Exhibit 99.1
Jack in the Box Inc. Reports Second-Quarter Results;
Provides Third-Quarter Guidance and Updates Fiscal 2005 Forecast
SAN DIEGO--(BUSINESS WIRE)--May 18, 2005--Jack in the Box Inc. (NYSE:JBX)
today reported net earnings of $20.7 million, or 55 cents per diluted share, in
the second quarter ended April 17, 2005, compared with $18.7 million, or 51
cents per diluted share, in the same quarter a year ago. Year to date, net
earnings totaled $46.1 million, or $1.23 per diluted share, compared with $33.0
million, or 90 cents per diluted share, for the first half of fiscal 2004, which
included a first-quarter 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.
The company also today updated its earnings guidance for fiscal 2005 to
approximately $2.46 per diluted share, compared with $2.43 per share previously
forecast and $2.02 per share reported for fiscal 2004, which was a 53-week
fiscal year. Excluding the 53rd week (+3 cents) and the refinancing charge (-15
cents), last year's earnings per diluted share were $2.14.
"Our two new chicken ciabatta sandwiches were a hit with guests and
contributed to a 3.1 percent increase in same-store sales for the quarter on top
of an 8.2 percent increase last year," said Robert Nugent, chairman and chief
executive officer. "With a new instant-win game currently under way at Jack in
the Box and two new ciabatta burgers slated for introduction at the end of May,
we believe we will maintain our positive sales momentum in the second half of
the fiscal year."
Second Quarter Initiatives
-- New products at Jack in the Box(R) restaurants included two premium
sandwiches served on lightly toasted artisan ciabatta bread:
Bruschetta Chicken and Classic Chicken.
-- As planned, the company began testing a new interior and exterior
design for its Jack in the Box restaurants. The design enhancements
are intended to create a more contemporary 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.
"Developing innovative new products and enhancing our restaurant facilities
are part of our holistic strategy to reinvent the Jack in the Box brand," Nugent
said. "Using the consumer research facilities at our new Innovation Center,
along with extensive field research and market analysis, we continue to identify
opportunities to improve our menu and facilities, as well as guest service. This
research is benefiting both our Jack in the Box and JBX Grill(TM) brands, and
will be essential in determining the next test phase of our new fast-casual JBX
Grill concept."
-- The company continued testing JBX Grill at nine locations in Boise,
Idaho, and Bakersfield, Calif., where the concept was enhanced based
on learnings gained at two prototype restaurants in San Diego. For
example, the dining areas are now larger and more open, the service
lobbies were redesigned to improve traffic flow and merchandising, and
the menu was expanded with flame-grilled products. With these market
tests successfully launched and the purpose of the San Diego "learning
labs" fulfilled, the company converted the menus at the two prototype
restaurants back to Jack in the Box.
-- In February, the board of directors authorized a $65 million program
to repurchase shares of the company's common stock using existing cash
resources. During the quarter, the company repurchased approximately
965,000 of its shares. This buyback program was completed after
quarter end, on May 6, with a total of approximately 1.7 million
shares repurchased.
-- To reduce exposure to rising interest rates, the company converted
approximately $130 million of its $275 million term loan at floating
rates to a fixed interest rate for the next three years.
Second Quarter Financial Highlights
-- Earnings per diluted share were 5 cents higher than the company's
guidance, resulting from higher same-store sales, improved labor
management, fixed-cost sales leverage and Profit Improvement Program
initiatives, partially offset by higher beef, produce and cheese costs
(+9 cents); higher other revenues, primarily from the sale of Jack in
the Box restaurants to franchisees (+2 cents); lower interest expense
(+1 cent); higher SG&A expense, due primarily to increases in
incentive accruals, as well as expenses associated with Sarbanes-Oxley
compliance (-5 cents); and a non-recurring expense associated with an
arbitration award in connection with the cancellation of a utility
contract (-2 cents).
-- 12 new company and franchised Jack in the Box and JBX Grill
restaurants opened, as forecast, versus 14 in FY04, bringing to 2,024
the total number of Jack in the Box and JBX Grill restaurants at
quarter end, comprising 1,545 company and 479 franchised locations; 18
new company and franchised Qdoba Mexican Grill(R) sites opened versus
15 forecast and 7 in FY04, bringing to 215 the total number of Qdoba
restaurants at quarter end, comprising 51 company and 164 franchised
locations; and 3 new Quick Stuff(R) convenience stores opened,
bringing to 35 the total number of c-store locations at quarter end
versus 21 in FY04. 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 3.1 percent
on top of an 8.2 percent increase in 2004. The increase was higher
than the 1.0 percent increase forecast, due in part to strong sales of
premium products, including the new chicken ciabatta sandwiches. Year
to date, same-store sales increased 2.6 percent on top of a 5.2
percent increase for the same period last year. During the quarter,
same-store sales at Qdoba increased in the double-digit range on top
of a double-digit increase in FY04. Qdoba extended to 23 its string of
consecutive quarters with same-store sales higher than the prior year.
-- Distribution and convenience-store sales were $74 million versus $39
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 $8.6 million compared with $5 million in FY04,
primarily related to the sale of 13 Jack in the Box restaurants to
franchisees versus 7 last year, with the decrease in average gains
this year related to the specific sales and cash flows of restaurants
sold. The company continues to expand its franchising program with the
goal of improving operating margins and accelerating cash flows, which
it may use to reinvest in its restaurant re-image program and
repurchase shares without incurring additional debt or diluting
equity.
-- Total revenues were $577 million versus $517 million in FY04. Year to
date, total revenues were $1.3 billion versus $1.2 billion last year.
-- Restaurant operating margin was 17.1 percent of sales compared with
16.7 percent forecast and 17.5 percent in FY04. The increase versus
forecast was primarily due to the increase in same-store sales,
fixed-cost leverage, improved labor management and Profit Improvement
Program initiatives, partially offset by higher commodity costs and
utility expenses. Compared with the prior year, beef costs were up
approximately 18 percent for the quarter.
-- Costs of revenues were at 82.7 percent compared with 83.4 percent
forecast and 82.2 percent in FY04, with the increase versus last year
due primarily to significant increases in distribution and c-store
sales at lower margins.
-- SG&A expense rate was 11.1 percent of revenues compared with 10.7
percent forecast and 11.3 percent in FY04. The increase versus
forecast was due primarily to higher incentive accruals based on the
company's improved performance, and costs associated with
Sarbanes-Oxley compliance.
-- Interest expense was $3.5 million versus $4 million forecast,
approximately the same as in FY04, due primarily to
lower-than-anticipated borrowing rates and to the refinancing and
subsequent repricings of the company's credit facility.
-- Income tax rate was 35.9 percent versus 36.0 percent in FY04.
-- Weighted average diluted shares outstanding were 37.4 million versus
36.8 million in FY04, with the increase due primarily to additional
stock option exercises, partially offset by the company's share
repurchase program. The increase in FY05 unfavorably impacted the EPS
comparison with FY04 by 1 cent.
-- Capital expenditures were approximately $20 million, as forecast,
versus $38 million in FY04, which included the cost of the company's
70,000-square-foot Innovation Center that opened in March 2004.
-- Earnings from operations were $35.8 million and
depreciation/amortization was $19.8 million versus $33.3 million and
$19.6 million, respectively, in FY04.
-- Current ratio was 0.9 versus 0.8 in FY04. Cash balances were $120.7
million versus $11.1 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 its franchising program.
-- Debt:equity ratio was 0.5:1 versus 0.6:1 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 current assets were $68 million compared with $148 million in
FY04. Last year's balance included the company's purchase of 80 Jack
in the Box restaurant properties in 2004 that it subsequently resold
and leased back at more favorable lease rates.
-- Other assets increased $24 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 $301 million compared with $313 million in FY04. The
company currently has no balance outstanding on its $200 million
revolving credit facility.
-- Stockholders' equity increased $73 million from a year ago, due
primarily to increased earnings over the past year, as well as to the
contributions made to the company's qualified pension plans, which
reduced a negative charge to equity. These increases to equity were
partially offset by increases in repurchases of the company's common
stock.
Third Quarter Initiatives
-- In April, Jack in the Box restaurants launched "Win Jack's Stuff," an
instant-win game offering guests who purchase a medium or large combo
meal a one-in-two chance of winning prizes ranging from food products
to Kawasaki motorcycles and Nintendo game systems.
-- Jack in the Box restaurants in April added a new flavor to its line of
real ice cream shakes, Blueberries 'n' Cream. Earlier this month, Jack
in the Box added a unique offering to its breakfast lineup: the Meaty
Breakfast Burrito, a warm flour tortilla stuffed with ham, sausage,
bacon, scrambled eggs, shredded cheddar and pepperjack cheeses and
served with a side of fire-roasted salsa. At the end of May, the chain
will introduce two new premium burgers served on artisan ciabatta
bread.
Third Quarter Guidance Highlights (in approximate amounts)
-- The company today provided its initial guidance for the third quarter
ending July 10, stating that it expects to earn approximately 60 cents
per diluted share compared with 56 cents reported last year.
-- 10-12 new company and franchised Jack in the Box restaurants are
planned to open, including 4 new Quick Stuff convenience stores, as
well as 12-15 new company and franchised Qdoba restaurants.
-- Same-store sales at Jack in the Box restaurants are estimated to
increase approximately 3.0-3.5 percent on top of a 3.9 percent
increase in the third quarter last year.
-- Distribution and c-store sales are estimated at $80 million versus $50
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.
-- Other revenues are estimated at $6-7 million, the same as last year,
due primarily to the sale of 18-20 restaurants to franchisees versus
12 last year, with the decrease in average gains this year related to
the specific sales and cash flows of the restaurants being sold.
-- Total revenues are estimated at $585 million versus $541 million last
year.
-- Restaurant operating margin is estimated at 18.2 percent versus 17.7
percent last year, due primarily to higher sales, continued
improvement in labor management and fixed cost leverage, and Profit
Improvement Program initiatives, partially offset by higher commodity
costs for beef and produce.
-- Costs of revenues are expected to be 82.2 percent versus 81.9 percent
last year, due primarily to significant increases in distribution and
c-store sales at lower margins, partially offset by higher restaurant
operating margin.
-- SG&A expense rate is expected to be 11.1 percent versus 11.3 percent
last year, due primarily to additional leverage from higher
distribution and c-store sales, and continued Profit Improvement
Program initiatives.
-- Interest expense is expected to be $4.5 million versus $3.8 million
last year, due primarily to expected increases in borrowing rates,
including the second-quarter conversion of approximately $130 million
of floating-rate term loan debt to fixed rates for the next three
years.
-- Income tax rate is projected at 37 percent versus 36.9 percent last
year.
-- Weighted average diluted shares outstanding are projected to be 36.5
million versus 37.3 million last year, due primarily to the impact of
the company's $65 million share repurchase program, which was
completed on May 6, 2005, partially offset by stock option exercises.
-- Capital expenditures are estimated at $30-$35 million versus $25
million last year.
-- Earnings from operations are estimated at $40 million and
depreciation/amortization at $20 million versus $37 million and $20
million, respectively, last year.
Fiscal 2005 Guidance Update (in approximate amounts)
-- Current EPS guidance of approximately $2.46 for fiscal 2005 is 3 cents
higher than prior forecast. The company now estimates that the
increase in commodity costs, primarily beef, will be about 30 basis
points higher than last year. The improvement in guidance is due
primarily to higher same-store sales, fixed-cost leverage, improved
labor management and Profit Improvement Program initiatives, partially
offset by higher commodity costs (+9 cents); deferral of stock-option
expensing until fiscal 2006 as now allowed by SFAS 123R (+3 cents);
higher gains on sales of restaurants to franchisees (+2 cents); higher
SG&A, due primarily to increased incentive accruals and costs
associated with Sarbanes-Oxley compliance (-8 cents); higher shares
outstanding, due primarily to stock option exercises (-1 cent); and a
non-recurring expense associated with an arbitration award in
connection with the cancellation of a utility contract (-2 cents).
-- 45-50 company and franchised Jack in the Box restaurants are expected
to open, including 14 new Quick Stuff convenience stores; and 75-80
company and franchised Qdoba Mexican Grills are expected to open.
-- Same-store sales at Jack in the Box are now expected to increase 3.0
percent for the year.
-- Other revenues are estimated at $31 million versus $30 million
previously forecast, due primarily to the sale of 57 Jack in the Box
restaurants to franchisees - 3 more than prior guidance.
-- Restaurant operating margin is estimated at 17.3 percent versus 17.2
percent previously forecast, and 17.0 percent last year. Beef costs
are expected to increase by 10-12 percent versus a year ago.
-- SG&A expense rate is expected to be 10.9 percent of revenues versus
11.4 percent in 2004 and 10.8 percent previously forecast, due
primarily to higher incentive accruals and expenses associated with
Sarbanes-Oxley compliance, partially offset by the deferral of
stock-option expensing until fiscal 2006.
-- Interest expense is expected to be $18 million, as previously
forecast.
-- Income tax rate is projected at 36.4 percent, the same as previously
forecast.
-- Weighted average diluted shares outstanding are projected to be 37
million.
-- Capital expenditures are estimated at $125-$135 million, the same as
previously forecast.
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 2,020 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 more than 210 restaurants in 33
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
Except for the historical information contained herein, the matters
discussed in this press release are forward-looking statements that are subject
to substantial risks and uncertainties. These statements may be identified by
the use of words such as "believes," "estimates," "expects," "intends," "plan,"
"will," 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 for food ingredients,
particularly beef, produce and cheese; costs related to new construction, Jack
in the Box remodels and conversions of Jack in the Box restaurants to JBX Grill;
the cost of developing and marketing JBX Grill as a new concept; costs of
utilities, fuel and labor, including increases in the minimum wage, workers'
compensation and other insurance; costs, effects and outcomes of pending or
future legal claims; potential variances between estimated and actual
liabilities; delays in the remodeling or opening of restaurants; the
availability of financing on terms satisfactory to franchisees and potential
franchisees; timely payment of franchisee obligations due the company; the
continuation of positive relationships with the company's franchisees, and the
franchisees' continuing willingness to participate in company strategies; the
risk that the company's new products and promotions may not be as successful as
the company anticipates; the effect of product withdrawals and the impact of
competition; adverse regional weather conditions; adverse 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 foodservice industry in general; the effects of war
and terrorist activities; changes in government regulations; changes in
accounting standards, policies and practices; and the possibility of unforeseen
events affecting business in general. Further information about factors that
could affect the company's financial and other results is included in the
company's fiscal year 2004 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 May 18,
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)
Twelve Weeks Twenty-eight Weeks
Ended Ended
-------------------- -----------------------
April 17, April 11, April 17, April 11,
2005 2004 2005 2004
-------------------- -----------------------
(Restated) (Restated)
Revenues:
Restaurant sales $477,968 $459,709 $1,090,108 $1,057,421
Distribution and other
sales 73,886 39,495 166,926 83,165
Franchise rents and
royalties 16,611 13,035 41,267 34,252
Other 8,580 5,027 17,340 12,348
--------- ---------- ----------- -----------
577,045 517,266 1,315,641 1,187,186
--------- ---------- ----------- -----------
Costs of revenues:
Restaurant costs of
sales 150,304 139,397 342,583 327,846
Restaurant operating
costs 245,762 239,939 565,660 555,002
Costs of distribution
and other sales 72,963 38,848 165,066 81,755
Franchised restaurant
costs 8,189 7,221 18,520 16,137
--------- ---------- ----------- -----------
477,218 425,405 1,091,829 980,740
--------- ---------- ----------- -----------
Selling, general and
administrative 64,040 58,609 143,598 134,176
--------- ---------- ----------- -----------
Earnings from operations 35,787 33,252 80,214 72,270
Interest expense 3,522 4,074 8,384 19,973
--------- ---------- ----------- -----------
Earnings before income
taxes 32,265 29,178 71,830 52,297
Income taxes 11,588 10,515 25,723 19,282
--------- ---------- ----------- -----------
Net earnings $20,677 $18,663 $46,107 $33,015
========= ========== =========== ===========
Earnings per share:
Basic $.57 $.52 $1.28 $.92
Diluted $.55 $.51 $1.23 $.90
Weighted-average shares
outstanding:
Basic 36,092 36,115 36,013 36,077
Diluted 37,395 36,811 37,340 36,694
JACK IN THE BOX INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
April 17, April 11,
2005 2004
- ----------------------------------------------------------------------
(Restated)
ASSETS
Current assets:
Cash and cash equivalents $120,662 $11,116
Accounts and notes receivable, net 20,869 28,236
Inventories 41,018 33,054
Other current assets 68,055 148,126
----------- -----------
Total current assets 250,604 220,532
----------- -----------
Property and equipment, net 852,078 848,809
Other assets, net 181,449 157,249
----------- -----------
TOTAL $1,284,131 $1,226,590
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $7,557 $8,860
Other current liabilities 262,778 263,008
----------- -----------
Total current liabilities 270,335 271,868
----------- -----------
Long-term debt, net of current maturities 293,500 303,928
Other long-term liabilities 161,062 164,653
----------- -----------
Total liabilities 724,897 740,449
----------- -----------
Stockholders' equity 559,234 486,141
----------- -----------
TOTAL $1,284,131 $1,226,590
=========== ===========
CONTACT: Jack in the Box Inc.
Brian Luscomb, 858-571-2229
Division Vice President, Corporate Communications
brian.luscomb@jackinthebox.com
Code: 07305