Exhibit 99.1
Jack in the Box Inc. Affirms Strategic Plan to Become a National
Restaurant Company;
Updates Fourth Quarter Earnings Forecast and Provides First Quarter
and Fiscal 2006 Guidance;
Announces Three-Year $150 Million Share Repurchase Program
SAN DIEGO--(BUSINESS WIRE)--Sept. 21, 2005--Jack in the Box Inc.
(NYSE:JBX) today announced that its board of directors has affirmed
the organization's long-term strategy to become a national restaurant
company. The goal was approved during the board's annual budget and
strategic plan review last week. Since announcing its strategic plan
three years ago, the company has executed a multifaceted growth
strategy and is making progress to reinvent the Jack in the Box(R)
brand by upgrading its menu, service levels and restaurant facilities.
"To realize our vision of being a national restaurant company, we
will focus on three key strategic initiatives: profitably growing the
business, reinventing the Jack in the Box brand, and driving product
innovation and building customer loyalty for all of our brands," said
Linda Lang, president and chief operating officer. "To be a leader in
the quick-serve and fast-casual segments of the restaurant industry,
our brands must deliver on the ever-increasing expectations of
consumers. Unit growth alone will not ensure future success or inspire
our stakeholders. To increase market share and shareholder value, we
must become a preferred destination for consumers."
Key Elements of Updated Strategic Plan: Profitably Growing the
Business
The company will continue to execute a multifaceted growth
strategy designed to grow same-store sales and to improve profits and
returns on invested capital by focusing on the following:
-- New unit growth of Jack in the Box restaurants and Quick
Stuff(R) convenience stores in existing and contiguous
markets;
-- Increasing the number of franchised Jack in the Box
restaurants through new unit growth and continued sales of
restaurants to franchisees; and
-- Aggressive franchise growth of Qdoba Mexican Grill(R).
Reinventing the Jack in the Box Brand
The company will continue to pursue a holistic approach to
reinvent the Jack in the Box brand, its second major strategic
initiative, to further differentiate the chain from other quick-serve
restaurants. Key elements of brand reinvention include:
-- Menu innovation;
-- Upgrading service execution;
-- Re-imaging existing restaurant facilities; and
-- Leveraging the JBX Grill(TM) experience and learnings.
"By developing innovative products and using high-quality
ingredients such as hearth-baked ciabatta bread, we can continue to
make the Jack in the Box menu relevant to a broader customer base,"
Lang said. "We'll continue to evaluate trends in other industry
segments, and leverage the extensive resources at our Innovation
Center, from test kitchens to consumer research facilities, to
efficiently deliver those products in a quick-serve environment."
Lang said the restaurant re-imaging program, which is currently in
test at several locations, entails comprehensive interior and exterior
enhancements that more effectively integrate Jack's personality into
the facility. Interior and exterior design elements are planned to
include new color schemes, furniture, lighting, flooring and
landscaping, as well as music, menu boards, product packaging and
employee uniforms.
Driving Product Innovation and Building Customer Loyalty
The third major strategic initiative focuses on driving product
innovation and building customer loyalty for each of the company's
brands.
"Successful execution of this strategy can create relevance among
a broader base of guests and build long-term customer loyalty to Jack
in the Box, Qdoba and Quick Stuff," Lang said. "For our Jack in the
Box and Qdoba brands, that means developing a pipeline of
differentiated products that guests crave as well as enhancing our
existing products to create menus that drive incremental traffic,
build average check and foster brand loyalty."
Key Initiatives: Entering New Contiguous Markets
The company's multifaceted growth strategy calls for Jack in the
Box to enter new contiguous markets in fiscal 2006. Leveraging the
company's convenience-store concept, the first restaurants in these
new markets will be constructed adjacent to Quick Stuff stores, which
include a major-brand fuel station.
"By leveraging our convenience-store concept as a tool for new
market expansion, we can benefit from the combined revenues and shared
development costs of three separate businesses, while securing the
best possible locations in high-traffic areas," Lang said.
"Additionally, we have an existing infrastructure of operations and
distribution capabilities to efficiently support new restaurants in
contiguous markets."
Cancel Test of JBX Grill(TM)
As part of its strategic plan, the company has decided to cancel
its test of JBX Grill as a stand-alone fast-casual burger and sandwich
concept. The company believes that the innovative menu, service
initiatives and creative restaurant design elements of JBX Grill can
be best leveraged across the existing 2,000 restaurants comprising the
core Jack in the Box brand rather than through a separate concept.
This strategy will require lower capital investments and is likely to
generate higher returns.
"In addition to testing a new facility design and guest-service
initiatives, JBX Grill was a great catalyst for developing innovative
products, many of which we were able to deliver at our Jack in the Box
restaurants, like Natural Cut Fries and our line of ciabatta burgers
and sandwiches, including the new Ciabatta Breakfast Sandwich that we
introduced earlier this month," Lang said.
The decision to cease the testing of JBX Grill will result in an
after-tax charge of approximately $2 million, or 5 cents per diluted
share, in the fourth quarter of fiscal 2005.
Share Repurchase Program
The company said today that its board of directors has authorized
a $150 million program to repurchase shares of the company's common
stock at prevailing market prices, in the open market or in private
transactions, from time to time at management's discretion, over the
next three years. Repurchases under the program are subject to bank
approval, which the company expects to obtain. Such repurchases will
be made using the company's own cash resources and are intended over
time to offset the dilutive impact of stock options and maintain
average shares outstanding at approximately 37 million shares.
Fiscal Year 2005 Update
The company now estimates fourth-quarter same-store sales at Jack
in the Box to increase approximately 1.5 percent compared with
approximately 3.0 percent previously forecast, with the decrease
primarily due to lower-than-expected sales of the chain's new Ultimate
Club premium sandwich and higher gasoline prices, which may now be
impacting consumer habits. For fiscal 2005, Jack in the Box same-store
sales are now estimated to increase approximately 2.0-2.5 percent
compared with an increase of approximately 2.5-3.0 percent previously
forecast. The lower same-store sales growth along with
higher-than-expected utility costs are forecast to negatively impact
the fourth-quarter and fiscal-year earnings by approximately 2 cents
per diluted share. Same-store sales at Qdoba are now expected to
increase in the low double-digit range for fiscal 2005 compared with a
mid single-digit increase previously forecast. Qdoba is expected to be
accretive to earnings for the year.
As a result of the after-tax charge related to JBX Grill
(approximately 5 cents), which was described above, and the lower
same-store sales estimate and higher utility costs (approximately 2
cents), the company now expects to earn approximately 56 cents per
diluted share in the fourth quarter and $2.45 per diluted share in
fiscal 2005.
The following table compares fiscal year 2005 guidance with fiscal
year 2004 results after adjusting for certain items in both years and
the 53rd week in fiscal 2004:
Fiscal 2005 Fiscal 2004
Forecast Actual
-------------------------
Forecast/Actual Diluted EPS $ 2.45 $ 2.02
Comparable Adjustments:
Charge related to JBX Grill in Q4,
FY 2005 0.05 -
Nonrecurring tax-rate reduction
in Q3, FY 2005 (0.06) -
Charge related to refinancing of the
company's credit facility in Q1, FY 2004 - 0.15
Effect of 53rd week in Q4, FY 2004 - (0.03)
-------------------------
Comparable Forecast/Actual Diluted EPS $ 2.44 $ 2.14
=========================
The fiscal 2005 forecast represents a 14.0 percent increase over
the comparable fiscal 2004 results.
Fiscal Year 2006 Guidance
For fiscal 2006, ending Oct. 1, 2006, earnings per diluted share
are expected to be approximately $2.50-$2.54 versus approximately
$2.45 forecast in 2005. The fiscal year 2006 guidance includes the
effect of expensing stock options, as required by SFAS 123R, of
approximately 15 cents per diluted share. The forecast for fiscal 2005
does not include the expensing of stock options. The following table
compares guidance for fiscal years 2006 and 2005 after adjusting in
fiscal 2005 for stock option expense estimated at 14 cents per diluted
share (excluding the effect of accelerated vesting of retiree's stock
options) and certain items:
Fiscal 2006 Fiscal 2005
Forecast Forecast
-----------------------------------
Forecast Diluted EPS $ 2.50 - 2.54 $ 2.45
Comparable Adjustments:
Effect of stock options if
expensed in FY 2005 - (0.14)
Nonrecurring tax-rate reduction
in Q3 of FY 2005 - (0.06)
Charge related to JBX Grill
in Q4, FY 2005 - 0.05
-----------------------------------
Comparable Forecast Diluted EPS $ 2.50 - 2.54 $ 2.30
===================================
Fiscal 2006 earnings guidance represents a 9-10 percent
improvement over the comparable 2005 forecast. The primary assumptions
on which earnings guidance is based are as follows, in approximate
amounts:
-- The opening of 45-55 new company and franchised Jack in the
Box restaurants, including 13-15 new Quick Stuff convenience
stores, compared with 45-50 restaurants, including 15 Quick
Stuff sites, forecast in 2005; 85-95 new company and
franchised Qdoba restaurants compared with 75-80 forecast in
2005.
-- A 2.0-2.5 percent increase in Jack in the Box same-store sales
on top of a 2.0-2.5 percent increase forecast in 2005. Qdoba
same-store sales are estimated to increase in the mid
single-digit range on top of a low double-digit increase
forecast in 2005.
-- Restaurant operating margin at 17.4 percent of sales versus
16.9 percent currently forecast in 2005, due primarily to
lower food costs, principally beef and produce, as well as
fixed-cost leverage on same-store sales growth and Profit
Improvement Program initiatives.
-- Other revenues of $34-36 million, primarily related to the
sale of 60-65 Jack in the Box restaurants to franchisees,
compared with approximately $32 million forecast in 2005,
primarily related to the sale of 58 company restaurants to
franchisees.
-- The effective tax rate is forecast at approximately 37-37.5
percent.
-- Capital expenditures are estimated at $140-150 million
compared with approximately $125 million forecast in 2005,
with the increase due in part to investments associated with
re-imaging approximately 100-150 Jack in the Box restaurants
in 2006.
First Quarter Fiscal 2006 Guidance
For the first quarter ending Jan. 22, 2006, earnings per diluted
share are expected to be approximately 67-69 cents versus 68 cents in
the prior year. The quarter's guidance includes the effect of
expensing stock options, as required by SFAS 123R, of approximately 4
cents per diluted share in fiscal 2006. First-quarter fiscal 2005
results did not include the expensing of stock options of 5 cents per
diluted share. The following table compares 2006 guidance with 2005
results after adjusting for stock option expense:
First Quarter First Quarter
Fiscal 2006 Fiscal 2005
Forecast Actual
-----------------------------------
Forecast/Actual Diluted EPS $ 0.67 - 0.69 $ 0.68
Comparable Adjustments:
Effect of stock options
if expensed in FY 2005 - (0.05)
-----------------------------------
Comparable Forecast/Actual
Diluted EPS $ 0.67 - 0.69 $ 0.63
===================================
First-quarter fiscal 2006 earnings guidance represents a 6-9
percent improvement over the prior year after adjusting for the effect
of expensing stock options in 2005. The primary assumptions on which
first-quarter earnings guidance is based are as follows, in
approximate amounts:
-- The opening of 8-10 new company and franchised Jack in the Box
restaurants, including 2-4 new Quick Stuff convenience stores,
compared with 11 restaurants, including 3 Quick Stuff sites,
in 2005; approximately 20-25 new company and franchised Qdoba
restaurants compared with 22 in 2005.
-- A 1.5-2.0 percent increase in Jack in the Box same-store sales
on top of a 2.2 percent increase in 2005.
-- Restaurant operating margin at 16.9 percent of sales versus
16.3 percent in 2005, due primarily to lower food costs,
principally beef and produce, and Profit Improvement Program
initiatives.
-- Other revenues of $8-10 million, primarily related to the sale
of 14-16 Jack in the Box restaurants to franchisees, compared
with approximately $9 million in 2005, primarily related to
the sale of 13 company restaurants to franchisees.
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 35 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," "forecasts," "intends," "likely to provide,"
"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 and packaging; costs related to
new construction and Jack in the Box remodels; costs of utilities,
fuel and labor, including increases in the minimum wage, workers'
compensation and other insurance and healthcare; costs related to
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 food safety; 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. This press release includes estimated
adjustments to forecasted results. These adjustments estimate the
impact of events that management believes should be considered
separately when comparing year to year results. The actual impact of
these events may differ from the company's estimates. 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. The information in
this press release is as of September 20, 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.
Use of Non-GAAP Financial Information
In this press release, the company provides earnings per diluted
share determined in accordance with generally accepted accounting
principles (GAAP) and earnings per diluted share excluding (i) a
fiscal 2004 charge related to refinancing, which was recorded in
interest expense and (ii) the effect of the 53rd week of fiscal year
2004. This non-GAAP financial measure is used by management to
evaluate financial and operating performance. Management does not
consider the refinancing charge to be directly related to operating
results for the period. Not all fiscal years have 53 weeks. Use of
this non-GAAP measure also facilitates comparisons between current and
prior period financial results, estimates of future results and to the
results of the company's competitors. This financial measure is also
comparable to forecasts made by securities analysts and others, which
generally exclude special items, as they are difficult to predict in
advance. Non-GAAP measures are not intended to be a substitute for net
earnings determined in accordance with GAAP.
CONTACT: Jack in the Box Inc.
Brian Luscomb, 858-571-2229
brian.luscomb@jackinthebox.com