Jack in the Box (JACK) 8-K Jack in the Box Inc. Reports Third Quarter FY 2012 Earnings; Updates Guidance for FY 2012

Exhibit 99.1

Jack in the Box Inc. Reports Third Quarter FY 2012 Earnings; Updates Guidance for FY 2012

SAN DIEGO--(BUSINESS WIRE)--August 8, 2012--Jack in the Box Inc. (NASDAQ: JACK) today reported net earnings of $11.6 million, or $0.26 per diluted share, for the third quarter ended July 8, 2012, compared with net earnings of $18.7 million, or $0.38 per diluted share, for the third quarter of fiscal 2011.

Gains from refranchising contributed approximately $0.05 per diluted share for the quarter as compared with approximately $0.13 per diluted share in the prior year quarter.

Operating earnings per share, a non-GAAP measure which the company defines as diluted earnings per share on a GAAP basis excluding gains from refranchising and restructuring charges, were $0.37 per diluted share compared with $0.25 per diluted share in the prior year quarter. A reconciliation of non-GAAP measurements to GAAP results is attached to this release.

During fiscal 2012, the company has been engaged in a comprehensive review of its organization structure, including evaluating opportunities for outsourcing, restructuring of certain functions and workforce reductions. As a result, restructuring charges of $11.3 million, or approximately $0.16 per diluted share, were recorded during the third quarter which relate primarily to costs resulting from employees electing to participate in the company’s voluntary early retirement program. These charges are included in “impairment and other charges, net” in the accompanying consolidated statement of earnings. The company expects to incur additional restructuring charges during the fourth quarter of 2012 relating to this review.

Subsequent to the end of the third quarter, the company entered into an agreement to outsource its distribution business, and expects the transition to be completed by the end of the first quarter of fiscal 2013, subject to the anticipated completion of certain closing conditions. The company expects that the distribution business, including exit costs, will be reflected as discontinued operations beginning in the fourth quarter of 2012.

Increase in same-store sales:

		12 Weeks Ended	12 Weeks Ended	40 Weeks Ended	40 Weeks Ended
		July 8, 2012	July 10, 2011	July 8, 2012	July 10, 2011
Jack in the Box®:
	Company	3.4%	4.7%	4.9%	2.4%
	Franchise	2.6%	2.4%	3.0%	0.9%
	System	2.8%	3.2%	3.5%	1.4%
Qdoba®:
	Company	3.3%	5.3%	3.5%	5.4%
	Franchise	0.9%	5.0%	2.5%	6.1%
	System	2.1%	5.1%	3.0%	5.8%

Linda A. Lang, chairman and chief executive officer, said, “Jack in the Box company same-store sales increased 3.4 percent in the third quarter, driven by a combination of traffic growth and an increase in average check. Four weeks into the fourth quarter, our same-store sales are tracking above our third quarter results. We believe the same-store sales increases we’ve experienced over the last seven quarters reflect the investments we have made to drive sustainable growth by enhancing the entire guest experience at the Jack in the Box brand.

“Qdoba’s same-store sales in the third quarter increased 3.3 percent for company restaurants and 2.1 percent system-wide. Importantly, company restaurant operating margin at Qdoba improved to 18.7 percent in the third quarter from 16.0 percent in the year-ago quarter,” Lang said.

Consolidated restaurant operating margin was 16.5 percent of sales in the third quarter of 2012, compared with 12.5 percent of sales in the year-ago quarter.

Food and packaging costs in the quarter were 160 basis points lower than prior year. The decrease resulted from the benefit of price increases and favorable product mix as well as a greater proportion of Qdoba company restaurants which combined to more than offset commodity inflation. Overall commodity costs were approximately 1 percent higher in the quarter.

Payroll and employee benefits costs were 100 basis points lower than the year-ago quarter, reflecting leverage from same-store sales increases, the benefits of refranchising Jack in the Box restaurants, and the favorable impact of recent acquisitions of Qdoba franchised restaurants.

Occupancy and other costs decreased 140 basis points in the third quarter due primarily to leverage from same-store sales increases, the benefits of refranchising Jack in the Box restaurants, the favorable impact of recent acquisitions of Qdoba franchised restaurants, and a reduction of approximately 50 basis points due to costs associated with the rollout of new menu boards and uniforms during the prior year quarter at Jack in the Box restaurants. These decreases were partially offset by higher debit card fees and higher depreciation expense related to the Jack in the Box re-image program.

SG&A expense for the third quarter increased by $1.2 million and was 10.5 percent of revenues as compared to 9.9 percent in the prior year quarter. The increase in SG&A was attributable primarily to higher incentive compensation accruals, increased G&A related to Qdoba growth, higher pension and pre-opening costs which were partially offset by lower advertising and overhead costs resulting from the company’s refranchising strategy. Mark-to-market adjustments on investments supporting the company’s non-qualified retirement plans had no impact on SG&A in either quarter.

Gains on the sale of 18 company-operated Jack in the Box restaurants to franchisees totaled $3.7 million in the third quarter, or approximately $0.05 per diluted share, compared with $10.2 million, or approximately $0.13 per diluted share in the year-ago quarter from the sale of 112 restaurants. For the third quarter of 2012, average gains were $207,000 per restaurant, and total proceeds related to refranchising were $7.3 million, or an average of $405,000 per restaurant.

Impairment and other charges increased in the quarter to $15.2 million from $2.1 million a year ago. This increase related primarily to restructuring charges of $11.3 million discussed above and an increase in costs associated with closed restaurants.

The company acquired 9 franchised Qdoba restaurants in one market during the third quarter of 2012 for $9.1 million. This acquisition is expected to be accretive to fiscal 2012 restaurant operating margin and earnings per share.

In November 2011, the company’s board of directors approved a new $100 million stock-buyback program that expires in November 2013. The company did not repurchase any shares of its common stock during the third quarter, and as of July 8, 2012, $100 million remains available under this authorization.

Restaurant openings

Seven new Jack in the Box restaurants opened in the third quarter, including 2 franchised locations, compared with 5 new restaurants opened system-wide during the same quarter last year, of which 1 was franchised.

In the third quarter, 11 Qdoba restaurants opened, including 5 franchised locations, versus 17 new restaurants in the year-ago quarter, of which 11 were franchised.

At July 8, 2012, the company’s system total comprised 2,247 Jack in the Box restaurants, including 1,661 franchised locations, and 614 Qdoba restaurants, including 310 franchised locations.

Guidance

The following guidance and underlying assumptions reflect the company’s current expectations for the fourth quarter and fiscal year ending September 30, 2012. Fiscal 2012 is a 52-week year, with 16 weeks in the first quarter, and 12 weeks in each of the second, third and fourth quarters.

Fourth quarter fiscal year 2012 guidance

• Same-store sales are expected to increase approximately 2 to 3 percent at Jack in the Box company restaurants versus a 5.8 percent increase in the year-ago quarter.
• Same-store sales are expected to increase approximately 1 to 2 percent at Qdoba system restaurants versus a 3.7 percent increase in the year-ago quarter, with company restaurant same-store sales growth expected to be higher than franchise restaurants.

Fiscal year 2012 guidance

• Same-store sales are expected to increase approximately 4.0 to 4.5 percent at Jack in the Box company restaurants.
• Same-store sales are expected to increase approximately 2.5 to 3.0 percent at Qdoba system restaurants, with company restaurant same-store sales growth expected to be higher than franchise restaurants.
• Overall commodity costs are now expected to increase by approximately 3.5 percent for the full year.
• Restaurant operating margin for the full year is expected to be approximately 15.0 percent, depending on same-store sales and commodity inflation.
• Approximately 35 new Jack in the Box restaurants are expected to open, including approximately 20 company locations.
• Approximately 60 new Qdoba restaurants are expected to open, of which approximately 25 to 30 are expected to be company locations.
• The company expects to sell approximately 100 Jack in the Box restaurants to franchisees with expected gains of approximately $25 million and total proceeds of approximately $45 million resulting from the sales.
• Capital expenditures are expected to be $80 to $90 million.
• SG&A is expected to be in the mid-10 percent range.
• Impairment and other charges are expected to be approximately 70 basis points, excluding restructuring charges.
• The tax rate is expected to be approximately 35 to 36 percent.
• Diluted earnings per share are expected to range from $1.48 to $1.58, excluding restructuring charges. Operating earnings per share, which the company defines as diluted earnings per share on a GAAP basis excluding gains from refranchising and restructuring charges, are expected to range from $1.12 to $1.22 per diluted share, as compared to the company’s previous guidance of $1.02 to $1.17 (excluding $0.02 of restructuring charges recorded in the second quarter). Gains from refranchising are expected to contribute approximately $0.36 to diluted earnings per share, as compared to $0.78 in fiscal 2011.
• Diluted earnings per share includes approximately $0.10 to $0.11 of re-image incentive payments to Jack in the Box franchisees in fiscal 2012 to complete the re-image program as compared to $0.11 in fiscal 2011.

Conference call

The company will host a conference call for financial analysts and investors on Thursday, August 9, 2012, beginning at 8:30 a.m. PT (11:30 a.m. ET). The conference call will be broadcast live over the Internet via the Jack in the Box website. To access the live call through the Internet, log onto the Investors section of the Jack in the Box Inc. website at http://investors.jackinthebox.com at least 15 minutes prior to the event in order to download and install any necessary audio software. A replay of the call will be available through the Jack in the Box Inc. corporate website for 21 days, beginning at approximately 11:30 a.m. PT on August 9.

About Jack in the Box Inc.

Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, is a restaurant company that operates and franchises Jack in the Box^® restaurants, one of the nation’s largest hamburger chains, with more than 2,200 restaurants in 20 states. Additionally, through a wholly owned subsidiary, the company operates and franchises Qdoba Mexican Grill^®, a leader in fast-casual dining, with more than 600 restaurants in 42 states and the District of Columbia. For more information on Jack in the Box and Qdoba, including franchising opportunities, visit www.jackinthebox.com or www.qdoba.com.

Safe harbor statement

This press release contains forward-looking statements within the meaning of the federal securities laws. Such statements are subject to substantial risks and uncertainties. A variety of factors could cause the company’s actual results to differ materially from those expressed in the forward-looking statements, including the success of new products and marketing initiatives, the impact of competition, unemployment, trends in consumer spending patterns, commodity costs, the timing of sales of Jack in the Box restaurants to franchisees, and stock market volatility. These and other factors are discussed in the company’s annual report on Form 10-K and its periodic reports on Form 10-Q filed with the Securities and Exchange Commission which are available online at www.jackinthebox.com or in hard copy upon request. The company undertakes no obligation to update or revise any forward-looking statement, whether as the result of new information or otherwise.

JACK IN THE BOX INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS
(Unaudited)
Operating earnings per share, a non-GAAP measure, is defined by the company as diluted earnings per share on a GAAP basis excluding gains from refranchising and restructuring charges. Management believes this non-GAAP financial measure provides important supplemental information to assist investors in analyzing the performance of the company’s core business. In addition, the company uses operating earnings per share in establishing performance goals for purposes of executive compensation. The company encourages investors to rely upon its GAAP numbers, but includes this non-GAAP financial measure as a supplemental metric to assist investors. This non-GAAP financial measure should not be considered as a substitute for, or superior to, financial measures calculated in accordance with GAAP. In addition, this non-GAAP financial measure used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
Below is a reconciliation of non-GAAP operating earnings per share to the most directly comparable GAAP measure, diluted earnings per share:
	12 Weeks Ended		40 Weeks Ended
	July 8,	July 10,	July 8,	July 10,
	2012	2011	2012	2011
Diluted earnings per share - GAAP	$0.26	$0.38	$1.01	$1.13
Plus: Restructuring charges	0.16	−	0.19	−
Less: Gains from refranchising	(0.05)	(0.13)	(0.28)	(0.49)
Operating earnings per share - Non-GAAP	$0.37	$0.25	$0.92	$0.64

JACK IN THE BOX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data) (Unaudited)
			Quarter						Year-to-Date
			July 8,			July 10,			July 8,			July 10,
			2012			2011			2012			2011
Revenues:
	Company restaurant sales		$	285,376		$	326,033		$	940,281		$	1,084,182
	Distribution sales			138,839			125,704			473,779			393,753
	Franchise revenues			77,605			67,542			247,105			211,194
				501,820			519,279			1,661,165			1,689,129
Operating costs and expenses, net:
	Company restaurant costs:
		Food and packaging		92,155			110,596			309,172			359,725
		Payroll and employee benefits		81,806			96,723			274,875			329,235
		Occupancy and other		64,316			78,100			214,751			259,896
		Total company restaurant costs		238,277			285,419			798,798			948,856
	Distribution costs			138,839			126,063			473,779			395,242
	Franchise costs			38,604			31,589			126,459			101,268
	Selling, general and administrative expenses			52,566			51,344			172,780			170,854
	Impairment and other charges, net			15,181			2,101			24,606			10,191
	Gains on the sale of company-operated restaurants			(3,733	)		(10,190	)		(18,933	)		(38,940	)
				479,734			486,326			1,577,489			1,587,471
Earnings from operations				22,086			32,953			83,676			101,658
Interest expense, net				4,371			4,016			14,962			12,573
Earnings before income taxes				17,715			28,937			68,714			89,085
Income taxes				6,123			10,192			23,540			31,138
Net earnings			$	11,592		$	18,745		$	45,174		$	57,947
Net earnings per share:
	Basic		$	0.26		$	0.39		$	1.03		$	1.15
	Diluted		$	0.26		$	0.38		$	1.01		$	1.13
Weighted-average shares outstanding:
	Basic			44,156			48,498			43,975			50,435
	Diluted			45,153			49,252			44,892			51,225

JACK IN THE BOX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share data) (Unaudited)
			July 8,			October 2,
			2012			2011
ASSETS
Current assets:
	Cash and cash equivalents		$	10,815		$	11,424
	Accounts and other receivables, net			84,899			86,213
	Inventories			36,997			38,931
	Prepaid expenses			32,175			18,737
	Deferred income taxes			44,166			45,520
	Assets held for sale and leaseback			62,400			51,793
	Other current assets			517			1,793
		Total current assets		271,969			254,411
Property and equipment, at cost				1,532,655			1,518,799
Less accumulated depreciation and amortization				(707,105	)		(663,373	)
	Property and equipment, net			825,550			855,426
Goodwill				140,470			105,872
Other assets, net				241,099			216,613
			$	1,479,088		$	1,432,322
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Current maturities of long-term debt		$	21,400		$	21,148
	Accounts payable			67,541			94,348
	Accrued liabilities			176,766			167,487
		Total current liabilities		265,707			282,983
Long-term debt, net of current maturities				430,441			447,350
Other long-term liabilities				340,376			290,723
Deferred income taxes				5,310			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, 75,600,656 and 74,992,487 issued, respectively			756			750
	Capital in excess of par value			215,539			202,684
	Retained earnings			1,108,194			1,063,020
	Accumulated other comprehensive loss, net			(115,776	)		(95,940	)
	Treasury stock, at cost, 31,072,631 and 30,746,099 shares, respectively			(771,459	)		(764,558	)
		Total stockholders’ equity		437,254			405,956
			$	1,479,088		$	1,432,322

JACK IN THE BOX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
			Year-to-Date
			July 8,			July 10,
			2012			2011
Cash flows from operating activities:
	Net earnings		$	45,174		$	57,947
	Adjustments to reconcile net earnings to net cash provided by operating activities:
		Depreciation and amortization		74,210			74,342
		Deferred finance cost amortization		2,068			1,954
		Deferred income taxes		(2,314	)		(7,771	)
		Share-based compensation expense		5,001			6,755
		Pension and postretirement expense		26,853			18,343
		Gains on cash surrender value of company-owned life insurance		(8,781	)		(8,287	)
		Gains on the sale of company-operated restaurants		(18,933	)		(38,940	)
		Gains on the acquisition of franchised-operated restaurants		-			(426	)
		Losses on the disposition of property and equipment, net		3,762			6,084
		Impairment charges		2,765			1,684
	Changes in assets and liabilities, excluding acquisitions and dispositions:
		Accounts and other receivables		(2,891	)		(14,198	)
		Inventories		1,934			(754	)
		Prepaid expenses and other current assets		(12,346	)		2,453
		Accounts payable		(5,395	)		(3,071	)
		Accrued liabilities		13,210			4,950
		Pension and postretirement contributions		(9,998	)		(3,522	)
		Other		(2,737	)		(5,527	)
		Cash flows provided by operating activities		111,582			92,016
Cash flows from investing activities:
	Purchases of property and equipment			(56,205	)		(99,485	)
	Purchases of assets held for sale and leaseback			(31,565	)		(17,442	)
	Proceeds from the sale of assets held for sale and leaseback			18,457			25,753
	Proceeds from the sale of company-operated restaurants			29,253			76,915
	Collections on notes receivable			10,198			20,014
	Disbursements for loans to franchisees			(3,976	)		(7,582	)
	Acquisitions of franchise-operated restaurants			(48,262	)		(22,077	)
	Other			315			2,170
		Cash flows used in investing activities		(81,785	)		(21,734	)
Cash flows from financing activities:
	Borrowings on revolving credit facility			444,380			543,000
	Repayments of borrowings on revolving credit facility			(445,104	)		(453,000	)
	Principal repayments on debt			(15,933	)		(8,549	)
	Debt issuance costs			(741	)		(989	)
	Proceeds from issuance of common stock			7,096			4,260
	Repurchases of common stock			(6,901	)		(138,050	)
	Excess tax benefits from share-based compensation arrangements			525			883
	Change in book overdraft			(13,728	)		(16,418	)
		Cash flows used in financing activities		(30,406	)		(68,863	)
Net increase (decrease) in cash and cash equivalents				(609	)		1,419
Cash and cash equivalents at beginning of period				11,424			10,607
Cash and cash equivalents at end of period			$	10,815		$	12,026

JACK IN THE BOX INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION (Unaudited)
The following table presents certain income and expense items included in the company’s 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
			July 8,		July 10,		July 8,		July 10,
			2012		2011		2012		2011
Revenues:
	Company restaurant sales		56.9	%	62.8	%	56.6	%	64.2	%
	Distribution sales		27.7	%	24.2	%	28.5	%	23.3	%
	Franchise revenues		15.5	%	13.0	%	14.9	%	12.5	%
		Total revenues	100.0	%	100.0	%	100.0	%	100.0	%
Operating costs and expenses, net:
	Company restaurant costs:
		Food and packaging (1)	32.3	%	33.9	%	32.9	%	33.2	%
		Payroll and employee benefits (1)	28.7	%	29.7	%	29.2	%	30.4	%
		Occupancy and other (1)	22.5	%	24.0	%	22.8	%	24.0	%
		Total company restaurant costs (1)	83.5	%	87.5	%	85.0	%	87.5	%
	Distribution costs (1)		100.0	%	100.3	%	100.0	%	100.4	%
	Franchise costs (1)		49.7	%	46.8	%	51.2	%	48.0	%
	Selling, general and administrative expenses		10.5	%	9.9	%	10.4	%	10.1	%
	Impairment and other charges, net		3.0	%	0.4	%	1.5	%	0.6	%
	Gains on the sale of company-operated restaurants		(0.7	%)	(2.0	%)	(1.1	%)	(2.3	%)
Earnings from operations			4.4	%	6.3	%	5.0	%	6.0	%
Income tax rate (2)			34.6	%	35.2	%	34.3	%	35.0	%

(1)	As a percentage of the related sales and/or revenues.
(2)	As a percentage of earnings before income taxes.

The following table summarizes the year-to-date changes in the number of Jack in the Box and Qdoba company and franchise restaurants:

			July 8, 2012						July 10, 2011
			Company		Franchise		Total		Company		Franchise		Total
Jack in the Box:
	Beginning of year		629		1,592		2,221		956		1,250		2,206
		New	14		16		30		11		10		21
		Refranchised	(55	)	55		-		(226	)	226		-
		Closed	(2	)	(2	)	(4	)	(6	)	(1	)	(7	)
	End of period		586		1,661		2,247		735		1,485		2,220
		% of system	26	%	74	%	100	%	33	%	67	%	100	%
Qdoba:
	Beginning of year		245		338		583		188		337		525
		New	14		20		34		17		30		47
		Acquired from franchisees	45		(45	)	-		24		(24	)	-
		Closed	-		(3	)	(3	)	-		(8	)	(8	)
	End of period		304		310		614		229		335		564
		% of system	50	%	50	%	100	%	41	%	59	%	100	%
Consolidated:
	Total system		890		1,971		2,861		964		1,820		2,784
		% of system	31	%	69	%	100	%	35	%	65	%	100	%

CONTACT:
Jack in the Box Inc.
Investor Contact:
Carol DiRaimo, 858-571-2407
or
Media Contact:
Brian Luscomb, 858-571-2291