Exhibit 99.1
Jack in the Box Inc. Reports First
Quarter Results; Updates Fiscal 2006 Forecast and Provides Guidance
for Second Quarter
SAN DIEGO--(BUSINESS WIRE)--Feb. 22, 2006--Jack in the Box Inc.
(NYSE: JBX) today reported that net earnings totaled $25.2 million, or
70 cents per diluted share, in the first quarter ended Jan. 22, 2006,
compared with $25.4 million, or 68 cents per diluted share, in the
same quarter a year ago. As required by Statement of Financial
Accounting Standards No. 123R ("SFAS 123R"), fiscal 2006 results
include the effect of expensing stock options, which was 5 cents per
diluted share in the first quarter, while fiscal 2005 results did not
include the effect of expensing of stock options. The first quarter of
2006 also includes a charge of 4 cents per diluted share from a legal
settlement related to a labor matter in California.
"During the quarter we saw an increase in Jack in the Box(R) sales
across all day parts, which contributed to the company's strong
performance," said Linda A. Lang, chairman and chief executive
officer. "Our ciabatta burgers and sandwiches, including the Breakfast
Ciabatta Sandwich added late in the fourth quarter, remain popular
among our guests, and a promotion upgrading combo meals to include
seasoned curly fries also helped drive an increase in sales."
The following table shows an 11 percent increase in comparable
first-quarter diluted EPS, adjusting for the effect of stock option
expense in the first quarter of fiscal 2005:
First Quarter First Quarter
Fiscal 2006 Fiscal 2005
------------- -------------
Diluted EPS $0.70 $0.68
Comparable adjustments:
Effect of stock options if expensed in
FY 2005(1) - (0.05)
------------- -------------
Comparable diluted EPS $0.70 $0.63
============= =============
(1) The company includes stock option expense as part of SG&A expense
on its unaudited consolidated statements of earnings commencing
with the adoption of SFAS 123R in the first quarter of fiscal
2006.
First quarter financial highlights
Earnings per diluted share were higher than the company's guidance
of 67-69 cents per diluted share and analysts' First Call consensus
estimate of 68 cents per diluted share. The improvement versus
guidance was due primarily to significant increases in sales and
slightly higher gains on the sales of restaurants to franchisees,
partially offset by higher costs for utilities and tomatoes.
First-quarter earnings per diluted share also reflected the company's
repurchase of approximately 1.4 million shares of its common stock (+2
cents), and the aforementioned legal settlement (-4 cents).
Same-store sales at Jack in the Box company restaurants increased
5.5 percent in the first quarter, with an increase in both average
check and transactions, compared with a 2.2 percent increase in 2005.
First-quarter same-store sales exceeded the 1.5-2.0 percent increase
forecast due to strong customer response to marketing messages
promoting the chain's premium products and value menu, along with
general economic improvement in the retail sector and favorable
weather in many of the company's major markets versus last year. For
the quarter, system same-store sales at Qdoba Mexican Grill(R)
increased 7.9 percent on top of a 12.5 percent increase in 2005. Qdoba
continued to be accretive to earnings for the quarter.
Restaurant operating margin was 16.4 percent of sales in the first
quarter compared with 16.3 percent a year ago and 16.9 percent
forecast, with the decrease versus guidance due primarily to an
approximate 50-basis-point increase from higher utility costs and an
approximate 20-basis-point increase from higher tomato costs,
partially offset by fixed-cost leverage on same-store sales growth.
SG&A expense rate was 10.9 percent of revenues in the first
quarter compared with 10.8 percent in 2005, with the variance due
primarily to an approximate 30-basis-point increase from the
aforementioned legal settlement and an approximate 30-basis-point
increase from the expensing of stock options.
Four company and franchised Jack in the Box restaurants opened in
the first quarter, along with two new Quick Stuff(R) convenience
stores, compared with 8-10 restaurants forecast and 11 restaurants,
including three Quick Stuff sites, opened in the same quarter a year
ago. The variance versus guidance is due primarily to construction
delays. The company still plans to open 45-55 restaurants in the year.
Qdoba opened 23 company and franchised restaurants during the first
quarter, as forecast, compared with 22 locations opened in the same
quarter a year ago. At Jan. 22, the company's system total was
composed of 2,052 company and franchised Jack in the Box restaurants,
including 46 with Quick Stuff convenience stores, and 273 company and
franchised Qdoba restaurants.
Other revenues totaled $9.0 million in the first quarter,
primarily from the sale of 17 Jack in the Box company restaurants to
franchisees, compared with $7.9 million a year ago, primarily from the
sale of 13 such restaurants to franchisees. Interest income, which the
company previously included in other revenues and now classifies as a
component of interest expense, net, was $1.7 million in the first
quarter versus $0.9 million a year ago, with the increase reflecting
higher rates for cash invested.
The effective tax rate for the quarter was 37.0 percent versus
35.7 percent a year ago.
Capital expenditures, including capital lease obligations, were
$25.4 million for the first quarter compared with $30.9 million in
fiscal 2005.
During the first quarter, the company repurchased approximately
1.4 million shares of its common stock for approximately $50 million.
The purchases were made in accordance with the company's stock
repurchase plan under Rule 10b5-1. The company has approximately $100
million remaining under its current share repurchase authorization.
First quarter initiatives
-- In the quarter, Jack in the Box restaurants offered free with
each large combo purchase one of three different
holiday-themed 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.
-- To promote its stored-value "Jack Cash" card -- as both a
convenient method of payment and as a holiday gift -- Jack in
the Box offered either two free tacos or a small shake with
every $10 Jack Cash card purchase or reload.
-- The company continued to excel on the first pillar of its
strategic initiative to reinvent the Jack in the Box brand --
enhancing its menu with innovative products. The chain has a
pipeline of new products in various stages of development,
test and rollout, including two new products introduced during
the first quarter: Butterfinger(R) Cheesecake and French Toast
Sticks.
-- The company is also making progress on the second pillar of
brand reinvention -- upgrading service execution. Jack in the
Box hosted a breakthrough three-day conference that engaged
all company and franchised Jack in the Box restaurant managers
in the service vision and provided them tools for improving
service at their restaurants with every guest, every time.
-- The first-quarter sale of 17 company Jack in the Box
restaurants to franchisees increased the percentage of
restaurants operated by franchisees to nearly 26 percent of
the Jack in the Box system at quarter end compared with 23
percent a year ago.
Fiscal year 2006 guidance update
Jack in the Box Inc. today updated its earnings guidance for
fiscal 2006. For the full year, the company now expects to earn
approximately $2.57 - $2.60 per diluted share, which is up from its
previous forecast of approximately $2.50 - $2.54 per diluted share,
and compares with $2.48 per diluted share earned in fiscal 2005. The
fiscal year 2006 guidance includes the effect of expensing stock
options, as required by SFAS 123R, forecast at approximately 15 cents
per diluted share. Fiscal 2005 results did not include the expensing
of stock options. The following table compares guidance for fiscal
year 2006 with 2005 comparable results assuming the effect of
expensing stock options of approximately 15 cents per diluted share
(excluding the effect of accelerated vesting of retiree's stock
options) and certain other non-comparable items:
Forecast
Fiscal 2006 Fiscal 2005
------------- ------------
Diluted EPS $2.57 - 2.60 $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 diluted EPS $2.57 - 2.60 $2.32
============= ============
(1) The company includes stock option expense as part of SG&A expense
on its unaudited consolidated statements of earnings commencing
with the adoption of SFAS 123R in the first quarter of fiscal
2006.
(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 11-12 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 10-13 with new Quick Stuff convenience
stores, and 85-95 new company and franchised Qdoba
restaurants.
-- A 3.5-4.5 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.
-- Restaurant operating margin at 17.2 percent of sales versus
16.9 percent in 2005, due primarily to fixed-cost leverage on
same-store sales growth and Profit Improvement Program
initiatives, partially offset by higher utility rates.
-- Other revenues of $32-34 million, primarily related to the
sale of 60-65 Jack in the Box restaurants to franchisees.
-- The effective tax rate is forecast at 37.0-37.5 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.
Second quarter 2006 guidance
The company also today provided earnings guidance for the second
quarter ending April 16, 2006, of approximately 57-59 cents per
diluted share versus 55 cents per diluted share in the prior year. The
quarter's guidance includes the effect of expensing stock options, as
required by SFAS 123R. Second-quarter fiscal 2005 results did not
include the effect of expensing of stock options of approximately 3
cents per diluted share. The following table compares 2006 guidance
with 2005 comparable results after the effect of stock option expense:
Forecast
Second Quarter Second Quarter
Fiscal 2006 Fiscal 2005
-------------- --------------
Diluted EPS $0.57 - 0.59 $0.55
Comparable adjustments:
Effect of stock options if expensed in
FY 2005(1) - (0.03)
-------------- --------------
Comparable diluted EPS $0.57 - 0.59 $0.52
============== ==============
(1) The company includes stock option expense as part of SG&A expense
on its unaudited consolidated statements of earnings commencing
with the adoption of SFAS 123R in the first quarter of fiscal
2006.
Second-quarter fiscal 2006 earnings guidance represents a 10-13
percent improvement over comparable prior-year results after adjusting
for the effect of expensing stock options in 2005. The primary
assumptions on which second-quarter earnings guidance is based are as
follows, in approximate amounts:
-- The opening of 7-9 new company and franchised Jack in the Box
restaurants, including 2-3 with new Quick Stuff convenience
stores, compared with 13 restaurants, including 3 Quick Stuff
sites, in 2005; approximately 12-14 new company and franchised
Qdoba restaurants compared with 18 in 2005.
-- A 3.0-4.0 percent increase in same-store sales at Jack in the
Box company restaurants on top of a 3.1 percent increase in
2005.
-- Restaurant operating margin at 17.2 percent of sales versus
17.1 percent in 2005, due primarily to leverage from higher
same-store sales, partially offset by higher utility costs.
-- Other revenues of $8-9 million, primarily related to the sale
of 13-15 Jack in the Box restaurants to franchisees, compared
with $7 million in 2005, primarily related to the sale of 13
company restaurants to franchisees.
-- The effective tax rate is forecast at 37.0-37.5 percent.
-- Capital expenditures are estimated at $25-30 million compared
with $20 million in 2005, with the increase due in part to
investments associated with the planned re-imaging of Jack in
the Box restaurants in 2006.
Second quarter initiatives
-- Last week, Jack in the Box introduced a new premium sandwich,
the Sourdough Ultimate Cheeseburger, which features two jumbo
beef patties topped with mayo-onion sauce, mustard, ketchup,
and American and Swiss-style cheese, and served on the chain's
signature sourdough bread.
-- Additional products slated for introduction in the second
quarter include a new premium sandwich and a new flavor of
shake, made with real ice cream.
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 2,050 restaurants in 17 states. The company also operates a
proprietary chain of convenience stores called Quick Stuff(R), with
approximately 46 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 270 restaurants in 39 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," "plans," "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 related to food, utilities, fuel, labor, pending or
future legal claims, and new construction or restaurant remodels;
delays in the opening of new restaurants; potential variances between
estimated and actual liabilities; changes in actuarial assumptions and
discount rates and the related possibility of increased pension
expense; changes in laws, including laws related to immigration,
information security and pension plans; the risk that the company's
new products, promotions, service and re-image initiatives may not be
as successful as the company anticipates; the effects of potential
weakness in or failure of internal controls; the risk of breaches in
the security of information; adverse weather conditions in the regions
in which restaurants are located; adverse business, economic,
political and other local or national conditions or events that affect
consumer confidence and spending patterns; 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 or 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 February 22, 2006. 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); and (b) earnings per diluted share for
fiscal 2005 excluding (i) the benefit from 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, and (iii) the pro forma effect of expensing stock options, if
the company had implemented the provisions of SFAS 123R in fiscal
2005.
These non-GAAP financial measures are used by management to
evaluate financial and operating performance. 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)
Sixteen Weeks Ended
-------------------
Jan. 22, Jan. 23,
2006 2005
-------------------
Revenues:
Restaurant sales $639,880 $612,140
Distribution and other sales 139,961 93,040
Franchise rents and royalties 30,903 24,656
Other 8,973 7,871
--------- ---------
819,717 737,707
--------- ---------
Costs of revenues:
Restaurant costs of sales 203,945 192,998
Restaurant operating costs 331,148 319,266
Costs of distribution and other sales 138,158 92,105
Franchised restaurant costs 12,867 10,242
--------- ---------
686,118 614,611
--------- ---------
Selling, general and administrative 89,550 79,558
--------- ---------
Earnings from operations 44,049 43,538
Interest expense, net 3,990 3,973
--------- ---------
Earnings before income taxes 40,059 39,565
Income taxes 14,836 14,135
--------- ---------
Net earnings $25,223 $25,430
========= =========
Net earnings per share:
Basic $.72 $.71
Diluted $.70 $.68
Weighted-average shares outstanding:
Basic 34,978 35,954
Diluted 36,053 37,313
JACK IN THE BOX INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Jan. 22, Jan. 23,
2006 2005
- ----------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $101,639 $118,054
Accounts and notes receivable, net 23,888 20,191
Inventories 40,575 38,712
Other current assets 103,629 94,314
----------- -----------
Total current assets 269,731 271,271
----------- -----------
Property and equipment, net 870,733 859,036
Other assets, net 175,640 181,905
----------- -----------
TOTAL $1,316,104 $1,312,212
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $7,846 $8,019
Other current liabilities 254,503 243,794
----------- -----------
Total current liabilities 262,349 251,813
----------- -----------
Long-term debt, net of current maturities 287,914 295,236
Other long-term liabilities 216,212 199,124
----------- -----------
Total liabilities 766,475 746,173
----------- -----------
Stockholders' equity 549,629 566,039
----------- -----------
TOTAL $1,316,104 $1,312,212
=========== ===========
CONTACT: Jack in the Box Inc.
Brian Luscomb, 858-571-2229
brian.luscomb@jackinthebox.com