franchise Finance, LLC (“FFE”), for the purpose of operating a franchisee lending program which will provide up to $100.0 million to assist franchisees in reimaging their restaurants. We are the sole equity investor in FFE. The $100.0 million lending program is comprised of a $20.0 million commitment from the Company in the form of a capital note and an $80.0 million Senior Secured Revolving Securitization Facility (“FFE Facility”) entered into with a third party. The FFE Facility is a 12-month revolving loan and security agreement bearing a variable interest rate. As of April 17, 2011, we have contributed $8.0 million to FFE, $6.7 million of which has been used to assist franchisees in reimaging their restaurants, and FFE has not borrowed against its third party revolving credit facility. We expect to make additional contributions of $5.0 — $10.0 million to FFE during the remainder of fiscal 2011.
We have determined that FFE is a VIE and that the Company is its primary beneficiary. We considered a variety of factors in identifying the primary beneficiary of FFE including, but not limited to, who holds the power to direct matters that most significantly impact FFE’s economic performance (such as determining the underwriting standards and credit management policies), as well as what party has the obligation to absorb the losses of FFE. Based on these considerations, we have determined that the Company is the primary beneficiary and have reflected the entity in the accompanying condensed consolidated financial statements.
We have determined that FFE is a variable interest entity (“VIE”) and that the Company is its primary beneficiary. The primary beneficiary of a VIE is an enterprise that has a controlling financial interest in the VIE. Controlling financial interest exists when an enterprise has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. We considered a variety of factors in identifying the primary beneficiary of FFE including, but not limited to, who holds the power to direct matters that most significantly impact FFE’s economic performance (such as determining the underwriting standards and credit management policies), as well as what party has the obligation to absorb the losses of FFE. Based on these considerations, we have determined that the Company is the primary beneficiary and have reflected the entity in the accompanying condensed consolidated financial statements.
FFE’s assets consolidated by the Company represent assets that can be used only to settle obligations of the consolidated VIE. Likewise, FFE’s liabilities consolidated by the Company do not represent additional claims on

12


JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
the Company’s general assets; rather they represent claims against the specific assets of FFE. The impact of FFE’s liabilities and net loss were not material to the Company’s condensed consolidated financial statements. The assets of FFE consisted of the following at April 17, 2011 (in thousands):
     
Cash $192 
Other current assets (1)  804 
Other assets, net (1)  6,808 
    
Total assets $7,804 
    
FFE’s assets consolidated by the Company represent assets that can be used only to settle obligations of the consolidated VIE. Likewise, FFE’s liabilities consolidated by the Company do not represent additional claims on the Company’s general assets; rather they represent claims against the specific assets of FFE. The impacts of FFE’s results were not material to the Company’s condensed consolidated statements of earnings or cash flows. The FFE’s balance sheet consisted of the following at the end of each period (in thousands):
 April 15,
2012
 October 2,
2011
Cash$165
 $531
Other current assets (1) 2,330
 2,086
Other assets, net (1) 13,077
 12,292
Total assets$15,572
 $14,909
    
Current liabilities$470
 $140
Revolving credit facility
 1,160
Other long-term liabilities (2) 15,608
 14,046
Retained earnings(506) (437)
Total liabilities and stockholders’ equity$15,572
 $14,909
____________________________
(1)Consists primarily of amounts due from franchisees and $1.0 millionfranchisees.
(2)Consists primarily of deferred finance fees includedthe capital note contributions from Jack in other assets, net.the Box which are eliminated in consolidation.
The Company’s maximum exposure to loss is equal to its outstanding contributions that are expected to range from $15.0-$17.0 million and represents estimated losses that would be incurred should all franchisees default on their loans without any consideration of recovery. To offset the credit risk associated with the Company’s variable interest in FFE, the Company holds a security interest in the assets of FFE subordinate and junior to all other obligations of FFE.

The Company’s maximum exposure to loss is equal to its outstanding contributions that are expected to range from $10.0 — $20.0 million and represents estimated losses that would be incurred should all franchisees default on their loans without any consideration of recovery. To offset the credit risk associated with the Company’s variable interest in FFE, the Company holds a security interest in the assets of FFE subordinate and junior to all other obligations of FFE.
12.LEGAL MATTERS
The Company is subject to normal and routine litigation brought by former, current or prospective employees, customers, franchisees, vendors, landlords, shareholders or others. The Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its 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. The Company regularly reviews contingencies to determine the adequacy of the accruals and related disclosures. The ultimate amount of loss may differ from these estimates. Although the Company currently believes that the ultimate outcome of these matters will not have a material adverse effect on the results of operations, liquidity or financial position of the Company, it is possible that the results of operations, liquidity or financial position of the Company could be materially affected in any particular future reporting period by the unfavorable resolution of one or more of these matters or contingencies.
The Company is subject to normal and routine legal proceedings, including litigation. We have reserves for certain of these legal proceedings; however, the outcomes of such proceedings are subject to inherent uncertainties. Based on current information, including our reserves and insurance coverage, management believes that the ultimate liability from all pending legal proceedings, individually and in the aggregate, will not have a material adverse effect on the Company’s operating results, financial position or liquidity.
13.SEGMENT REPORTING
Reflecting the information currently being used in managing the Company as a two-branded restaurant operations business, our segments comprise results related to system restaurant operations for our Jack in the Box and Qdoba brands. This segment reporting structure reflects the Company’s current management structure, internal reporting method and financial information used in deciding how to allocate Company resources. Based upon certain quantitative thresholds, both

13


operating segments are considered reportable segments.
We measure and evaluate our segments based on segment earnings from operations. Summarized financial information concerning our reportable segments is shown in the following tables (in thousands):
 Quarter Year-to-Date
 April 15,
2012
 April 17,
2011
 April 15,
2012
 April 17,
2011
Revenues by segment:       
Jack in the Box restaurant operations segment$299,418
 $335,318
 $682,076
 $797,649
Qdoba restaurant operations segment67,066
 48,455
 142,329
 104,155
Distribution operations140,146
 121,362
 334,940
 268,049
Consolidated revenues$506,630
 $505,135
 $1,159,345
 $1,169,853
Earnings from operations by segment:       
Jack in the Box restaurant operations segment$33,510
 $12,973
 $55,647
 $67,175
Qdoba restaurant operations segment3,869
 1,795
 6,043
 2,884
Distribution operations
 (527) 
 (1,182)
FFE operations(44) (172) (100) (172)
Consolidated earnings from operations$37,335
 $14,069
 $61,590
 $68,705
Total depreciation expense by segment:       
Jack in the Box restaurant operations segment$18,035
 $19,005
 $42,328
 $44,667
Qdoba restaurant operations segment3,970
 2,932
 8,752
 6,462
Distribution operations155
 160
 398
 390
Consolidated depreciation expense$22,160
 $22,097
 $51,478
 $51,519
Interest income and expense, income taxes and total assets are not reported for our segments, in accordance with our method of internal reporting.
 April 15, 2012 October 2, 2011
Goodwill by segment:   
Jack in the Box$48,529
 $49,181
Qdoba85,974
 56,691
Consolidated goodwill$134,503
 $105,872
Refer to Note 2, Summary of Refranchisings, Franchise Development and Acquisitions, for information regarding the segment changes in goodwill during 2012.

Reflecting the information currently being used in managing the Company as a two-branded restaurant operations business, our segments comprise results related to system restaurant operations for our Jack in the Box and Qdoba brands. This segment reporting structure reflects the Company’s current management structure, internal reporting method and financial information used in deciding how to allocate Company resources. Based upon certain quantitative thresholds, both operating segments are considered reportable segments.
We measure and evaluate our segments based on segment earnings from operations. Summarized financial information concerning our reportable segments is shown in the following table (in thousands):
                 
  Quarter  Year-to-Date 
  April 17,  April 11,  April 17,  April 11, 
  2011  2010  2011  2010 
 
Revenues by segment:
                
Jack in the Box restaurant operations segment $335,318  $403,361  $797,649  $934,610 
Qdoba restaurant operations segment  48,455   35,583   104,155   81,034 
Distribution operations  121,362   90,762   268,049   195,380 
             
Consolidated revenues $505,135  $529,706  $1,169,853  $1,211,024 
             
Earnings from operations by segment:
                
Jack in the Box restaurant operations segment $12,973  $29,311  $67,175  $71,245 
Qdoba restaurant operations segment  1,795   1,992   2,884   4,507 
Distribution operations and other  (699)  (153)  (1,354)  (871)
             
Consolidated earnings from operations $14,069  $31,150  $68,705  $74,881 
             
Interest income and expense, income taxes and total assets are not reported for our segments, in accordance with our method of internal reporting.

13


JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
14.
SUPPLEMENTAL CONSOLIDATED CASH FLOW INFORMATION(in thousands)
 Year-to-Date
 April 15,
2012
 April 17,
2011
Cash paid during the quarter for:   
Interest, net of amounts capitalized$11,089
 $7,068
Income tax payments$24,125
 $22,601

14



Additional information related to cash flows is as follows (in thousands):
         
  Year-to-Date 
  April 17,  April 11, 
  2011  2010 
 
Cash paid during the year for:        
Interest, net of amounts capitalized $7,068  $12,299 
Income tax payments $22,601  $46,305 
15.
SUPPLEMENTAL CONSOLIDATED BALANCE SHEET INFORMATION(in thousands)
        
 April 17, October 3, 
 2011 2010 
April 15,
2012
 October 2,
2011
Other assets, net:    
Goodwill $101,514 $85,041 
Company-owned life insurance policies 84,137 76,296 $83,629
 $75,202
Other 108,341 92,794 141,639
 141,411
     $225,268
 $216,613
Accrued liabilities:   
Payroll and related$47,662
 $40,438
Sales and property taxes14,120
 13,963
Advertising18,405
 21,899
Insurance33,976
 37,987
Other55,068
 53,200
 $293,992 $254,131 $169,231
 $167,487
Other long-term liabilities:   
Pension$144,739
 $144,860
Other148,903
 145,863
     $293,642
 $290,723

16.SUBSEQUENT EVENT
During fiscal 2012, the Company has been engaged in a comprehensive review of its overhead structure, including evaluating opportunities for outsourcing, restructuring of certain functions and workforce reductions. On April 23, 2012, the Company offered a voluntary early retirement program to eligible employees. The impact of the early retirement program on our condensed consolidated financial statements will depend on the number of employees that accept the early retirement offer.

FUTURE APPLICATION OF
17.NEW ACCOUNTING PRINCIPLES
In May 2011, the Financial Accounting Standards Board (“FASB”) issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS, which was issued to update the language used in existing guidance to better align U.S. GAAP and IFRS fair value measurement guidance. This update also requires increased disclosure of quantitative and qualitative information about unobservable inputs used in a fair value measurement that is categorized within Level 3 of the fair value hierarchy. Other than requiring additional disclosures, adoption of this new guidance in the second quarter did not have a significant impact on our consolidated financial statements.
Any accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.
In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income, which was issued to enhance comparability between entities that report under U.S. GAAP and IFRS, and to provide a more consistent method of presenting non-owner transactions that affect an entity’s equity. ASU 2011-05 eliminates the option to report other comprehensive income and its components in the statement of changes in stockholders’ equity and requires an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement or in two separate but consecutive statements. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption of the new guidance is permitted, and full retrospective application is required.

14

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.




15


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 OPERATIONSGENERAL
GENERAL
All comparisons between 20112012 and 20102011 refer to the 12-week12-weeks (“quarter”) and 28-week28-weeks (“year-to-date”) periods ended April 15, 2012 and April 17, 2011 and April 11, 2010,, respectively, unless otherwise indicated.
For an understanding of the significant factors that influenced our performance during the quarterly periods ended April 15, 2012 and April 17, 2011 and April 11, 2010,, 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 3, 2010.2, 2011.
Our MD&A consists of the following sections:
Overview— a general description of our business and fiscal 2011 highlights.
Financial reporting— a discussion of changes in presentation.
Results of operations— an analysis of our consolidated statements of earnings for the periods presented in our condensed consolidated financial statements.
Liquidity and capital resources— an analysis of our cash flows including capital expenditures, aggregate contractual obligations, share repurchase activity, known trends that may impact liquidity and the impact of inflation.
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 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.
Overview — a general description of our business and fiscal 2012 highlights.
OVERVIEW
Results of operations — an analysis of our consolidated statements of earnings for the periods presented in our condensed consolidated financial statements.
Liquidity and capital resources — an analysis of our cash flows including capital expenditures, share repurchase activity, known trends that may impact liquidity and the impact of inflation.
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.
OVERVIEW
As of April 17, 2011,15, 2012, we operated and franchised 2,2202,242 Jack in the Box quick-service restaurants, (“QSR”), primarily in the western and southern United States, and 549605 Qdoba Mexican Grill (“Qdoba”) fast-casual restaurants throughout the United States.
Our primary source of revenue is from retail sales at Jack in the Box and Qdoba company-operated restaurants. We also derive revenue from Jack in the Box and Qdoba franchise restaurants, including royalties (based upon a percent of sales), rents, franchise fees and distribution sales of food and packaging commodities. In addition, we recognize gains from the sale of company-operated restaurants to franchisees, which are presented as a reduction of operating costs and expenses, net in the accompanying condensed consolidated statements of earnings.
The following summarizes the most significant events occurring in fiscal 20112012 and certain trends compared to a year ago:
Restaurant SalesSales at restaurants open more than one year (“same-store sales”) increased (decreased) as follows:
Restaurant Sales Sales at restaurants open more than one year (“same-store sales”) increased (decreased) as follows:
                 
  Quarter Year-to-Date
  April 17, April 11, April 17, April 11,
  2011 2010 2011 2010
 
Jack in the Box:                
Company  0.8%  (8.6%)  1.2%  (10.1%)
Franchise  (0.3%)  (7.3%)  0.4%  (9.4%)
System  0.1%  (8.1%)  0.7%  (9.9%)
Qdoba system  6.0%  3.1%  6.2%  0.4%

15


 Quarter Year-to-Date
 April 15, 2012 April 17, 2011 April 15, 2012 April 17, 2011
Jack in the Box:       
Company5.6% 0.8 % 5.5% 1.2%
Franchise3.6% (0.3)% 3.1% 0.4%
System4.2% 0.1 % 3.8% 0.7%
Qdoba:       
Company3.8% 5.1 % 3.7% 5.5%
Franchise2.2% 6.4 % 3.2% 6.5%
System3.0% 6.0 % 3.4% 6.2%

Commodity CostsPressures from higher commodity costs continue to impact our business. Overall commodity costs at our Jack in the Box restaurants increased approximately 5.0% in the quarter and 3.4% year-to-date compared to a year ago. We expect our overall commodity costs to increase approximately 4.5-5.5% in fiscal 2011.
New Unit DevelopmentWe continued to grow our brands with the opening of new company-operated and franchise restaurants. Year-to-date, we opened 16 Jack in the Box locations system-wide, including several in our newer markets, and 30 Qdoba locations.
Franchising ProgramWe refranchised 114 Jack in the Box restaurants, while Qdoba and Jack in the Box franchisees opened a total of 28 restaurants year-to-date. We are ahead of our timeline to increase franchise ownership to 70-80% of the Jack in the Box system, and we were approximately 62%Commodity Costs Commodity costs increased approximately 1.8% and 6.7%, at our Jack in the Box and Qdoba restaurants, respectively, in the quarter and 4.7% and 10.2%, respectively, year-to-date compared to a year ago. We expect our overall commodity costs to increase approximately 3%-4% in fiscal 2012.
16


New Unit Development We continued to grow our brands with the opening of new company-operated and franchise-operated restaurants. Year-to-date, we opened 23 Jack in the Box locations and 23 Qdoba locations system-wide.
Franchising Program Qdoba and Jack in the Box franchisees opened a total of 29 restaurants year-to-date. Our Jack in the Box system was approximately 73% franchised at the end of the second quarter.
Share RepurchasesPursuant to a share repurchase program authorized by our Board of Directors, we repurchased approximately 3.5 million shares of our common stock at an average price of $21.58 per share year-to-date, including the cost of brokerage fees.
Franchise Financing EntityWe formed an entity, Jack in the Box Franchise Finance, LLC, for the purpose of operating a franchisee lending program used primarily to assist franchisees in reimaging their restaurants. During the quarter, FFE provided $6.7 million to franchisees. The impact of this entity on the Company’s condensed consolidated financial statements as of and for the period ended April 17, 2011 was not material.
FINANCIAL REPORTING
     At the end of fiscal 2010,the second quarter and we separated impairment and other charges, net from selling, general and administrative expenses in our consolidated statementsplan to further increase franchise ownership to approximately 80% over the next couple of earnings. Prior year amounts have been reclassified to conform to this new presentation.years.
RESULTS OF OPERATIONS
The following 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.
                 
  Quarter Year-to-Date
  April 17, April 11, April 17, April 11,
  2011 2010 2011 2010
 
Statement of Earnings Data:
                
Revenues:                
Company restaurant sales  63.6%  73.3%  64.8%  74.4%
Distribution sales  24.0%  17.1%  22.9%  16.1%
Franchise revenues  12.4%  9.6%  12.3%  9.5%
                 
   100.0%  100.0%  100.0%  100.0%
                 
                 
Operating costs and expenses, net:                
Company restaurant costs:                
Food and packaging (1)  33.4%  31.5%  32.9%  31.6%
Payroll and employee benefits (1)  30.5%  30.2%  30.7%  30.4%
Occupancy and other (1)  23.8%  23.1%  24.0%  23.3%
                 
Total company restaurant costs (1)  87.7%  84.8%  87.5%  85.3%
                 
                 
Distribution costs (1)  100.4%  100.2%  100.4%  100.5%
Franchise costs (1)  50.1%  45.6%  48.5%  45.6%
Selling, general and administrative expenses  10.4%  10.3%  10.2%  10.4%
Impairment and other charges, net  0.9%  0.7%  0.7%  0.5%
Gains on the sale of company-operated restaurants  (0.2%)  (0.6%)  (2.5%)  (1.0%)
Earnings from operations  2.8%  5.9%  5.9%  6.2%
Income tax rate (2)  32.8%  35.2%  34.8%  36.1%
CONSOLIDATED STATEMENTS OF EARNINGS DATA
 Quarter Year-to-Date
 April 15, 2012 April 17, 2011 April 15, 2012 April 17, 2011
Revenues:       
Company restaurant sales57.4 % 63.6 % 56.5 % 64.8 %
Distribution sales27.7 % 24.0 % 28.9 % 22.9 %
Franchise revenues14.9 % 12.4 % 14.6 % 12.3 %
Total revenues100.0 % 100.0 % 100.0 % 100.0 %
Operating costs and expenses, net:       
Company restaurant costs:       
Food and packaging (1)32.6 % 33.4 % 33.1 % 32.9 %
Payroll and employee benefits (1)29.3 % 30.5 % 29.5 % 30.7 %
Occupancy and other (1)22.5 % 23.8 % 23.0 % 24.0 %
Total company restaurant costs (1)84.5 % 87.7 % 85.6 % 87.5 %
Distribution costs (1) 100.0 % 100.4 % 100.0 % 100.4 %
Franchise costs (1) 50.2 % 50.1 % 51.8 % 48.5 %
Selling, general and administrative expenses10.8 % 10.4 % 10.4 % 10.2 %
Impairment and other charges, net1.0 % 0.9 % 0.8 % 0.7 %
Gains on the sale of company-operated restaurants(2.8)% (0.2)% (1.3)% (2.5)%
Earnings from operations7.4 % 2.8 % 5.3 % 5.9 %
Income tax rate (2) 34.1 % 32.8 % 34.2 % 34.8 %
____________________________
(1)As a percentage of the related sales and/or revenues.
(2)As a percentage of earnings before income taxes.

16

The following table presents Jack in the Box and Qdoba company restaurant sales, costs and costs as a percentage of the related sales. Percentages may not add due to rounding.









17


SUPPLEMENTAL COMPANY-OPERATED RESTAURANTS STATEMENTS OF EARNINGS DATA
(dollars in thousands)
 Quarter Year-to-Date
 April 15, 2012 April 17, 2011 April 15, 2012 April 17, 2011
Jack in the Box:               
Company restaurant sales$227,828
   $276,981
   $522,181
   $664,056
  
Company restaurant costs:               
Food and packaging76,508
 33.6% 94,493
 34.1% 178,098
 34.1% 222,303
 33.5%
Payroll and employee benefits67,819
 29.8% 85,309
 30.8% 155,389
 29.8% 205,397
 30.9%
Occupancy and other48,209
 21.2% 63,205
 22.8% 112,499
 21.5% 152,935
 23.0%
Total company restaurant costs$192,536
 84.5% $243,007
 87.7% $445,986
 85.4% $580,635
 87.4%
Qdoba:               
Company restaurant sales$62,975
   $44,261
   $132,724
   $94,096
  
Company restaurant costs:               
Food and packaging18,402
 29.2% 12,782
 28.9% 38,919
 29.3% 26,827
 28.5%
Payroll and employee benefits17,438
 27.7% 12,689
 28.7% 37,680
 28.4% 27,117
 28.8%
Occupancy and other17,284
 27.4% 13,188
 29.8% 37,936
 28.6% 28,867
 30.7%
Total company restaurant costs$53,124
 84.4% $38,659
 87.3% $114,535
 86.3% $82,811
 88.0%
The following table summarizes the year-to-date changes in the number of Jack in the Box and Qdoba company-operatedcompany and franchise restaurants:
                         
  April 17, 2011 April 11, 2010
  Company Franchise Total Company Franchise Total
 
Jack in the Box:
                        
Beginning of period  956   1,250   2,206   1,190   1,022   2,212 
New  7   9   16   16   12   28 
Refranchised  (114)  114      (53)  53    
Acquired from franchisees           1   (1)   
Closed  (1)  (1)  (2)  (1)  (6)  (7)
                         
End of period  848   1,372   2,220   1,153   1,080   2,233 
                         
% of system  38%  62%  100%  52%  48%  100%
Qdoba:
                        
Beginning of period  188   337   525   157   353   510 
New  11   19   30   3   7   10 
Acquired from franchisees  22   (22)            
Closed     (6)  (6)     (15)  (15)
                         
End of period  221   328   549   160   345   505 
                         
% of system  40%  60%  100%  32%  68%  100%
Consolidated:
                        
                         
Total system  1,069   1,700   2,769   1,313   1,425   2,738 
                         
% of system  39%  61%  100%  48%  52%  100%
Revenues
 April 15, 2012 April 17, 2011
 Company Franchise Total Company Franchise Total
Jack in the Box:           
Beginning of year629
 1,592
 2,221
 956
 1,250
 2,206
New9
 14
 23
 7
 9
 16
Refranchised(37) 37
 
 (114) 114
 
Closed
 (2) (2) (1) (1) (2)
End of period601
 1,641
 2,242
 848
 1,372
 2,220
% of system27% 73% 100% 38% 62% 100%
Qdoba:           
Beginning of year245
 338
 583
 188
 337
 525
New8
 15
 23
 11
 19
 30
Acquired from franchisees36
 (36) 
 22
 (22) 
Closed
 (1) (1) 
 (6) (6)
End of period289
 316
 605
 221
 328
 549
% of system48% 52% 100% 40% 60% 100%
Consolidated:           
Total system890
 1,957
 2,847
 1,069
 1,700
 2,769
% of system31% 69% 100% 39% 61% 100%
Revenues
As we continue to execute our refranchising strategy, which includes the sale of restaurants to franchisees, we expect the number of Jack in the Box company-operated restaurants and the related sales to continually decrease while revenues from franchise restaurants increase. As such, company restaurant sales decreased $67.1$30.4 million, or 17.3%9.5%, in the quarter and $142.2$103.2 million, or 15.8%13.6%, year-to-date, reflecting the declineyear-to-date. This decrease is due primarily to a decrease in the average number of Jack in the Box company-operated restaurants. This decrease wasrestaurants, partially offset by increases in same-store sales at Jack in the Box and Qdoba restaurants and an increase in the number of Qdoba company-operated restaurants and increases in per-store average sales (“PSA”) at our Jack in the Box and Qdoba company-operated restaurants.


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The following table represents the approximate impact of these increases (decreases) on company restaurant sales(in thousands)thousands):
         
  Quarter  Year-to-Date 
Reduction in the average number of Jack in the Box company-operated restaurants $(101,100) $(209,000)
Jack in the Box per-store average (“PSA”) sales increase  21,200   44,400 
Qdoba  12,800   22,400 
       
Total decrease in restaurant sales $(67,100) $(142,200)
       
 Quarter Year-to-Date
Reduction in the average number of Jack in the Box restaurants$(83,500) $(225,400)
Jack in the Box PSA sales increase34,400
 83,500
Increase in the average number of Qdoba restaurants15,400
 32,800
Qdoba PSA sales increase3,300
 5,900
Total decrease in company restaurant sales$(30,400) $(103,200)
Same-store sales at Jack in the Box company-operated restaurants grew 0.8%increased 5.6% in the quarter and 1.2%5.5% year-to-date as follows:
         
  Quarter Year-to-Date
Increase in transactions  0.1%  0.7%
Average check growth (1)  0.7%  0.5%
driven by a combination of price increases and transaction growth. Same-store sales at Qdoba company-operated restaurants increased
3.8% in the quarter and 3.7% year-to-date primarily driven by price increases. The following table summarizes the change in company-operated same-store sales:
 Quarter Year-to-Date
Jack in the Box transactions3.1% 3.0%
Jack in the Box average check (1)2.5% 2.5%
Jack in the Box change in same-store sales5.6% 5.5%
Qdoba change in same-store sales (2)3.8% 3.7%
____________________________
(1)
Includes price increases of approximately 1.3%3.5% and 3.4% in the quarter and year-to-date, compared with a year ago.respectively.
(2)
Includes price increases of approximately 4.2% and 4.1% in the quarter and year-to-date, respectively.
Distribution sales to Jack in the Box and Qdoba franchisees grew $30.6$18.8 million in the quarter and $72.7$66.9 million year-to-date from a year ago. TheThis growth primarily reflects an increase reflects a higherin the number of Jack in the Box franchise restaurants that purchase ingredients and supplies from our distribution centers, which contributed additional sales of approximately $28.0$19.5 million and $64.2$55.2 million, respectively. HigherIncreases in PSA volumes and higher commodity prices year-to-date also contributed to the increase in distribution sales. During the second quarter, Qdoba restaurants ceased using our distribution services. Distribution sales in both periods.to Qdoba franchisees were not material to our results of operations for any period presented.
Franchise revenues increased $11.9$13.2 million, or 23.5%21.0%, in the quarter and $28.4$25.8 million, or 24.6%18.0%, year-to-date due primarily to a 28.6% and 26.0%an increase in the average number of Jack in the Box franchise restaurants, which contributed additional royalties and rents of approximately $12.6$10.9 million and $26.4$29.4 million, respectively. In addition,

17


year-to-date increases in the number of restaurants sold to and developed by franchisees resulted in higher revenues from initial franchise fees. These increases wereYear-to-date, this increase was partially offset by an increase in re-image contributions to franchisees, which are recorded as a reduction of franchise revenues.revenues, and a decrease in revenues from franchise fees and other driven primarily by a decline in the number of restaurants sold to franchisees. The following table reflects the detail of our franchise revenues in each period and other information we believe is useful in analyzing the change in franchise revenues (dollars in thousands):
                 
  Quarter  Year-to-Date 
  April 17,  April 11,  April 17,  April 11, 
  2011  2010  2011  2010 
 
Royalties $25,120  $20,352  $56,345  $46,386 
Rents  36,643   28,190   82,726   65,046 
Re-image contributions to franchisees  (1,435)  (95)  (2,715)  (650)
Franchise fees and other  2,203   2,196   7,296   4,467 
             
Franchise revenues $62,531  $50,643  $143,652  $115,249 
             
Increase (decrease) in Jack in the Box franchise-operated same-store sales  (0.3%)  (7.3%)  0.4%  (9.4%)
                 
Royalties as a percentage of estimated franchise restaurant sales:                
Jack in the Box  5.3%  5.3%  5.3%  5.3%
Qdoba  5.0%  5.0%  5.0%  5.0%
 Quarter Year-to-Date
 April 15, 2012 April 17, 2011 April 15, 2012 April 17, 2011
Royalties$29,382
 $25,120
 $67,511
 $56,345
Rents44,427
 36,643
 104,094
 82,726
Re-image contributions to franchisees(827) (1,435) (6,535) (2,715)
Franchise fees and other2,699
 2,203
 4,430
 7,296
Franchise revenues$75,681
 $62,531
 $169,500
 $143,652
% increase21.0% 

 18.0% 

Average number of franchise restaurants1,929
 1,690
 1,933
 1,648
% increase14.1%   17.3%  
Increase (decrease) in franchise-operated same-store sales:       
Jack in the Box3.6% (0.3)% 3.1% 0.4%
Qdoba2.2% 6.4 % 3.2% 6.5%
Royalties as a percentage of estimated franchise restaurant sales:       
Jack in the Box5.3% 5.3 % 5.2% 5.3%
Qdoba5.0% 5.0 % 5.0% 5.0%

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Operating Costs and Expenses
Food and packaging costs increaseddecreased to 33.4%32.6% of company restaurant sales in the quarter and 32.9%increased to 33.1% year-to-date from 31.5%compared with 33.4% and 31.6%32.9%, respectively, a year ago. OverallIn 2012, higher commodity costs at our Jack in the Box restaurants increased approximately 5.0%were more than offset in the quarter and 3.4%partially offset year-to-date by the benefit of selling price increases, favorable product mix and a greater proportion of Qdoba company restaurants. Commodity costs increased as follows compared with the prior year:
 Quarter Year-to-Date
Jack in the Box1.8% 4.7%
Qdoba6.7% 10.2%
Commodity cost increases were driven by higher costs for beef, cheese, pork, dairy, shorteningmost commodities other than produce and produce, partially offset by lowerpoultry. We expect overall commodity costs for poultryfiscal 2012 to increase approximately 3%-4%. Beef represents the largest portion, or approximately 21%, of the Company’s overall commodity spend, and bakery. Additionally,we typically do not enter into fixed price contracts for our beef needs. For the unfavorable impact of product mixfull year, we currently expect beef costs to increase approximately 5%-6%, and promotions was partially offset by the benefit ofmost other major commodities to be higher prices.in 2012 compared with last year.
Payroll and employee benefit costs were 30.5%decreased to 29.3% of company restaurant sales in the quarter and 30.7%29.5% year-to-date, compared to 30.2%30.5% and 30.4%30.7%, respectively, in 2010,2011, reflecting the leverage from same-store sales increases and the benefits of refranchising. These decreases were offset in part by higher levels of staffing designed to improve the guest experience. In addition, increases in unemployment taxes in several states in which we operate negatively impacted these costs.incentive compensation.
Occupancy and other costs were 23.8%decreased to 22.5% of company restaurant sales in the quarter and 24.0%23.0% year-to-date compared with 23.1%23.8% and 23.3%24.0%, respectively, last year. The higherlower percentage in 20112012 is due primarily relates to guest service initiativesthe leverage from same-store sales increases, the benefits of refranchising, and lower repair and maintenance costs. These benefits were partially offset by higher fees associated with debit card transactions, PSA depreciation expense related to the Jack in the Box re-image program and PSA rent expense as a percentage of sales resulting from a greater proportion of company-operated Qdoba restaurants compared with last year. These increases were partially offset by lower utilities expense.
Distribution costs increased $30.9$18.3 million in the quarter and $72.9$65.8 million year-to-date, primarily reflecting an increase in the related sales. In the quarter, these costs were 100.4% ofThe 2012 supply chain agreement provides that any profits or losses related to our distribution sales in 2011 compared with 100.2% a year ago primarily reflecting lower PSA volumes. Year-to-date, these costs remained fairly consistent as a percentage of the related sales decreasing slightly to 100.4% from 100.5% last year.operations are shared by all company and franchise restaurants who utilize our distribution services.
Franchise costs, principally rents and depreciation on properties leasedwe lease to Jack in the Box franchisees, increased $8.2$6.7 million to 50.1%50.2% of the related revenues in the quarter and $17.2$18.2 million to 48.5%51.8% year-to-date, from 45.6% of the related revenues in each period50.1% and 48.5%, respectively, a year ago. The percentage increase as a percent of revenues is primarily due to higher rent and depreciation and rent expense as a greater proportionresulting from an increase in the percentage of properties are leasedlocations that we lease to franchisees. Year-to-date, an increase in re-image contributions to franchisees and the impact of higher re-image contributions, which were partially offset year-to-date by leverage from higherlower franchise fee revenue.revenue also contributed to the percent of revenues increase.

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The following table presents the change in selling, general and administrative (“SG&A”) expenses compared with the prior year (in thousands):
         
  Increase/(Decrease) 
  Quarter  Year-to-Date 
 
Advertising $(4,221) $(6,734)
Refranchising strategy  (713)  (5,058)
Incentive compensation  1,651   3,717 
Cash surrender value of COLI policies, net  (599)  (1,613)
Pension and postretirement benefits  (1,209)  (2,821)
Qdoba general and administrative  1,642   3,056 
Hurricane Ike insurance proceeds in 2010     1,004 
Other  1,326   2,534 
       
  $(2,123) $(5,915)
       
 Increase / (Decrease)
 Quarter Year-to-Date
Advertising$(2,533) $(7,685)
Refranchising strategy(1,216) (2,376)
Incentive compensation1,869
 1,690
Cash surrender value of COLI policies, net163
 81
Pension and postretirement benefits657
 1,532
Pre-opening costs398
 1,149
Qdoba general and administrative1,200
 2,075
Other1,340
 4,244
 $1,878
 $710
Our refranchising strategy has resulted in a decrease in the number of Jack in the Box company-operated restaurants and the related overhead expenses to manage and support those restaurants. As such,restaurants, including advertising costs, which are primarily contributions to our marketing fund determined as a percentage of restaurant sales, decreased at Jack in the Box and were partially offset bysales. The higher advertising expense at Qdoba due to sales growth and timing. The increase in ourlevels of incentive compensation accruals in 2011 reflects the expectedreflect an improvement in the Company’sCompany's results compared with performance goals. Changes in theThe cash surrender value of our company-owned life insurance (“COLI”) policies, net of changes in our non-qualified deferred compensation obligation supported by these policies, are subject to market fluctuations and positively impacted SG&A by $1.3fluctuations. The changes in market values had a positive impact of $1.1 million in the quarter and $4.4$4.3 million year-to-date year to date compared to $0.7$1.3 million and $2.8$4.4 million, respectively, a year ago. The decreaseincrease in pension and

20


postretirement benefits expense principally relates to changes toa decrease in the Company’s pension plan whereby participants will no longer accrue benefits after December 31, 2015.discount rate as compared with a year ago. The increase in pre-opening costs primarily relates to higher expenses associated with restaurant openings in new Jack in the Box markets. Qdoba general and administrative costs isincreased primarily due to higher pre-opening expenses and overhead to support our growing number of company-operated restaurant base.restaurants.
Impairment and other charges, net is comprised of the following(in thousands)thousands):
                 
  Quarter  Year-to-Date 
  April 17,  April 11,  April 17,  April 11, 
  2011  2010  2011  2010 
 
Impairment charges $878  $895  $1,167  $1,503 
Losses on the disposition of property and equipment, net  2,628   1,178   5,424   2,360 
Costs of closed restaurants (primarily lease obligations) and other  988   1,379   1,499   2,268 
             
  $4,494  $3,452  $8,090  $6,131 
             
 Quarter Year-to-Date
 April 15, 2012 April 17, 2011 April 15, 2012 April 17, 2011
Impairment charges$910
 $878
 $2,109
 $1,167
Losses on the disposition of property and equipment, net1,775
 2,628
 2,858
 5,424
Costs of closed restaurants (primarily lease obligations) and other864
 988
 2,933
 1,499
Restructuring costs1,525
 
 1,525
 
 $5,074
 $4,494
 $9,425
 $8,090
Impairment and other charges, net increased $1.0$0.6 million in the quarter and $2.0$1.3 million year-to-date fromcompared to a year ago due primarily to losses associated with our ongoing re-image program, which is targeted to be completed byago. These increases include severance costs of $1.5 million recorded in the endsecond quarter of 2011, and the rollout of signagefiscal 2012 related to our restructuring activities. The year-to-date increase also includes higher costs associated with restaurants and facilities we have closed or plan to close and impairment charges related to under-performing Jack in the Box restaurants. These increases were partially offset by a decrease in costs in both periods related to our re-image and new logo.logo program which was substantially completed during the first quarter of fiscal 2012.
Gains on the sale of company-operated restaurants to franchisees, net are detailed in the following table (dollars in thousands):
                 
  Quarter  Year-to-Date 
  April 17,  April 11,  April 17,  April 11, 
  2011  2010  2011  2010 
 
Number of restaurants sold to franchisees  26   30   114   53 
                 
Gains on the sale of company-operated restaurants $878  $2,987  $28,750  $12,367 
                 
Average gain on restaurants sold $34  $100  $252  $233 
     Gains were impacted by
 Quarter Year-to-Date
 April 15, 2012 April 17, 2011 April 15, 2012 April 17, 2011
Number of restaurants sold to franchisees37
 26
 37
 114
Gains on the sale of company-operated restaurants$14,078
 $878
 $15,200
 $28,750
Average gain on restaurants sold$380
 $34
 $411
 $252
In 2012, gains on the numbersale of company-operated restaurants include additional gains of $0.9 million in the quarter and $2.1 million year-to-date recognized upon the extension of the underlying franchise and lease agreements related to restaurants sold andin a prior year. The lower average gains in the specificprior year relate to the sale of a market with lower than average sales volumes and cash flows of those restaurants, which affectedin the changes in average gains recognized.second quarter.

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Interest Expense, Net
Interest expense, net is comprised of the following (in thousands):
                 
  Quarter  Year-to-Date 
  April 17,  April 11,  April 17,  April 11, 
  2011  2010  2011  2010 
 
Interest expense $4,204  $4,125  $9,151  $9,897 
Interest income  (259)  (252)  (595)  (589)
             
Interest expense, net $3,945  $3,873  $8,556  $9,308 
             
 Quarter Year-to-Date
 April 15, 2012 April 17, 2011 April 15, 2012 April 17, 2011
Interest expense$5,152
 $4,204
 $11,756
 $9,151
Interest income(618) (259) (1,165) (595)
Interest expense, net$4,534
 $3,945
 $10,591
 $8,556
Interest expense, net increased slightly$0.6 million in the quarter and decreased $0.7$2.0 million year-to-date compared with last year primarily reflecting lower average interest rates and borrowings compared to a year ago offset in the quarter by interest expense incurred in connection with FFE.primarily due to higher average borrowings.
Income Taxes
The tax rate decreased to 32.8%in 2012 was 34.1% in the quarter and 34.8%34.2% year-to-date, compared with 35.2%32.8% and 36.1%34.8%, respectively, in 2010.the prior year. The decreases are due primarily to the impact ofchanges in rates were impacted by the market performance of insurance investment products used to fund certain non-qualified retirement plans.plans and estimated earnings. Changes in the cash value of the insurance products are not included in taxable income. We expect the fiscal year tax rate to be approximately 35%-36%. The final annual tax rate cannot be determined until the end of the fiscal year; therefore, the actual rate could differ from our current estimates.

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Net Earnings
Net earnings were $6.8$21.6 million, or $0.13$0.48 per diluted share, in the quarter compared with $17.7$6.8 million, or $0.32$0.13 per diluted share, a year ago. Year-to-date net earnings were $39.2$33.6 million, or $0.75$0.75 per diluted share, compared with $41.9$39.2 million or $0.74$0.75 per diluted share, a year ago.
LIQUIDITY AND CAPITAL RESOURCES
General
Our primary sources of short-term and long-term liquidity are expected to be cash flows from operations, the revolving bank credit facility, the sale of company-operated restaurants to franchisees and the sale and leaseback of certain restaurant properties.properties and the sale of Jack in the Box company-operated restaurants to franchisees.
We generally reinvest available cash flows from operations to improve our restaurant facilities and develop new restaurants, to reduce debt and to repurchase shares of our common stock. Our cash requirements consist principally of:
working capital;
capital expenditures for new restaurant construction and restaurant renovations;
income tax payments;
debt service requirements; and
obligations related to our benefit plans.
capital expenditures for new restaurant construction and restaurant renovations;
income tax payments;
debt service requirements; and
obligations related to our benefit plans.
Based upon current levels of operations and anticipated growth, we expect that cash flows from operations, combined with other financing alternatives in place or available, will be sufficient to meet our capital expenditure, working capital and debt service requirements for 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 typically maintain current liabilities in excess of current assets, which results in a working capital deficit.
     Cash and cash equivalents increased $4.1 million to $14.7 million at the end of the quarter from $10.6 million at the beginning of the fiscal year. This increase is primarily due to cash flows provided by operating activities, proceeds and collections of notes receivable from the sale of restaurants to franchisees, and borrowings under our revolving credit facility, offset in part by cash used to repurchase common stock, purchase property and equipment and acquire Qdoba franchise-operated restaurants. We generally reinvest available cash flows from operations to improve our restaurant facilities and develop new restaurants, to reduce debt and to repurchase shares of our common stock.

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Cash Flows
The table below summarizes our cash flows from operating, investing and financing activities (in thousands):
         
  Year-to-Date 
  April 17,  April 11, 
  2011  2010 
 
Total cash provided by (used in):        
Operating activities:        
Continuing operations $81,844  $26,646 
Discontinued operations     (2,172)
Investing activities  (26,905)  (5,944)
Financing activities  (50,834)  (59,071)
       
Increase (decrease) in cash and cash equivalents $4,105  $(40,541)
       
 Year-to-Date
 April 15, 2012 April 17, 2011
Total cash provided by (used in):   
Operating activities$69,588
 $81,844
Investing activities(64,592) (26,905)
Financing activities(5,112) (50,834)
Net increase (decrease) in cash and cash equivalents$(116) $4,105
Operating Activities.Operating cash flows from continuing operations increased $55.2decreased $12.3 million compared with a year ago due primarily to increases in payments as follows: $9.5 million related to fluctuations in the timing of propertyOctober rent payments; $4.3 million for bonuses; $4.1 million in pension contributions; and $4.0 million for interest expense. The impact of these higher payments and a reductionwere partially offset by an $8.4 million increase in bonus and estimatednet income tax payments.adjusted for non-cash items.
Investing Activities.Cash used in investing activities increased $21.0$37.7 million compared with a year ago due primarily to decreases in (1) proceeds from the sale of restaurants to franchisees, (2) proceeds from the sale and leaseback of restaurant properties and (3) collections of notes receivable related to prior years’ refranchising activities, as well as an increase in capital expenditures and cash used to acquire Qdoba franchise-operated restaurantsrestaurants. The impact of these decreases in 2011,cash flows were partially offset by an increasea decrease in capital expenditures.

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Capital Expenditures The composition of capital expenditures in each period follows (in thousands):
 Year-to-Date
 April 15, 2012 April 17, 2011
Jack in the Box:   
New restaurants$7,527
 $3,905
Restaurant facility improvements16,748
 51,734
Other, including corporate7,408
 5,868
Qdoba8,926
 12,622
Total capital expenditures$40,609
 $74,129
Our capital expenditure program includes, among other things, investments in new locations, restaurant remodeling, new equipment and information technology enhancements. Capital expenditures decreased compared to a year ago due primarily to a decrease in spending related to our Jack in the numberBox restaurant re-image and new logo program. We expect fiscal 2012 capital expenditures to be approximately $85-$95 million. We plan to open approximately 15 Jack in the Box and 25-30 Qdoba company-operated restaurants in 2012.
Sale of Company-Operated Restaurants The following table details proceeds received in connection with our refranchising activities in each period (dollars in thousands):
 Year-to-Date
 April 15, 2012 April 17, 2011
Number of restaurants sold to franchisees37
 114
    
Total proceeds$21,964
 $49,588
Average proceeds$594
 $435
We expect total proceeds of $40-$50 million from the sale of 80-120 Jack in the Box restaurants soldin 2012. In certain instances, we may provide financing to franchisees and collectionsfacilitate the closing of certain transactions. As of April 15, 2012, notes receivablesreceivable related to prior year refranchising activity.refranchisings were $6.3 million.
Assets Held for Sale and LeasebackWe use sale and leaseback financing to lower the initial cash investment in our Jack in the Box restaurants to the cost of the equipment, whenever possible. In 2011 we soldThe following table summarizes the cash flow activity related to sale and leased back 12 restaurants, generating proceeds of $21.8 million compared with 19 restaurants and $36.0 million a year ago. leaseback transactions in each period (dollars in thousands):
 Year-to-Date
 April 15, 2012 April 17, 2011
Number of restaurants sold and leased back5
 12
    
Proceeds from sale of assets$9,312
 $21,811
Spending to acquire/purchase assets(22,000) (15,142)
Net cash flows related to assets held for sale and leaseback$(12,688) $6,669
As of April 17, 2011,15, 2012, we had cash investments of $51.3$62.5 million in 56approximately 44 operating and under-constructionor under construction restaurant properties that we expect to sell and leaseback during the next twelve12 months.
Capital Expenditures —Our capital expenditure program includes, among other things, investments in new locations, restaurant remodeling, new equipment and information technology enhancements. The compositionAcquisition of capital expenditures in each period is as follows (in thousands):
         
  Year-to-Date 
  April 17,  April 11, 
  2011  2010 
 
Jack in the Box:        
New restaurants $3,905  $15,901 
Restaurant facility improvements  51,734   17,769 
Other, including corporate  5,868   4,482 
Qdoba  12,622   4,480 
       
Total capital expenditures $74,129  $42,632 
       
     Capital expenditures increased compared to a year ago due primarily to an increase in spending related to our Jack in the Box re-image program and new logo rollout, as well as newFranchise-Operated Restaurants During 2012, we acquired Qdoba restaurants, partially offset by a decrease in spending for new Jack in the Box locations. We expect fiscal 2011 capital expenditures to be approximately $125-$135 million, including investment costs related to the Jack in the Box restaurant re-image program. We plan to open approximately 18 Jack in the Box and 25 Qdoba company-operatedfranchise restaurants in 2011.

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Sale of Company-Operated Restaurants —We haveselect markets where we believe there is continued to expand franchise ownership in the Jack in the Box system primarily through the sale of company-operated restaurants to franchisees.opportunity for restaurant development. The following table details proceeds received in connection with our refranchising activitiesfranchise-operated restaurant acquisition activity (dollars in thousands)thousands):
         
  Year-to-Date
  April 17, April 11,
  2011 2010
 
Number of restaurants sold to franchisees  114   53 
         
Cash $49,588  $19,093 
Notes receivable     2,730 
       
Total proceeds $49,588  $21,823 
       
         
Average proceeds $435  $412 
     In certain instances, we may provide financing to facilitate the closing of certain transactions. As of April 17, 2011, the notes receivable balance related to prior year refranchisings was $10.9 million, $4.3 million of which is expected to be fully repaid by the end of the fiscal year. We expect total proceeds of $85-$95 million from the sale of 175-225 Jack in the Box restaurants in 2011.
 Year-to-Date
 April 15, 2012 April 17, 2011
Number of restaurants acquired from franchisees36
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Cash used to acquire franchise-operated restaurants$39,195
 $21,477
Acquisition of Franchise-Operated Restaurants —In 2011, we acquired 20 Qdoba franchise-operated restaurants in the Indianapolis market and two in Northern Florida for approximately $21.5 million. The purchase price wasprices were primarily allocated primarily to goodwill, property and equipment, goodwill and reacquired franchise rights. For additional information, refer to Note 2,Summary of Refranchisings, FranchiseeFranchise Development and Acquisitions, of the notes to the condensed consolidated financial statements.Acquisitions.

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Financing Activities.Cash flows used in financing activities decreased $8.2$45.7 million compared with a year ago primarily attributable to lower principal repayments on debt and an increase in borrowings under our revolving credit facility, offset in part by the change in our book overdraft related to the timing of working capital receipts and disbursements and an increasea decrease in cash used to repurchase shares of the Company’sour common stock.stock, partially offset by a decrease in borrowings under our credit facility.
Credit FacilityOur credit facility is comprised of (i) a $400.0 million revolving credit facility and (ii) a $200.0 million term loan maturing on June 29, 2015, initially both withbearing interest at London Interbank Offered Rate (“LIBOR”) plus 2.502.75%., as of April 15, 2012. As part of the credit agreement, we may also request the issuance of up to $75.0 million in letters of credit, the outstanding amount of which reduces the net borrowing capacity under the agreement. The credit facility requires the payment of an annual commitment fee based on the unused portion of the credit facility. The credit facility’s interest rates and the annual commitment rate are based on a financial leverage ratio, as defined in the credit agreement. We may make voluntary prepayments of the loans under the revolving credit facility and term loan at any time without premium or penalty. Specific events, such as asset sales, certain issuances of debt, and insurance and condemnation recoveries, may trigger a mandatory prepayment.
We are subject to a number of customary covenants under our credit facility, including limitations on additional borrowings, acquisitions, loans to franchisees, capital expenditures, lease commitments, stock repurchases, dividend payments and requirements to maintain certain financial ratios. We were in compliance with all covenants as of April 17, 2011.15, 2012. Effective February 16, 2012, to provide additional financial flexibility due to the timing of refranchising transactions and the $33.0 million acquisition of Qdoba franchised restaurants completed in the second quarter of fiscal 2012, we amended our credit facility to temporarily increase the maximum financial leverage ratio to 2.50 to 1.00 from 2.25 to 1.00 through the third quarter of fiscal 2012.
At April 17, 2011,15, 2012, we had $192.5$175.0 million outstanding under the term loan, borrowings under the revolving credit facility of $207.0$300.0 million and letters of credit outstanding of $35.8 million.$38.9 million.
Franchise Financing EntityFFE Credit FacilityFFE has a $100.0 million lending program comprised of a $20.0 million commitment from the Company in the form of a capital note andentered into an $80.0 million Senior Secured Revolving Securitization Facility (“FFE Facility”) entered into with a third party.party to assist in funding our franchisee lending program. The FFE Facility is a 12-month revolving loan and security agreement bearing a variable interest rate. The revolving period has been extended and is set to expire in June 2012. As of April 17, 2011, we have contributed $8.015, 2012, FFE had borrowings outstanding of $0.9 million to FFE, $6.7 million of which has been used to assist franchisees in reimaging their restaurants, and FFE has not borrowed against its third party revolving creditthis facility.
Interest Rate SwapsTo reduce our exposure to rising interest rates under our credit facility, we consider interest rate swaps. In August 2010, we entered into two forward lookingforward-looking swaps that will effectively convert $100.0 million of our variable rate term loan to a fixed-rate basis beginningfrom September 2011 through September 2014. Based on the term loanloan’s applicable margin of 2.50%2.75% as of April 17, 2011,15, 2012, these agreements would have an average pay rate of 1.54%, yielding an “all-in” fixed rate of 4.04%4.29%. From March 2007 to April 2010, we held two interest rate swaps that

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effectively converted $200.0 million of our variable rate term loan borrowings to a fixed-rate basis. For additional information related to our interest rate swaps, refer to Note 4,Derivative Instruments, of the notes to the condensed consolidated financial statements.
Repurchases of Common StockIn November 2010,May 2011, the Board of Directors approved a program to repurchase up to $100.0 million in shares of our common stock expiring November 2011.2012. During 2011,the first quarter, we repurchased approximately 3.50.3 million shares at an aggregate cost of $75.0 million. As of April 17,$6.4 million, completing the May 2011 the aggregate remaining amount authorized for repurchase was $25.0 million.authorization. In MayNovember 2011, the Board of Directors authorizedapproved a new program to repurchase up to $100.0 million in shares of our common stock expiring November 2012.2013. As of the end of the second quarter, $100.0 million remains available under this authorization.
Off-Balance Sheet Arrangements
     Other than operating leases, weWe are not a party to any 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. We finance a portion of our new restaurant development through sale-leaseback transactions. These transactions involve selling restaurants to unrelated parties and leasing the restaurants back.
DISCUSSION OF CRITICAL ACCOUNTING ESTIMATES
     We have identified the following as our most criticalCritical accounting estimates which are those thatthe Company believes are most important tofor the portrayal of the Company’s financial condition and results and that require management’s most subjective and complex judgments. InformationJudgments and uncertainties regarding our other significantthe 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 estimates and policies ispreviously disclosed in Note 1 of our most recentthe Company’s Annual Report on Form 10-K filed withfor the SEC.fiscal year ended October 2, 2011.
Long-lived Assets— Property, equipmentNEW ACCOUNTING PRONOUNCEMENTS
In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income, which was issued to enhance comparability between entities that report under U.S. GAAP and certainIFRS, and to provide a more consistent method of presenting non-owner transactions that affect an entity’s equity. ASU 2011-05 eliminates the option to report other assets, including amortized intangible assets, are reviewed for impairment when indicators of impairment are present. This review generally includes a restaurant-level analysis, except when we are actively selling a group of restaurants, in which case we perform our impairment evaluations at the group level. Impairment evaluations for individual restaurants take into consideration a restaurant’s operating cash flows, the period of time since a restaurant has been opened or remodeled, refranchising expectationscomprehensive income and the maturity of the related market. Impairment evaluations for a group of restaurants take into consideration the group’s expected future cash flows and sales proceeds from bids received, if any, or fair market value based on, among other considerations, the specific sales and cash flows of those restaurants. If the assets of a restaurant or group of restaurants subject to our impairment evaluation are not recoverable based upon the forecasted, undiscounted cash flows, we recognize an impairment loss as the amount by which the carrying value of the assets exceeds fair value. Our estimates of cash flows used to assess impairment are subject to a high degree of judgment and may differ from actual cash flows due to, among other things, economic conditions or changes in operating performance.
Retirement Benefits— Our defined benefit and other postretirement plans’ costs and liabilities are determined using several statistical and other factors, which attempt to anticipate future events, including assumptions about the discount rate and expected return on plan assets. We determine and set our discount rate annually, with assistance from our actuaries, by considering the average of pension yield curves constructed of a population of high-quality bonds with a Moody’s or Standard and Poor’s rating of “AA” or better meeting certain other criteria. As of October 3, 2010, our discount rate was 5.82% for our defined benefit and postretirement benefit plans. Our expected long-term rate of return on assets is determined taking into consideration our projected asset allocation and economic forecasts prepared with the assistance of our actuarial consultants. As of October 3, 2010, our assumed expected long-term rate of return was 7.75% for our qualified defined benefit plan. The actuarial assumptions used may differ materially from actual results due to changing market and economic conditions, higher or lower turnover and retirement rates or longer or shorter life spans of participants. These differences may affect the amount of pension expense we record. A hypothetical 25 basis point reductionits components in the assumed discount rate and expected long-term rate of return on plan assets would have resulted in an estimated increase of $2.7 million and $0.7 million, respectively, in our fiscal 2011 pension and postretirement plan expense. We expect our pension and postretirement expense to decrease in fiscal 2011 principally due to the curtailment of our qualified plan, which will be partially offset by a decrease in our discount rate from 6.16% to 5.82%.
Self Insurance— We are self-insured for a portion of our losses related to workers’ compensation, general liability, automotive and health benefits. In estimating our self-insurance accruals, we utilize independent actuarial estimates of expected losses, which are based on statistical analysis of historical data. These assumptions are closely monitored and adjusted when warranted by changing circumstances. Should a greater amount of claims occur

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compared to what was estimated or medical costs increase beyond what was expected, accruals might not be sufficient, and additional expense may be recorded.
Restaurant Closing Costs— Restaurant closing costs consist of net future lease commitments and expected ancillary costs. We record a liability for the net present value of any remaining lease obligations, less estimated sublease income, at the date we cease using a property. Subsequent adjustments to the liability as a resultstatement of changes in estimatesstockholders’ equity and requires an entity to present the total of sublease comprehensive

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income, the components of net income and the components of other comprehensive income either in a single continuous statement or lease cancellations are recorded in the period incurred. The estimates we make related to sublease income are subject to a high degree of judgmenttwo separate but consecutive statements. This pronouncement is effective for fiscal years, and may differ from actual sublease income due to changes in economic conditions, desirabilityinterim periods within those years, beginning after December 15, 2011. Early adoption of the sitesnew guidance is permitted, and other factors.full retrospective application is required. This pronouncement is not expected to have a material impact on our consolidated financial statements upon adoption.
Share-based CompensationWe offer share-based compensation plans to attract, retain and motivate key officers, employees and non-employee directors to work toward the financial success of the Company. Share-based compensation cost for our stock option grants is estimated at the grant date based on the award’s fair-value as calculated by an option pricing model and is recognized as expense ratably over the requisite service period. The option pricing models require various highly judgmental assumptions, including volatility, forfeiture rates and expected option life. If any of the assumptions used in the model change significantly, share-based compensation expense may differ materially in the future from that recorded in the current period.
Goodwill and Other Intangibles— We also evaluate goodwill and non-amortizable intangible assets annually, or more frequently if indicators of impairment are present. If the determined fair values of these assets are less than the related carrying amounts, an impairment loss is recognized. The methods we use to estimate fair value include future cash flow assumptions, which may differ from actual cash flows due to, among other things, economic conditions or changes in operating performance. During the fourth quarter of fiscal 2010, we reviewed the carrying value of our goodwill and indefinite life intangible assets and determined that no impairment existed as of October 3, 2010.
Legal AccrualsThe Company is subject to claims and lawsuits in the ordinary course of its business. A determination of the amount accrued, if any, for these contingencies is made after analysis of each matter. We continually evaluate such accruals and may increase or decrease accrued amounts, as we deem appropriate.
Income TaxesWe estimate certain components of our provision for income taxes. These estimates include, among other items, depreciation and amortization expense allowable for tax purposes, allowable tax credits, effective rates for state and local income taxes and the tax deductibility of certain other items. We adjust our effective income tax rate as additional information on outcomes or events becomes available. Our estimates are based on the best available information at the time that we prepare the income tax provision. We generally file our annual income tax returns several months after our fiscal year-end. Income tax returns are subject to audit by federal, state and local governments, generally years after the returns are filed. These returns could be subject to material adjustments or differing interpretations of the tax laws.
NEW ACCOUNTING PRONOUNCEMENTS
     Any accounting standards that have been issued by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our consolidated financial statements upon adoption.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of the federal securities laws. Any statements contained herein that are not historical facts may be deemed to be forward-looking statements. Forward-looking statements usemay be identified by words such words as “anticipate,” “assume,” “believe,” “estimate,” “expect,” “forecast,” “goals,” “guidance,” “intend,” “plan,” “project,” “may,” “will,” “would” 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 subject to risks and uncertainties, whichin some cases beyond our control. Factors that may cause our actual results to differ materially from expectations. You should not rely unduly on forward-looking statements. Allany forward-looking statements include, but are made only as of the date issued. The estimates and assumptions underlying those forward-looking statements can and do change. We do not undertake any obligationlimited to, update any forward-looking statements. We caution the reader that the following important factors and the important factors described in the “Discussion of Critical Accounting Estimates,” and in other sections in this Form 10-Q and in our most recent Annual Report on Form 10-K and other Securities and Exchange Commission filings, including:
Food service businesses such as ours may be materially and adversely affected by changes in consumer tastes or eating habits, and economic, political and socioeconomic conditions. Adverse economic conditions such as unemployment (particularly in California and Texas where our Jack in the Box restaurants are concentrated) may result in reduced restaurant traffic and sales and impose practical limits on pricing.
Our profitability depends in part on our ability to anticipate and react to changes in food costs and availability, fuel costs and other supply and distribution costs. As discussed in our MD&A under the caption “Operating Costs and Expenses,” commodity costs have increased significantly in the past year. While prices appear to be moderating, the risks of increased costs and continued volatility remain, which factors could negatively impact our margins as well as franchisee margins.
Multi-unit food service businesses such as ours can be materially and adversely affected by widespread negative publicity of any type, particularly regarding food quality or public health issues. Negative publicity regarding our brands or the restaurant industry in general could cause a decline in system restaurant sales and could have a material adverse effect on our financial condition and results of operations.
Food service businesses such as ours are subject to the risk that shortages or interruptions in supply could adversely affect the availability, quality and cost of ingredients.
Our business can be materially and adversely affected by severe weather conditions, which can result in lost restaurant sales and increased costs.
New restaurant development, which is critical to our long-term success, involves substantial risks, including availability of acceptable financing, cost overruns and the inability to secure suitable sites on acceptable terms.
Our growth strategy includes opening restaurants in new markets where we cannot assure that we will be able to successfully expand, attract customers or otherwise operate profitably.
The restaurant industry is highly competitive with respect to price, service, location, brand identification and the quality of food. We cannot assure that we will be able to effectively respond to aggressive competitors (including competitors with significantly greater financial resources); that our facility improvements will yield the desired return on investment; or that our new products, service initiatives or our overall strategies will be successful.
The cost of compliance with labor and other regulations could negatively affect our results of operations and financial condition. The increasing amount and complexity of federal, state and local governmental regulations applicable to vary materiallyour industry may increase both our costs of compliance and our exposure to regulatory claims.
Should our advertising and promotion be less effective than our competitors, there could be a material adverse effect on our results of operations and financial condition.
We may not be able to achieve or maintain the ownership mix of franchisee to company-operated restaurants that we desire. Additionally, our ability to reduce operating costs through increased franchise ownership is subject to risks and uncertainties.
We cannot assure that franchisees and developers planning the opening of franchisee restaurants will have the ability or resources to open restaurants or be effective operators, remain aligned with our operations, promotional and capital-intensive initiatives, or successfully operate restaurants in a manner consistent with our standards. In addition, a

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franchisee's unrelated business obligations could adversely affect a franchisee’s ability to make timely payments to us or adhere to our standards and project an image consistent with our brands.
The loss of key personnel could have a material adverse effect on our business.
A material failure or interruption of service or a breach in security of our computer systems could cause reduced efficiency in operations, loss of data or business interruptions.
Failure to comply with environmental laws could result in the imposition of severe penalties or restrictions on operations by governmental agencies or courts of law, which could adversely affect operations.
Our ability to repay expected borrowings under our credit facility and to meet our other debt or contractual obligations will depend upon our future performance and our cash flows from those expressedoperations, both of which are subject to prevailing economic conditions and financial, business and other known and unknown risks and uncertainties, certain of which are beyond our control.
Changes in any forward-looking statement:

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Any widespread publicity, whether or not based in fact, about public health issues or pandemics, or the prospect of such events, which negatively affects consumer perceptions about the health, safety or quality of food and beverages served at our restaurants may adversely affect our results.
Food service businesses such as ours may be materially and adversely affected by changes in national and regional political and economic conditions. Unstable economic conditions, including inflation, lower levels of consumer confidence, low levels of employment, decreased consumer spending and changes in discretionary spending priorities may adversely impact our sales, operating results and profits.
Costs may exceed projections, including costs for food ingredients, labor (including increases in minimum wage, workers’ compensation, healthcare and other insurance), fuel, utilities, real estate, insurance, equipment, technology and construction of new and remodeled restaurants. Inflationary pressures affecting the cost of commodities may adversely affect our food costs and our operating margins. Because a significant number of our restaurants are company-operated, we may have greater exposure to operating cost issues than if we were more heavily franchised.
Regulatory changes, such as the federal healthcare legislation or possible changes to labor or other laws and regulations, could result in increased operating costs.
There can be no assurances that new interior and exterior designs, kitchen enhancements or new equipment will foster increases in sales at remodeled restaurants and yield the desired return on investment.
There can be no assurances that our growth objectives in the regional markets in which we operate restaurants will be met or that new facilities will be profitable. Development delays, sales softness and restaurant closures may have a material adverse effect on our results of operations. The development and profitability of restaurants can be adversely affected by many factors, including the ability of the Company and its franchisees to select and secure suitable sites on satisfactory terms, costs of construction, and general business and economic conditions. In addition, tight credit marketsaccounting standards, policies or related interpretations by accountants or regulatory entities may negatively impact the ability of franchisees to fulfill their restaurant development commitments.
There can be no assurances that we will be able to effectively respond to aggressive competition from numerous and varied competitors (some with significantly greater financial resources) in all areas of business, including new concepts, facility design, competition for labor, new product introductions, customer service initiatives, promotions (including value promotions) and discounting. Additionally, the trend toward convergence in grocery, deli, convenience store and other types of food services may increase the number of our competitors. Such increased competition could decrease the demand for our products and negatively affect our sales and profitability. Moreover, there can be no assurance of the success of any new products, initiatives or overall strategies that we choose to pursue.
The realization of gains from the sale of company-operated restaurants to existing and new franchisees depends upon various factors, including sales trends, cost trends and economic conditions. The financing market, including the cost and availability of borrowed funds and the terms required by lenders, can impact the ability of franchisee candidates to purchase franchises and can potentially impact the sales prices and number of franchises sold. The number of franchises sold and the amount of gain realized from the sale of an on-going business may not be consistent from quarter to quarter and may not meet expectations.
As the number of franchisees increases, our revenues derived from rents and royalties at franchise restaurants will increase, as well as the risk that revenues could be negatively impacted by defaults in payment of rents and royalties.
Franchisee business obligations may not be limited to the operation of Jack in the Box or Qdoba restaurants, making them subject to business and financial risks unrelated to the operation of their restaurants. These unrelated risks could adversely affect a franchisee’s ability to make full or timely payments to us.
The costs related to legal claims such as class actions involving employees, franchisees, shareholders or consumers, including costs related to potential settlement or judgments, may adversely affect our results.
Changes in accounting standards, policies or practices or related interpretations by auditors or regulatory entities, including changes in tax accounting or tax laws, may adversely affect our results.

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The costs or exposures associated with maintaining the security of information and the use of cashless payments may exceed expectations. Such risks include increased investment in technology and costs of compliance with consumer protection and other laws.
Many factors affect the trading price of our stock, including factors over which we have no control, such as the current financial environment, government actions, reports on the economy as well as negative or positive announcements by competitors, regardless of whether the report relates directly to our business.
Significant demographic changes, adverse weather, political conditions such as terrorist activity or the effects of war, other significant events (particularly in California and Texas where nearly 70% of our Jack in the Box system restaurants are located), new legislation, governmental regulation, the possibility of unforeseen events affecting the food service industry in general and other factors over which we have no control can each adversely affect our results of operation.
     This discussion of uncertainties is by no means exhaustive but is intended to highlight some important factors that may materially affect our results.
We are subject to litigation which is inherently unpredictable and can result in unfavorable resolutions where the amount of ultimate loss may differ from our estimated loss contingencies, or impose other costs in defense of claims.
Potential investors are urged to consider these factors 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.
ITEM 3.QUANTITATIVEQUANITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our primary exposure to risks relating to financial instruments is changes in interest rates. Our credit facility, which is comprised of a revolving credit facility and a term loan, bears interest at an annual rate equal to the prime rate or LIBOR plus an applicable margin based on a financial leverage ratio. As of April 17, 2011,15, 2012, the applicable margin for the LIBOR-based revolving loans and term loan was set at 2.50%2.75%.
We use interest rate swap agreements to reduce exposure to interest rate fluctuations. In August 2010, we entered into two interest rate swap agreements that will effectively convert $100.0 million of our variable rate term loan borrowings to a fixed-rate basis beginning September 2011 through September 2014. Based on the term loan’s applicable margin of 2.50%2.75% as of April 17, 2011,15, 2012, these agreements would have an average pay rate of 1.54%, yielding an “all-in” fixed rate of 4.04%4.29%.
A hypothetical 100 basis point increase in short-term interest rates, based on the outstanding balance of our revolving credit facility and term loan at April 17, 2011,15, 2012, would result in an estimated increase of $4.0$3.8 million in annual interest expense.
We are also exposed to the impact of commodity and utility price fluctuations related to unpredictable factors such as weather and various other market conditions outside our control. Our ability to recover increased costs through higher prices is limited by the competitive environment in which we operate. From time to time, we enter into futures and option contracts to manage these fluctuations. At April 17, 2011,15, 2012, we had no such contracts in place.

ITEM 4.CONTROLS AND PROCEDURES
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
     We maintainBased on an evaluation of the Company’s disclosure controls and procedures that are designed to ensure that information required to be disclosed(as defined in the reports that we file or submit underRules 13a - 15 and 15d - 15 of the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rulesamended), as of the Securities and Exchange Commission, and that such information is accumulated and communicated to management, including ourend of the Company’s quarter ended April 15, 2012, the Company’s Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosures.
     Under the supervision(its principal executive officer and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures, as such term is defined under Securities and Exchange Act Rules 13a-15(e). Based on this evaluation, our Chief Executive Officer and Chief Financial Officerprincipal financial officer, respectively) have concluded that ourthe Company’s disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.effective.
Changes in Internal Control Over Financial Reporting
There have been no significant changes in the Company’s internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-QCompany’s fiscal quarter ended April 15, 2012 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
The Company is subject to normal and routine legal proceedings, including litigation. We have reserveslitigation brought by former, current or prospective employees, customers, franchisees, vendors, landlords, shareholders or others. The Company assesses contingencies to determine the degree of probability and range of possible loss for certainpotential accrual in its 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. The Company regularly reviews contingencies to determine the adequacy of the accruals and related disclosures. The ultimate amount of loss may differ from these legal proceedings; however,estimates. Although the outcomes of such proceedings are subject to inherent uncertainties. Based on current information, including our reserves and insurance coverage, managementCompany currently believes that the ultimate liability from all pending legal proceedings, individually and in the aggregate,outcome of these matters will not have a material adverse effect on the Company’s operating results of operations, liquidity or financial position of the Company, it is possible that the results of operations, liquidity, or liquidity.financial position of the Company could be materially affected in any particular future reporting period by the unfavorable resolution of one or more of these matters or contingencies.
ITEM 1A.RISK FACTORS
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 3, 2010,2, 2011, which we filed with the SEC on November 24, 2010,23, 2011, together with 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 when evaluating our business and our prospects. 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 2, 2011. 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, our business and financial results could be harmed. In that case, the market price of our common stock could decline. 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 3, 2010,2, 2011, including our financial statements and the related notes.
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Our credit agreement provides for $500.0 million for
ITEM 5.          OTHER INFORMATION
Item 5.02(e) Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers
The Compensation Committee (the “Committee”) of the potential payment of cash dividends and stock repurchases, subject to certain limitations based on our leverage ratio as defined in our credit agreement. As of April 17, 2011, the aggregate remaining amount authorized and available under our credit agreement was $378.0 million.
Dividends.We did not pay any cash or other dividends during the last two fiscal years and do not anticipate paying dividends in the foreseeable future.
Stock Repurchases.In November 2010, theCompany’s Board of Directors has approved an amendment to the Company’s form of Revised Compensation and Benefits Assurance Agreement (the “Amended CIC Agreement”).  The Committee had previously approved the Revised Compensation and Benefits Assurance Agreement in November 2009 (the “Prior CIC Agreement”), and had authorized the Company to enter into the Prior CIC Agreement with three of its executive officers, including Leonard A. Comma, President and Chief Operating Officer; Philip H. Rudolph, Executive Vice President, General Counsel and Secretary; and Mark H. Blankenship, Senior Vice President and Chief Administrative Officer.  In connection with approving the form of Amended CIC Agreement, the Committee has authorized the Company to enter into the Amended CIC Agreement with Messrs. Comma, Rudolph and Blankenship, effective as of May 15, 2012.
Similar to the Prior CIC Agreement, the Amended CIC Agreement provides for compensation to the executive in the form of a programlump sum payment and other benefits in the event of a qualifying termination of the executive within 24 months of the effective date of a “change in control” of the Company, as that term is defined in the agreement. The Amended CIC Agreement has a term of two years, which automatically renews for an additional two years unless either party to repurchase upthe agreement gives notice of an intent not to $100.0 million in sharesrenew the agreement. 
The Prior CIC Agreement provided that any payments to the executive that constituted “parachute payments” within the meaning of our common stock expiring November 2011. AsSection 280G of April 17, 2011,the Internal Revenue Code (the “Code”) would be aggregated and reduced, if necessary, to the maximum amount of payments that could be paid to executive without giving rise to excise tax payments under Section 4999 of the Code (the “Excise Tax”).  Under the Amended CIC Agreement, the executive will automatically receive the greater of (i) the aggregate remainingparachute payments reduced to the maximum amount authorized for repurchase was $25.0 million. The following table summarizes shares repurchased pursuantthat would not subject the executive to the Excise Tax or (ii) the aggregate parachute payments, with the executive paying the Excise Tax and such other applicable federal, state and local income and employment taxes. 
This summary of the Amended CIC Agreement is qualified in its entirety by reference to the form of Amended CIC Agreement attached as Exhibit 10.2.1 to this program during the quarter ended April 17, 2011:report. 
                 
          (c)  
          Total number  
          of shares (d)
  (a) (b) purchased as Maximum dollar
  Total number Average part of publicly value that may yet
  of shares price paid announced be purchased under
  purchased per share programs these programs
              $  50,000,012 
January 24, 2011 - February 20, 2011          $  50,000,012 
February 21, 2011 - March 20, 2011  696,800  $  22.19   696,800  $  34,523,720 
March 21, 2011 - April 17, 2011  427,712  $  22.24   427,712  $  25,000,022 
                 
Total  1,124,512  $  22.21   1,124,512     
                 
      In May 2011, the Board of Directors authorized a new program to repurchase up to $100.0 million in shares of our common stock expiring November 2012.

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ITEM 6.EXHIBITS
NumberDescriptionDescriptionFormFiled with SEC
3.1Restated Certificate of Incorporation, as amended, which is incorporated herein by reference from the registrant’s Annual Report on Form 10-K for the fiscal year ended October 3, 1999.
3.1.1Certificate of Amendment of Restated Certificate of Incorporation, which is incorporated herein by reference from the registrant’s Current Report on Form 8-K dated September 21, 2007.
200710-K11/20/2009
3.2Amended and Restated Bylaws, which are incorporated herein by reference from the registrant’s Current Report on Form 8-K dated May 11, 2010.April 9, 20128-K4/10/2012
10.2.1 ~Form of Revised Compensation and Benefits Assurance Agreement for certain officers
10.15(a)Memorandum of Understanding clarifying date of employment with Qdoba Restaurant Corporation, which is incorporated herein by reference from the registrant’s Quarterly Report on Form 10-Q for the quarter ended January 23, 2011.
Filed herewith
31.1Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
2002Filed herewith
31.2Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
2002Filed herewith
32.1Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
2002Filed herewith
32.2Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
2002Filed herewith
101.INS*XBRL Instance Document
  
101.SCH*XBRL Taxonomy Extension Schema Document
  
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document  
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
  
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document
____________________________
~Management contract or compensatory plan
*In accordance with Regulation S-T, the XBRL-related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall be deemed to be “furnished” and not “filed.”

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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:
By:  
/S/ JERRYS/    JERRY P. REBEL  
REBEL        
  Jerry P. Rebel
  
Executive Vice President
and Chief Financial Officer
(principal (principal financial officer)
(Duly Authorized Signatory)
Date: May 19, 201117, 2012


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