Exhibit 99.1
Jack in the Box Inc. Reports Fourth Quarter and FY2005 Results;
Affirms Guidance for First Quarter and FY2006
SAN DIEGO--(BUSINESS WIRE)--Nov. 30, 2005--Jack in the Box Inc.
(NYSE:JBX) today reported that net earnings totaled $21.5 million, or
59 cents per diluted share, in the fourth quarter ended Oct. 2, 2005,
including a $2 million after-tax charge, or 5 cents per diluted share,
related to the cancellation of the company's test of a fast-casual
concept called JBX Grill(TM). These results represent a 3 cents per
diluted share improvement compared with guidance and were achieved
despite the impact of Hurricane Rita on the company's Texas market.
Net earnings were $21.0 million, or 56 cents per diluted share, in the
same quarter a year ago, which included an extra week that contributed
3 cents per diluted share to earnings.
Net earnings for fiscal 2005 increased to $91.5 million, or $2.48
per diluted share, including the 5 cents per share charge described
above for canceling the JBX Grill test and a 6 cents per share benefit
from the resolution of a prior year's tax position, which reduced the
company's third-quarter tax rate. Net earnings in fiscal 2004 were
$74.7 million, or $2.02 per diluted share, which included a 15 cents
per diluted share charge related to refinancing the company's credit
facility and the 3 cents per share benefit for the 53rd week. As
indicated in the table below, 2005 earnings increased approximately 15
percent versus the comparable 52-week earnings in 2004, when excluding
the special items in both years.
Fiscal Fiscal
2005 2004
Actual Actual
------ ------
Diluted EPS $2.48 $2.02
Comparable Adjustments:
Effect of 53rd week in FY 2004 - (0.03)
Refinancing credit facility in Q1 of FY 2004 (1) - 0.15
Nonrecurring tax-rate reduction in Q3 of FY 2005 (2) (0.06) -
Charge related to JBX Grill in Q4 of FY 2005 (3) 0.05 -
------ ------
Comparable Diluted EPS $2.47 $2.14
====== ======
(1) Included in interest expense on the company's consolidated
statements of earnings
(2) Included in income taxes on the company's unaudited consolidated
statements of earnings
(3) Included in SG&A on the company's unaudited consolidated
statements of earnings
"Our restaurants delivered another solid performance for the
quarter, and we achieved our sales projections despite the temporary
closure of approximately 200 Jack in the Box(R) restaurants due to
Hurricane Rita," said Linda A. Lang, chairman and chief executive
officer. "For the full year, we're very pleased with the same-store
sales increases at Jack in the Box and Qdoba Mexican Grill(R), which
were largely due to the addition of new menu items and promotional
support."
Fourth quarter and fiscal 2005 financial highlights
Earnings per diluted share were 3 cents higher than the company's
guidance due to: higher sales, which is attributed primarily to a
shift in advertising to promote the line of ciabatta sandwiches at
Jack in the Box (+2 cents), higher other revenues (+1 cent), and a
lower tax rate (+4 cents), offset by the impact of Hurricane Rita (-4
cents).
Same-store sales at Jack in the Box company restaurants increased
1.5 percent during the fourth quarter on top of a 4.1 percent increase
in 2004. Restaurant sales were consistent with guidance despite the
impact of Hurricane Rita, which caused the temporary closure of
approximately 200 Texas locations. Most restaurants re-opened within a
week of closing; the five locations that remain closed today are
expected to re-open in December. For the full year, Jack in the Box
same-store sales increased 2.4 percent on top of a 4.6 percent
increase in fiscal 2004. The temporary closing of restaurants due to
Hurricane Rita negatively impacted fourth-quarter and fiscal-year
same-store sales by approximately 0.5 percent and 0.1 percent,
respectively. For the quarter, company same-store sales at Qdoba
increased 11.4 percent on top of a 7.9 percent increase in 2004. For
the year, Qdoba same-store sales increased 11.8 percent on top of a
9.3 percent increase in 2004. As expected, Qdoba was accretive to
earnings for the fourth quarter and fiscal year 2005.
Restaurant operating margin was 17.3 percent of sales in the
fourth quarter compared with 17.6 percent a year ago, with the
decrease due in large part to higher restaurant operating costs,
primarily utilities, and costs associated with Hurricane Rita, along
with higher food costs, partially offset by improved labor management.
For the full year, restaurant operating margin was 16.9 percent of
sales, down slightly from 17.0 percent a year ago with the decrease
due in large part to significantly higher food costs, primarily beef
and produce, partially offset by improved labor management and Profit
Improvement Program initiatives.
SG&A expense rate was 11.3 percent of revenues in the fourth
quarter, including the charge of $3 million, or $2 million after tax,
to cancel the JBX Grill test, compared with 11.6 percent in 2004. For
the year, SG&A expense rate was 10.9 percent of revenues compared with
11.4 percent a year ago. The reduction in the SG&A rate compared with
prior year is due primarily to sales leverage on higher Quick Stuff,
distribution and restaurant sales.
Sixteen company and franchised Jack in the Box restaurants opened
in the fourth quarter, including 5 with new Quick Stuff(R) convenience
stores, compared with 20 restaurants, including 4 new Quick Stuff
sites, opened in the same quarter a year ago. For the year, 49 company
and franchised Jack in the Box restaurants opened, including 15 with
new Quick Stuff stores, bringing to 2,049 the number of Jack in the
Box locations at fiscal year end; Quick Stuff comprised 44 locations
at year end. Qdoba Restaurant Corporation, a wholly owned subsidiary
of Jack in the Box Inc., opened 22 company and franchised Qdoba
Mexican Grill restaurants during the fourth quarter compared with 28
locations opened in the same quarter a year ago. For the year, Qdoba
opened 77 company and franchised restaurants compared with 67
restaurants opened in fiscal 2004. At Oct. 2, the Qdoba system totaled
250 company and franchised restaurants. Quick Stuff and Qdoba
operations are not material components of the company's consolidated
financial results or projections.
Other revenues totaled $8.4 million in the fourth quarter,
primarily from the sale of 12 Jack in the Box company restaurants to
franchisees. This compared with other revenues of $5.5 million in the
fourth quarter of fiscal 2004, primarily from the sale of 11 such
restaurants to franchisees, with the variance in gains versus 2005 due
to differences in the sales and cash flows of the restaurants sold.
For fiscal 2005, other revenues totaled $33 million, primarily from
the sale of 58 Jack in the Box company restaurants to franchisees,
compared with $24 million in fiscal 2004, primarily from the sale of
49 such restaurants to franchisees.
The effective tax rate for the quarter was 32.2 percent versus
35.3 percent a year ago, and for the full year was 33.8 percent versus
36.4 percent in 2005, with the decrease in the quarter due primarily
to tax-planning initiatives and adjustments from the prior year's tax
return. Additionally, the full-year tax rate in 2005 was reduced by
the resolution of a prior year's tax position in the third quarter.
Capital expenditures, including capital lease obligations, were
$124 million for the year compared with $130 million in fiscal 2004.
Fourth quarter initiatives
-- The Ciabatta Breakfast Sandwich debuted at Jack in the Box
restaurants during the fourth quarter, and two popular flavors
returned to the chain's line-up of real ice cream desserts:
Root Beer Float and Pumpkin Pie Shake.
-- Jack in the Box launched an ESL (English-as-a-second-language)
program that offers its Spanish-speaking restaurant employees
an opportunity to improve their English skills. The self-paced
computerized program uses an interactive technology with voice
and audio commands to teach vocabulary and phrases related to
foodservice and everyday life skills.
-- In recognition of the company's innovative workforce programs
that foster employee satisfaction, such as the new ESL
program, affordable healthcare for hourly workers and
computer-based training, Nation's Restaurant News and the
National Restaurant Association Educational Foundation honored
Jack in the Box with the first-ever Spirit Award. Presented at
the MUFSO (Multi-unit Foodservice Operators) conference in
September, the Spirit Award recognizes restaurant and
foodservice operators that demonstrate excellence in
developing programs related to recruitment, hiring, training,
retention and education.
-- During the quarter, the company's board of directors
authorized a $150 million program to repurchase shares of the
company's common stock over the next three years. Repurchases
under the program were subject to bank approval, which the
company has received. 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.
Fiscal year 2006 guidance update
Jack in the Box Inc. today affirmed its earnings forecast for
fiscal 2006 of approximately $2.50-$2.54 per diluted share versus
$2.48 in 2005. The fiscal year 2006 guidance includes the effect of
expensing stock options, as required by Statement of Financial
Accounting Standards No. 123R (SFAS 123R), of approximately 15 cents
per diluted share. Fiscal 2005 does not include the expensing of stock
options. The following table compares guidance for fiscal year 2006
with 2005 comparable results after the effect of expensing stock
options estimated at 15 cents per diluted share (excluding the effect
of accelerated vesting of retiree's stock options) and certain items:
Fiscal 2006 Fiscal 2005
Forecast Actual
------------- -----------
Forecast/Actual Diluted EPS $2.50 - 2.54 $2.48
Comparable Adjustments:
Effect of stock options if expensed in FY
2005 (1) - (0.15)
Nonrecurring tax-rate reduction in Q3 of FY
2005 (2) - (0.06)
Charge related to JBX Grill in Q4 of FY 2005
(3) - 0.05
------------- -----------
Comparable Forecast/Comparable 2005 Diluted
EPS $2.50 - 2.54 $2.32
============= ===========
(1) The company intends to include stock option expense as part of
SG&A expense on its consolidated statements of earnings
(2) Included in income taxes on the company's unaudited consolidated
statements of earnings
(3) Included in SG&A expense on the company's unaudited consolidated
statements of earnings
Fiscal 2006 earnings guidance represents an 8-9 percent
improvement over comparable 2005 results. The primary assumptions on
which earnings guidance is based are as follows, in approximate
amounts:
-- The opening of 45-55 company and franchised Jack in the Box
restaurants, including 13-15 with new Quick Stuff convenience
stores, and 85-95 new company and franchised Qdoba
restaurants.
-- A 2.0-2.5 percent increase in same-store sales at Jack in the
Box company restaurants, and a 4.0-6.0 percent same-store
sales increase at Qdoba company restaurants.
-- Restaurant operating margin at 17.4 percent of sales versus
16.9 percent 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.
-- The effective tax rate is forecast at approximately 37-37.5
percent.
-- Capital expenditures are estimated at $140-150 million
compared with $124 million in 2005, with the increase due in
part to investments associated with the planned re-imaging of
100-150 Jack in the Box restaurants in 2006.
First quarter guidance update
The company also today affirmed earnings guidance for the first
quarter ending Jan. 22, 2006, of approximately 67-69 cents per diluted
share versus 68 cents per diluted share 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.
First-quarter fiscal 2005 results did not include the effect of
expensing of stock options estimated at 5 cents per diluted share. The
following table compares 2006 guidance with 2005 comparable results
after the effect of 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 (1) - (0.05)
---------------- -------------
Comparable Forecast/Comparable 2005
Diluted EPS $0.67 - 0.69 $0.63
================ =============
(1) The company intends to include stock option expense as part of
SG&A expense on its consolidated statements of earnings
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 with 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 same-store sales at Jack in the
Box company restaurants 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 $9 million in 2005, primarily related to the sale of 13
company restaurants to franchisees.
First quarter initiatives
-- In October, Jack in the Box launched a new website
(www.breadisback.com) supporting its "Bread is Back" campaign
that lauds the merits of hearth-baked ciabatta bread and
Jack's line of sandwiches and burgers made with this higher
quality ingredient. The website includes a description of the
ciabatta product line and a downloadable video of Jack's
anthemic tribute to bread. Other elements of the campaign
include advertising on television, radio, the Internet and
college campuses.
-- New products introduced at Jack in the Box restaurants include
a dessert treat, Butterfinger(R) Cheesecake, and a new premium
breakfast product, Blueberry French Toast.
-- During the holiday season, Jack in the Box restaurants will
offer three different antenna balls, each featuring Jack's
popular likeness in different adornments: reindeer antlers and
a red nose a la Rudolph, a snowman's top hat and carrot nose,
and a New Year's Eve "2006" party hat and noisemaker. For a
limited time, a version of the festive antenna balls will be
offered free with a large combo purchase.
-- To promote its stored-value "Jack Cash" card - as both a
convenient method of payment and as a holiday gift - Jack in
the Box is currently offering either two free tacos or a small
shake with every $10 Jack Cash card purchase or reload.
-- During the first quarter, the company amended the $275 million
term-loan portion of its credit facility to achieve a
25-basis-point reduction in its borrowing rate over the term
of the loan. Fees paid in association with the repricing were
customary for such arrangements of this type and were not
material.
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 2,000 restaurants in 17 states. The company also operates a
proprietary chain of convenience stores called Quick Stuff(R), with
more than 40 locations, each built adjacent to a full-size Jack in the
Box restaurant and including a major-brand fuel station. Additionally,
through a wholly owned subsidiary the company operates and franchises
Qdoba Mexican Grill(R), an emerging leader in fast-casual dining, with
more than 250 restaurants in 37 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 produce, 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. 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 filed with the Securities and Exchange Commission. The
information in this press release is as of November 30, 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 (a) earnings per
diluted share determined in accordance with generally accepted
accounting principles (GAAP); (b) earnings per diluted share for
fiscal 2004 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; and (c) earnings per diluted share for
fiscal 2005 excluding (i) a tax-rate reduction in the third quarter of
fiscal 2005, (ii) a charge related to the cancellation of the test of
JBX Grill in the fourth quarter of fiscal 2005 that is included in
SG&A expense on the company's unaudited consolidated statements of
earnings, and (iii) the estimated effect of expensing stock options,
if stock options had been expensed under the provisions of SFAS 123R
in fiscal 2005.
These non-GAAP financial measures are 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. The tax
rate reduction and the charge for canceling the JBX Grill test are
both expected to be nonrecurring. Use of these non-GAAP measures also
facilitates comparisons between current and prior period financial
results, estimates of future results, and to the results of the
company's competitors. These financial measures are 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.
JACK IN THE BOX INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
Twelve Thirteen Fifty-two Fifty-three
Weeks Weeks Weeks Weeks
Ended Ended Ended Ended
--------- --------- ----------- -----------
Oct. 2, Oct. 3, Oct. 2, Oct. 3,
2005 2004 2005 2004
--------- --------- ----------- -----------
Revenues:
Restaurant sales $471,900 $505,440 $2,045,400 $2,033,482
Distribution and other
sales 100,238 65,022 348,482 197,762
Franchise rents and
royalties 20,887 17,999 80,390 66,653
Other 8,394 5,476 32,966 24,467
--------- --------- ----------- -----------
601,419 593,937 2,507,238 2,322,364
--------- --------- ----------- -----------
Costs of revenues:
Restaurant costs of sales 148,029 157,495 646,705 630,942
Restaurant operating
costs 242,317 259,223 1,052,262 1,056,156
Costs of distribution and
other sales 98,899 63,964 343,836 194,251
Franchised restaurant
costs 8,176 8,531 35,318 31,936
--------- --------- ----------- -----------
497,421 489,213 2,078,121 1,913,285
--------- --------- ----------- -----------
Selling, general and
administrative 67,950 68,713 273,821 264,257
--------- --------- ----------- -----------
Earnings from operations 36,048 36,011 155,296 144,822
Interest expense 4,273 3,588 17,092 27,318
--------- --------- ----------- -----------
Earnings before income
taxes 31,775 32,423 138,204 117,504
Income taxes 10,231 11,437 46,667 42,820
--------- --------- ----------- -----------
Net earnings $21,544 $20,986 $91,537 $74,684
========= ========= =========== ===========
Earnings per share:
Basic $.61 $.57 $2.57 $2.06
Diluted $.59 $.56 $2.48 $2.02
Weighted-average shares
outstanding:
Basic 35,264 36,542 35,625 36,237
Diluted 36,391 37,609 36,938 36,961
JACK IN THE BOX INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
October 2, October 3,
2005 2004
- ---------------------------------------------------------- -----------
ASSETS
Current assets:
Cash and cash equivalents $103,708 $131,700
Accounts and notes receivable, net 21,227 18,310
Inventories 40,007 34,043
Other current assets 118,661 92,808
----------- -----------
Total current assets 283,603 276,861
----------- -----------
Property and equipment, net 877,985 862,610
Other assets, net 176,031 182,577
----------- -----------
TOTAL $1,337,619 $1,322,048
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $7,788 $8,203
Other current liabilities 268,685 267,472
----------- -----------
Total current liabilities 276,473 275,675
----------- -----------
Long-term debt, net of current maturities 290,213 297,092
Other long-term liabilities 205,561 195,882
----------- -----------
Total liabilities 772,247 768,649
----------- -----------
Stockholders' equity 565,372 553,399
----------- -----------
TOTAL $1,337,619 $1,322,048
=========== ===========
CONTACT: Jack in the Box Inc., San Diego
Brian Luscomb, 858-571-2229
brian.luscomb@jackinthebox.com
www.jackinthebox.com