Exhibit 99.1
Jack in the Box Inc. Reports Third-quarter Results; Updates Fourth Quarter and
Fiscal 2005 Guidance
SAN DIEGO--(BUSINESS WIRE)--Aug. 10, 2005--Jack in the Box Inc. (NYSE:JBX)
today reported net earnings of $23.9 million, or 66 cents per diluted share, in
the third quarter ended July 10, 2005, compared with $20.7 million, or 56 cents
per diluted share, in the same quarter a year ago. The 2005 results include
approximately 6 cents from the resolution of a prior year's tax position, which
reduced the company's third-quarter tax rate. The company had previously
forecast third-quarter earnings per diluted share of 60 cents. Year to date, net
earnings totaled $70 million, or $1.89 per diluted share, compared with $53.7
million, or $1.46 per diluted share, for the first three quarters 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.
The company also today updated its earnings guidance for fiscal
2005 to approximately $2.52 per diluted share, compared with $2.46 per
diluted share previously forecast, and $2.02 per diluted 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 Jack in the Box(R) restaurants experienced another strong
operating quarter, despite escalating beef costs," said Robert Nugent,
chairman and chief executive officer. "We continue to differentiate
our brand from other QSR chains through the use of high-quality
ingredients such as ciabatta and sourdough bread, and premium products
like our new Ultimate Club sandwich.
"Along with menu innovation, another important goal of our brand
reinvention strategy is to deliver higher levels of guest service.
We're achieving this through a number of new programs developed
specifically to support our restaurant employees. We have introduced
computer-based training, expanded internal recognition programs, and
provided hourly workers access to affordable healthcare coverage. As a
result of these and other internal service initiatives, we continue to
see reductions in crew turnover, which are at all-time low levels."
Third Quarter Initiatives
-- New products at Jack in the Box restaurants included two
premium burgers served on lightly toasted artisan ciabatta
bread, the Original Ciabatta Burger and Bacon 'n' Cheese
Ciabatta Burger. Jack in the Box also enhanced its breakfast
menu with a protein-packed Meaty Breakfast Burrito, and
expanded its popular line of real ice cream shakes with a new
flavor, Blueberries 'n' Cream.
-- On May 6, as previously disclosed, the company completed its
$65 million share repurchase authorization, buying back 1.7
million shares of its stock out of existing cash resources.
-- The company continued testing new interior and exterior
designs for its Jack in the Box restaurants. The design
enhancements are intended to create a more contemporary
atmosphere and promote more in-restaurant dining.
-- The company continued testing JBX Grill at nine locations in
Boise, Idaho, and Bakersfield, Calif.
Third Quarter Financial Highlights
-- Earnings per diluted share were 6 cents higher than the
company's guidance, resulting from: a non-recurring reduction
in the tax rate for the quarter to 31 percent from 37 percent
forecast due to the resolution of a prior year's tax position
(+6 cents); lower SG&A expenses, due in part to Profit
Improvement Program initiatives and lower training costs
related to the company's computer-based training system and
lower restaurant employee turnover (+5 cents); and lower
restaurant operating margin, partially offset by higher
franchise royalties and rents (-5 cents). The lower restaurant
operating margin was due primarily to higher costs for beef
and produce, partially offset by improved labor management and
Profit Improvement Program initiatives.
-- 10 new company and franchised Jack in the Box restaurants
opened, as forecast, versus 14 in FY04, bringing to 2,033 the
total number of Jack in the Box and JBX Grill restaurants at
quarter end, comprising 1,534 company and 499 franchised
locations; 15 new company and franchised Qdoba Mexican
Grill(R) sites opened, as forecast, versus 12 in FY04,
bringing to 229 the total number of Qdoba restaurants at
quarter end, comprising 55 company and 174 franchised
locations; and 4 new Quick Stuff(R) convenience stores opened,
also as forecast, bringing to 39 the total number of c-store
locations at quarter end versus 25 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 2.8
percent for the quarter on top of a 3.9 percent increase last
year. Year to date, same-store sales increased 2.7 percent on
top of a 4.8 percent increase for the same period last year.
During the quarter, same-store sales at Qdoba increased in the
low double-digit range on top of a high single-digit increase
in FY04. Qdoba extended to 24 its string of consecutive
quarters with same-store sales higher than the prior year. For
the quarter, Qdoba was accretive to earnings, as anticipated.
-- Distribution and convenience-store sales were $81 million
versus $50 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 $7.2 million compared with $6.6 million in
FY04, primarily related to the sale of 20 Jack in the Box
restaurants to franchisees versus 12 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.
-- Total revenues were $590 million versus $541 million in FY04.
Year to date, total revenues were $1.9 billion versus $1.7
billion last year.
-- Restaurant operating margin was 17.2 percent of sales compared
with 18.2 percent forecast and 17.7 percent in FY04. The
decrease was primarily due to higher costs for beef and
produce, partially offset by improved labor management and
Profit Improvement Program initiatives. Compared with the
prior year, beef costs were up approximately 18 percent for
the quarter.
-- SG&A expense rate was 10.6 percent of revenues compared with
11.1 percent forecast and 11.3 percent in FY04. The decrease
versus forecast was due primarily to Profit Improvement
Program initiatives and lower training costs related to the
company's computer-based training system and lower restaurant
employee turnover.
-- Interest expense was $4.4 million versus $3.8 million in FY04,
with the increase versus 2004 due primarily to higher interest
rates, including the second-quarter conversion of
approximately $130 million of floating-rate term loan debt to
fixed rates for the next three years. The higher rates were
partially offset by the company's prior repricings of its
credit facility.
-- Income tax rate was 31 percent versus 37 percent forecast and
36.9 percent in FY04, with the decrease in FY05 due to the
non-recurring reduction in the current year's quarter
resulting from the resolution of a prior year's tax position.
-- Weighted average diluted shares outstanding were 36.4 million
versus 37.3 million in FY04.
-- Capital expenditures were approximately $27 million versus
$30-35 million forecast, reflecting the timing of new store
openings and the timing of restaurant re-imaging tests.
-- Earnings from operations were $39 million and
depreciation/amortization was $20 million versus $37 million
and $20 million, respectively, in FY04.
-- Total debt was $300 million compared with $307 million in
FY04. The company currently has no balance outstanding on its
$200 million revolving credit facility.
-- Debt:equity ratio was 0.5:1 versus 0.6:1 last year.
Fourth Quarter Initiatives
-- In July, Jack in the Box restaurants added a new flavor to its
line of real ice cream shakes, Root Beer Float, and last week
introduced a new premium sandwich, the Ultimate Club, which
features the chain's signature sourdough bread piled high with
slices of Black Forest Ham, oven-roasted turkey, bacon,
cheese, lettuce and tomato. In September, Jack in the Box will
begin rolling out another new premium item for its breakfast
menu.
-- To improve advancement opportunities for its Spanish-speaking
employees, while also improving guest service and further
reducing crew turnover, Jack in the Box will roll out an
innovative ESL (English as a Second Language) program this
fall. Called "Sed de Saber," meaning "Thirst for Knowledge,"
this electronic tool covers restaurant-specific communication,
such as taking orders and reading schedules. The program can
also enhance the lives of employees in their everyday
activities and general interaction within their communities.
Fourth Quarter Guidance Highlights (in approximate amounts)
The company announced today that it expects to earn approximately
63 cents per diluted share for the fourth quarter ending Oct. 2
compared with 56 cents last year, or 53 cents when excluding the
3-cents benefit of the 53rd week in fiscal 2004. Additional guidance
highlights are as follows:
-- Same-store sales at Jack in the Box restaurants are estimated
to increase approximately 3.0 percent on top of a 4.1 percent
increase in the fourth quarter last year.
-- Restaurant operating margin is estimated at 17.9 percent of
sales versus 17.6 percent last year, due in part to same-store
sales growth and Profit Improvement Program initiatives. This
guidance also reflects a positive impact from reopening the
U.S. border to Canadian cattle.
-- SG&A expense rate is expected to be 10.9 percent of revenues
versus 11.5 percent last year, due primarily to additional
leverage from higher distribution and c-store sales, reduced
training costs, and continued Profit Improvement Program
initiatives.
-- Income tax rate is projected at 37 percent versus 35.3 percent
last year.
-- Weighted average diluted shares outstanding are projected to
be 37 million versus 37.6 million last year, due primarily to
the impact of the company's $65 million share repurchase
program that was completed on May 6, 2005, partially offset by
stock option exercises.
Fiscal 2005 Guidance Update (in approximate amounts)
The company now expects to earn $2.52 per diluted share for fiscal
2005, which is 6 cents higher than prior forecast, due primarily to
the non-recurring reduction in the tax rate in the third quarter of
FY05. Additional guidance highlights are as follows:
-- 45-50 company and franchised Jack in the Box restaurants are
expected to open, including 15 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 expected to increase
2.5-3.0 percent for the year.
-- Other revenues are estimated at $32 million versus $31 million
previously forecast, due primarily to the sale of 58 Jack in
the Box restaurants to franchisees compared with 57 in prior
guidance.
-- Restaurant operating margin is estimated at 17.1 percent of
sales versus 17.3 percent previously forecast, due primarily
to higher than expected beef costs that were experienced in
the third quarter. Although the company expects beef prices to
ease in the fourth quarter, it now expects a 12-14 percent
increase in beef costs for the year, up from 10-12 percent
forecast previously.
-- SG&A expense rate is expected to be 10.8 percent of revenues
versus prior guidance of 10.9 percent.
-- Interest expense is expected to be $18 million, as previously
forecast.
-- Income tax rate is projected at 34.8 percent versus prior
guidance of 36.4 percent, due primarily to the non-recurring
reduction in the tax rate in the third quarter of FY05.
-- Weighted average diluted shares outstanding are projected to
be 37 million, as previously forecast.
-- Capital expenditures are estimated at $125-130 million.
About Jack in the Box Inc.
Jack in the Box Inc. (NYSE: JBX), based in San Diego, 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 2,030 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 220
restaurants in 33 states. 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 and produce;
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 and healthcare; costs and
outcomes of pending or future legal claims; potential variances
between estimated and actual liabilities; changes in actuarial
assumptions and discount rates and the related possibility of
increased pension expense; decisions by management to curtail or cease
investment in under-performing assets or markets which can result in
impairment charges; 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 may not realize expected or consistent amounts of
gain on the sale of franchises or the expected number of franchises to
be sold; the risk that the company may not fully realize the potential
benefits of its acquisition of Qdoba; the risk that the company's new
concepts, products, promotions, service and re-image initiatives may
not be as successful as the company anticipates; the effect of product
withdrawals and the impact of competition; the effects of potential
weakness in or failure of internal controls; 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
August 10, 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 Ended Forty Weeks Ended
-------------------- -----------------------
July 10, July 4, July 10, July 4,
2005 2004 2005 2004
--------- ---------- ----------- -----------
(Restated) (Restated)
Revenues:
Restaurant sales $483,392 $470,621 $1,573,500 $1,528,042
Distribution and other
sales 81,318 49,575 248,244 132,740
Franchise rents and
royalties 18,236 14,402 59,503 48,654
Other 7,232 6,614 24,572 18,962
--------- ---------- ----------- -----------
590,178 541,212 1,905,819 1,728,398
--------- ---------- ----------- -----------
Costs of revenues:
Restaurant costs of
sales 156,093 145,601 498,676 473,447
Restaurant operating
costs 244,198 241,931 809,945 796,933
Costs of distribution
and other sales 79,869 48,532 244,937 130,287
Franchised restaurant
costs 8,711 7,239 27,142 23,376
--------- ---------- ----------- -----------
488,871 443,303 1,580,700 1,424,043
--------- ---------- ----------- -----------
Selling, general and
administrative 62,273 61,368 205,871 195,544
--------- ---------- ----------- -----------
Earnings from operations 39,034 36,541 119,248 108,811
Interest expense 4,435 3,757 12,819 23,730
--------- ---------- ----------- -----------
Earnings before income
taxes 34,599 32,784 106,429 85,081
Income taxes 10,713 12,101 36,436 31,383
--------- ---------- ----------- -----------
Net earnings $23,886 $20,683 $69,993 $53,698
========= ========== =========== ===========
Earnings per share:
Basic $.68 $.57 $1.96 $1.49
Diluted $.66 $.56 $1.89 $1.46
Weighted-average shares
outstanding:
Basic 35,080 36,291 35,733 36,139
Diluted 36,403 37,254 37,067 36,737
JACK IN THE BOX INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 10, July 4,
2005 2004
- ---------------------------------------------------------- -----------
(Restated)
ASSETS
Current assets:
Cash and cash equivalents $98,636 $87,486
Accounts and notes receivable, net 25,679 25,820
Inventories 39,503 36,608
Other current assets 66,268 66,535
----------- -----------
Total current assets 230,086 216,449
----------- -----------
Property and equipment, net 855,349 848,954
Other assets, net 203,118 158,690
----------- -----------
TOTAL $1,288,553 $1,224,093
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $7,629 $8,470
Other current liabilities 255,687 245,134
----------- -----------
Total current liabilities 263,316 253,604
----------- -----------
Long-term debt, net of current maturities 291,973 298,669
Other long-term liabilities 164,315 159,699
----------- -----------
Total liabilities 719,604 711,972
----------- -----------
Stockholders' equity 568,949 512,121
----------- -----------
TOTAL $1,288,553 $1,224,093
=========== ===========
CONTACT: Jack in the Box Inc.
Brian Luscomb, 858-571-2229
brian.luscomb@jackinthebox.com