Exhibit 99.1
Jack in the Box Inc. Reports First Quarter Results;
Provides Guidance for Second Quarter and Updates Fiscal 2005 Forecast
SAN DIEGO--(BUSINESS WIRE)--Feb. 23, 2005--
Announces $65 Million Share Repurchase Authorization
Jack in the Box Inc. (NYSE:JBX) today reported net earnings of
$25.4 million, or 68 cents per diluted share, in the first quarter
ended Jan. 23, 2005, compared with $14.4 million, or 39 cents per
diluted share, in the same quarter a year ago. Last year's quarter
included an after-tax charge to interest expense of $5.7 million, or
15 cents per diluted share, for costs related to refinancing the
company's credit facility. All numbers presented in this news release
reflect adjustments described in the company's restatement news
release, dated Dec. 16, 2004.
"New products and seasonal promotions contributed to the sixth
consecutive quarterly increase in Jack in the Box(R) same-store sales
and another solid performance for our core brand," said Robert Nugent,
chairman and CEO. "Our Qdoba Mexican Grill(R) brand also posted strong
results, with same-store sales increasing in the double-digit range on
top of a double-digit increase last year. Both chains have a strong
lineup of products and promotions that we believe will support our
sales expectations for the remainder of the year.
"Our balance sheet remains in excellent condition, and the company
continues to generate strong cash flows and maintain significant cash
reserves, even after completing a $35 million share repurchase program
at the beginning of the first quarter. Accordingly, our board of
directors believes that an additional $65 million share repurchase
program for 2005 represents a prudent opportunity to further increase
shareholder value."
First Quarter Initiatives
-- New products at Jack in the Box included a premium Chicken
Cordon Bleu sandwich, Chicken Caesar entree salad and two
seasonal ice cream shakes, Pumpkin Pie and Egg Nog. Jack in
the Box also added to each of its Kid's Meals a 4-oz. serving
of Mott's Original Applesauce.
-- Jack in the Box introduced reloadable gift cards at virtually
all of its restaurants in November. The "Jack Cash" gift cards
are available in any amount from $5 to $100.
-- Throughout the holiday season, Jack in the Box offered free
with all large combo meals a new Holiday Antenna Ball, with
Jack's familiar likeness featuring reindeer antlers and a red
nose.
-- Jack in the Box began offering all restaurant hourly employees
a health-care program, including vision and dental benefits.
As an additional incentive to crew members with more than a
year of service, Jack in the Box will pay a portion of their
premiums.
-- The company launched a new program for evaluating guest
service, called "Voice of the Customer," which asks randomly
selected customers to rate their restaurant experience in an
automated survey via telephone or Internet. The new program
provides restaurant managers with more relevant and frequent
guest feedback regarding their Jack in the Box experience than
did the previous mystery-guest program, and is expected to
save the company about $1 million annually in costs.
-- The company expanded the test of its fast-casual JBX Grill(TM)
concept to Boise, Idaho, and Bakersfield, Calif., where nine
locations are now operating with a new, flame-grilled cooking
platform, expanded menu and upgraded interior design. Early
response to the new concept has been positive, and the company
plans to incorporate the new menu, design and additional
enhancements in future tests, based on learnings gained at the
existing locations. To accommodate these enhancements, the
company now plans to open additional JBX Grill locations in
2006.
First Quarter Financial Highlights
-- Earnings per diluted share were 2 cents higher than the
company's guidance, resulting from higher other revenues (4
cents), lower income tax rate (2 cents), and lower interest
expense (1 cent), partially offset by lower restaurant
operating margin from higher tomato and beef costs (2 cents)
and softer same-store sales due to unusually severe rains
during January in many of the company's major western markets
(3 cents).
-- 11 new company and franchised Jack in the Box restaurants
opened versus 13 in FY04, bringing to 2,014 the total number
of Jack in the Box and JBX Grill restaurants at quarter end;
22 new company and franchised Qdoba Mexican Grill sites opened
versus 20 in FY04, bringing to 198 the total number of Qdoba
restaurants at quarter end; and 3 new Quick Stuff convenience
stores opened, bringing to 32 the total number of c-store
locations at quarter end compared with 18 a year ago. Qdoba,
Quick Stuff and JBX Grill operations are not material
components of the company's consolidated financial results or
projections.
-- Same-store sales at Jack in the Box restaurants increased 2.2
percent on top of a 3.1 percent increase in 2004. The increase
was slightly below the 2.5-3.0 percent increase forecast, due
primarily to the impact of unusually severe weather conditions
in January, mentioned previously. Same-store sales at Qdoba
increased in the double-digit range on top of a double-digit
increase in FY04.
-- Distribution and other sales were $93 million versus $96
million forecast, due primarily to fewer gallons of fuel sold
in January when heavy rains impacted the company's western
markets, and versus $44 million in FY04. The increase compared
with last year was due primarily to additional Quick Stuff
units and higher fuel sales, as well as increased distribution
sales to Qdoba and Jack in the Box franchised restaurants.
Increases in fuel sales reflect additional gallons dispensed
and higher retail prices per gallon, which have
proportionately higher costs, but which yield stable penny
profits.
-- Other revenues were $9 million compared with $6 million
forecast and $7 million in FY04, primarily related to the sale
of 13 Jack in the Box restaurants to franchisees versus 10-12
forecast and 19 last year, with the increase in average gains
due to the specific sales and cash flows of the restaurants
being sold. The company continues to expand its franchising
program to improve operating margins and accelerate cash flows
to be able to repurchase shares and reinvest in its restaurant
re-image program without incurring additional debt or diluting
equity.
-- Total revenues were $739 million versus $670 million in FY04.
-- Restaurant operating margin was 16.3 percent of sales compared
with 16.6 percent forecast and 15.8 percent in FY04, with the
decrease versus forecast due primarily to higher commodity
costs for tomatoes and beef, partially offset by effective
management of labor. The increase in restaurant operating
margin versus last year was due primarily to additional
leverage from higher sales, as well as effective labor
management and lower costs for occupancy, both of which were
related to continued Profit Improvement Program initiatives.
-- Costs of revenues were at 83.2 percent compared with 82.9
percent in FY04, due primarily to significant increases in
distribution and c-store sales at lower margins.
-- SG&A expense rate was 10.8 percent of revenues, as forecast,
compared with 11.3 percent in FY04, resulting primarily from
greater leverage from increased distribution and c-store
sales, along with continued Profit Improvement Program
initiatives.
-- Interest expense was $4.9 million versus $5.5 million
forecast, due primarily to lower-than-expected borrowing
rates, and versus $15.9 million in FY04, which included a $9.2
million pretax refinancing charge. Excluding the refinancing
charge, the decrease compared with last year was due primarily
to lower interest rates from refinancing and subsequent
repricing of the company's credit facility.
-- Income tax rate was 35.7 percent versus 38 percent forecast
and 37.9 percent in FY04, due primarily to the retroactive
reinstatement of the Work Opportunity Tax Credit (WOTC)
program and from continued tax-planning initiatives. The
company now expects its income tax rate for the fiscal year
will be approximately 36.4 percent.
-- Weighted average diluted shares outstanding were 37.3 million
versus 37 million forecast and 36.6 million in FY04, with the
increase due primarily to additional stock option exercises.
-- Capital expenditures were $31 million, same as FY04 and
slightly higher than the $25-30 million forecast, due in part
to the purchase of three franchised Qdoba restaurants.
-- Earnings from operations were $44.4 million and
depreciation/amortization was $26.1 million versus $39.0
million and $25.2 million, respectively, in FY04.
-- Current ratio was 0.9 versus 0.7 in FY04. Cash balances were
$118 million versus $31 million a year ago, due primarily to
strong operating cash flows, payments from franchisees on
notes receivable, and proceeds from sales of restaurants to
franchisees as part of the company's strategic plan to expand
franchising.
-- Debt:equity ratio was 0.5:1 versus 0.7:1 last year.
-- Accounts and notes receivable decreased $7 million from a year
ago, due primarily to repayment of short-term loans made to
qualified Jack in the Box franchisees for purchases of
restaurants from the company.
-- Other assets increased $26 million from a year ago, due
primarily to contributions of $30 million made to the
company's qualified pension plans in fiscal 2004.
-- Total debt was $303 million compared with $310 million in
FY04. The company currently has no balance outstanding on its
$200 million revolving credit facility.
-- Stockholders' equity increased $101 million from a year ago,
due primarily to increased earnings over the past year, as
well as a reduction in a charge to equity resulting from
contributions made to the company's pension plans. Increases
from stock option exercises were more than offset by the
recent completion of a $35 million share repurchase program.
Earnings Guidance Summary
-- The company today provided its initial guidance for the second
quarter ending April 17, stating that it expects to earn
approximately 50 cents per diluted share compared with 51
cents reported last year. The EPS forecast for the second
quarter is consistent with the company's budget for fiscal
2005, which incorporated the challenge of rolling over an 8.2
percent same-store sales increase in the second quarter of
2004.
-- The company also today updated its earnings guidance for
fiscal 2005. For the full year, the company now expects to
earn approximately $2.43 per diluted share, which is up from
its previous forecast of $2.33, and versus $2.02 reported for
fiscal 2004, which was a 53-week fiscal year that included the
above-mentioned 15 cents per share charge related to
refinancing. Current guidance is higher than originally
forecast, due primarily to a 6 cents benefit from a lower
income tax rate, a 2 cents benefit from lower interest
expense, a 5 cents benefit from higher gains on sales of
restaurants to franchisees, and a 3 cents benefit from
additional share repurchases, partially offset by a 3 cents
impact from softer sales in the first quarter, and a 3 cents
impact from stock-option expensing, as required by the
adoption of FAS 123R in the fourth quarter of fiscal 2005.
Second Quarter Initiatives
-- Jack in the Box restaurants introduced two premium sandwiches
in early February. The Bruschetta Chicken Ciabatta features a
grilled chicken breast on a lightly toasted ciabatta bun with
real provolone cheese, green leaf lettuce, mayo-onion sauce
and diced tomatoes marinated in basil, garlic, olive oil,
vinegar and Parmesan cheese. And the Classic Chicken Ciabatta
features a grilled chicken breast on a lightly toasted
ciabatta bun with reduced-fat herb mayo, sliced tomatoes,
green leaf lettuce and red onion slices. Inspired by a similar
sandwich developed and tested at the company's JBX Grill
concept, the new sandwiches constitute the chain's second
sandwich line featuring ciabatta bread; last year Jack in the
Box successfully launched a line of deli-style sandwiches
called Pannidos(R), which are served on ciabatta baguettes.
-- As planned, Jack in the Box will begin testing new interior
and exterior designs for its restaurants during the quarter.
The enhancements are intended to create a more contemporary,
upscale atmosphere and promote more in-restaurant dining.
Approximately 50 restaurants will test the new designs in
fiscal 2005, and assuming results are successful, the company
expects to re-image approximately 200 restaurants each year
thereafter.
-- Several recent internal-service initiatives have helped reduce
crew turnover at Jack in the Box restaurants to a current
all-time low. They include access to health benefits for all
full- and part-time crew members and computer-based training.
To further promote retention and help ensure operational
consistency throughout the chain, Jack in the Box is rolling
out a new structured coaching process to help restaurant
managers identify opportunities to improve operations and
create step-by-step business plans to achieve such
opportunities.
-- The company also today announced that it recently completed,
effective Jan. 31, 2005, an additional repricing of its $275
million term loan to a new borrowing rate of LIBOR plus 175
basis points (versus 225 basis points previously), which will
reduce interest expense by approximately $1.2 million
annually.
$65 Million Share Repurchase Authorization
-- The company said today that its board of directors has
authorized a $65 million program to repurchase shares of the
company's common stock, in the open market or in private
transactions, from time to time, until Oct. 2, 2005, the end
of the company's current fiscal year. Successful completion of
the program is expected to provide a benefit of approximately
3 cents per diluted share in this fiscal year, and such
repurchases will be made using the company's existing cash
resources.
Second Quarter Guidance Highlights (in approximate amounts)
-- 12 new company and franchised Jack in the Box and JBX Grill
restaurants are planned to open, along with 15 new company and
franchised Qdoba restaurants, and 3 new Quick Stuff
convenience stores.
-- 1 percent same-store sales increase is estimated on top of an
8.2 percent increase in the second quarter last year, in which
Jack in the Box experienced one of its highest-ever sales
increases, related primarily to the introduction of its
Pannido sandwich line.
-- $75 million in distribution and other sales is estimated
versus $39 million last year, due primarily to increased
distribution sales to Qdoba and Jack in the Box franchised
restaurants, additional Quick Stuff units and higher fuel
sales.
-- $7 million in other revenues is projected versus $5 million
last year, due primarily to the sale of 14 restaurants to
franchisees versus 7 last year, with the decrease in average
gains related to the specific sales and cash flows of the
restaurants being sold.
-- $560 million in total revenues is projected versus $517
million last year.
-- Restaurant operating margin is estimated at 16.7 percent
versus 17.5 percent last year, due primarily to the
significant fixed- and variable-cost leverage obtained from an
8.2 percent increase in same-store sales and moderate food
costs in last year's second quarter. This year's estimate
reflects higher commodity costs for beef and dairy, partially
offset by continued improvement in labor management.
-- Costs of revenues are expected to be 83.4 percent versus 82.3
percent last year, due primarily to lower restaurant operating
margin and significant increases in distribution and c-store
sales at lower margins, partially offset by higher gains on
sales of restaurants.
-- SG&A expense rate is expected to be 10.7 percent versus 11.3
percent last year, due primarily to continued Profit
Improvement Program initiatives and additional leverage from
higher distribution and c-store sales.
-- Interest expense is expected to be $4 million, the same as
last year, as increases in LIBOR rates year over year offset
two term-loan repricing initiatives, as mentioned previously.
-- Income tax rate is projected at 35.8 percent versus 36.0
percent last year.
-- Weighted average diluted shares outstanding are projected to
be 37.3 million versus 36.8 million last year.
-- Capital expenditures are estimated at $20-25 million versus
$38 million last year.
-- Earnings from operations are estimated at $33 million and
depreciation/amortization at $21 million versus $33 million
and $20 million, respectively, last year.
Fiscal 2005 Guidance Update (in approximate amounts)
-- New unit openings are expected to remain on plan for both Jack
in the Box and Qdoba at 45-50 and 75, respectively.
-- Jack in the Box same-store sales are now expected to increase
approximately 2.5 percent, which is at the lower end of
original guidance, due primarily to the weather-related
softness in the first quarter. Same-store sales for Qdoba are
still expected to increase in the mid-single-digit range.
-- Other revenues are expected to increase to $30 million from
$24 million last year on higher average gains from the
expected sales of 54 restaurants to franchisees, 4 more than
originally forecast. The company continues to expand its
franchising program to improve operating margins and
accelerate cash flows to be able to repurchase shares and
reinvest in its restaurant re-image program without incurring
additional debt or diluting equity.
-- Restaurant operating margin is estimated at 17.2 percent, as
forecast.
-- SG&A rate is expected to be 10.8 percent versus 10.7 percent
previously forecast, due primarily to absorption of costs
related to stock-option expensing, as required by the adoption
of FAS 123R in the fourth quarter of fiscal 2005.
-- Interest expense is expected to be $18 million versus $19
million previously forecast, due primarily to the recent term
loan repricing and continued Profit Improvement Program
initiatives.
-- Income tax rate is projected at 36.4 percent versus 38 percent
previously forecast, due to the retroactive reinstatement of
the WOTC program, tax refunds and continued tax-planning
initiatives.
-- Weighted average diluted shares outstanding are projected to
be 36.8 million versus 37 million previously forecast, related
primarily to the new share repurchase program.
-- Capital expenditures remain unchanged at $125-135 million.
In the company's news release of Dec. 16, 2004, Jack in the Box
provided information related to its restatement of prior years'
financial results and included the estimated earnings per diluted
share effect for each of the first three quarters of fiscal 2004.
These adjustments to earnings per diluted share round to 3 cents for
each of the first three quarters of last year, and when calculated on
a discreet basis they are as follows: 3.4 cents in the first quarter,
yielding diluted earnings per share of 39 cents; 2.5 cents in the
second quarter, yielding diluted earnings per share of 51 cents; and
2.5 cents in the third quarter, yielding diluted earnings per share of
56 cents.
The full-year impact of these adjustments in fiscal 2004 rounds to
10 cents per diluted share and total 10.2 cents on a discreet basis,
yielding diluted earnings per share of $2.02.
About Jack in the Box Inc.
Jack in the Box Inc. (NYSE:JBX) is a restaurant company that
operates and franchises Jack in the Box(R) restaurants, one of the
nation's largest hamburger chains, with more than 2,000 restaurants in
17 states. Through a wholly owned subsidiary, the company also
operates and franchises Qdoba Mexican Grill(R), an emerging leader in
fast-casual dining, with approximately 200 restaurants in 31 states.
Based in San Diego, Jack in the Box Inc. has nearly 45,000 employees.
For more information, visit www.jackinthebox.com.
Safe Harbor Statement
Any statements contained in this press release that are not
historical are forward-looking statements, including statements about
the company's financial results and estimates, adjustments to
financial statements, and accounting policies, that are subject to
substantial risks and uncertainties. These statements may be
identified by the use of words such as "believes," "estimates,"
"expects," "guidance," "will," "would," and other words of similar
meaning.
The following are some of the factors that could cause the
company's actual results to differ materially from those expressed in
the forward-looking statements: costs may exceed projections,
including costs related to new construction, Jack in the Box remodels
and conversions of Jack in the Box restaurants to JBX Grill;
developing and marketing JBX Grill as a new concept; costs for food
ingredients, particularly tomatoes, beef and dairy, as well as fuel,
utilities and labor, including increases in the minimum wage, workers'
compensation and other insurance; delays in the remodeling or opening
of restaurants; the availability of financing on terms satisfactory to
franchisees and potential franchisees; timely payment of franchisees'
obligations due the company; the continuation of positive
relationships with the company's franchisees, and the franchisees'
continuing willingness to participate in company strategies; adverse
regional weather conditions and business, economic and other local or
national conditions or events that affect consumer confidence and
spending patterns, such as concerns about the safety of beef or other
foods; concerns about obesity; the effect of any widespread negative
publicity regarding the company or the restaurant industry in general;
the effects of war and terrorist activities; changes in government
regulations; changes in accounting standards, policies and practices;
potential variances between estimated and actual liabilities; the
effect of potential weakness in or failure of internal controls; the
effects of legal claims; and the possibility of unforeseen events
affecting the industry in general. Further information about factors
that could affect the company's financial and other results is
included in the company's annual report on Form 10-K and its periodic
reports on Forms 10-Q and 8-K filed with the Securities and Exchange
Commission. Statements about the company's past performance are not
necessarily indicative of its future results. The information in this
press release is as of February 23, 2005. The company undertakes no
obligation to update or revise any forward-looking statement, whether
as the result of new information, future events or otherwise.
JACK IN THE BOX INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
Sixteen Weeks Ended
-----------------------
Jan. 23, Jan. 18,
2005 2004
----------- -----------
(Restated)
Revenues:
Restaurant sales $612,140 $597,712
Distribution and other sales 93,040 43,670
Franchise rents and royalties 24,656 21,217
Other 8,760 7,321
----------- -----------
738,596 669,920
----------- -----------
Costs of revenues:
Restaurant costs of sales 192,279 188,449
Restaurant operating costs 319,898 315,063
Costs of distribution and other sales 92,103 42,907
Franchised restaurant costs 10,331 8,916
----------- -----------
614,611 555,335
----------- -----------
Selling, general and administrative 79,558 75,567
----------- -----------
Earnings from operations 44,427 39,018
Interest expense 4,862 15,899
----------- -----------
Earnings before income taxes 39,565 23,119
Income taxes 14,135 8,767
----------- -----------
Net earnings $25,430 $14,352
=========== ===========
Earnings per share:
Basic $.71 $.40
Diluted $.68 $.39
Weighted-average shares outstanding:
Basic 35,954 36,050
Diluted 37,313 36,607
JACK IN THE BOX INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Jan. 23, Jan. 18,
2005 2004
----------- -----------
(Restated)
ASSETS
Current assets:
Cash and cash equivalents $118,054 $30,558
Accounts and notes receivable, net 20,191 26,804
Inventories 38,712 34,801
Other current assets 57,608 72,162
----------- -----------
Total current assets 234,565 164,325
----------- -----------
Property and equipment, net 859,036 834,417
Other assets, net 181,845 155,757
----------- -----------
TOTAL $1,275,446 $1,154,499
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $8,019 $9,536
Other current liabilities 243,794 225,665
----------- -----------
Total current liabilities 251,813 235,201
----------- -----------
Long-term debt, net of current maturities 295,236 300,701
Other long-term liabilities 162,358 153,362
----------- -----------
Total liabilities 709,407 689,264
----------- -----------
Stockholders' equity 566,039 465,235
----------- -----------
TOTAL $1,275,446 $1,154,499
=========== ===========
CONTACT: Jack in the Box Inc.
Brian Luscomb, 858-571-2229
Division Vice President, Corporate Communications
Email: brian.luscomb@jackinthebox.com