Exhibit 99.1
Jack in the Box Inc. Reports Third
Quarter Earnings; Raises Fiscal 2007 Earnings Forecast; Plans 2-For-1
Stock Split
SAN DIEGO--(BUSINESS WIRE)--Aug. 8, 2007--Jack in the Box Inc.
(NYSE: JBX) today reported earnings of $34.7 million, or $1.08 per
diluted share, for the quarter ended July 8, 2007, compared with $27.8
million, or 77 cents per diluted share, for the same quarter a year
ago. Year-to-date net earnings increased to $99.3 million, or $2.90
per diluted share, versus $74.9 million, or $2.09 per diluted share,
for the same period last year.
Third quarter earnings exceeded by 19 cents the high end of the
range previously forecast by the company and analysts' First Call
consensus estimate - 89 cents - due primarily to the following, in
approximate amounts:
-- +8 cents from higher sales and franchise revenues, and good
expense controls, partially offset by lower restaurant
operating margin due to higher food costs.
-- +7 cents primarily from an insurance recovery.
-- +4 cents due to higher gains from the planned refranchising of
22 Jack in the Box(R) restaurants, which had
higher-than-average cash flows.
"Our success in executing the company's strategic plan has Jack in
the Box Inc. well on its way to another record year of earnings," said
Linda A. Lang, chairman and chief executive officer. "We're growing
our business, expanding our franchise operations, and, through the
holistic reinvention of the Jack in the Box brand, broadening our
appeal and becoming a preferred dining destination for our guests."
Third quarter financial highlights
Same-store sales at Jack in the Box company restaurants were up
7.4 percent in the third quarter, with an increase in both average
check and transactions, on top of a year-ago increase of 2.9 percent.
Year to date, same-store sales were up 6.4 percent on top of a 4.3
percent increase for the same period last year. System same-store
sales at Qdoba Mexican Grill(R) increased 5.0 percent in the third
quarter on top of a 6.0 percent increase in the third quarter of 2006.
Year to date, same-store sales were up 4.2 percent at Qdoba on top of
a 6.5 percent increase for the first three quarters of fiscal 2006.
Restaurant operating margin was 17.4 percent of sales in the third
quarter compared with the company's internal forecast of 17.9 percent
and 18.7 percent a year ago, due primarily to higher commodity costs
offset by fixed cost leverage from higher sales in 2007, profit
improvement program initiatives and labor efficiencies. Year to date,
restaurant operating margin improved to 18.1 percent of sales versus
17.4 percent for the same period a year ago, with the 70-basis-point
improvement due primarily to fixed cost leverage from higher sales in
2007, profit improvement program initiatives, and lower costs for
utilities, partially offset by higher food costs.
Beef costs for the quarter were up approximately 9 percent versus
prior year. Egg and cheese costs were also up substantially for the
quarter. The company expects higher food costs to continue for the
balance of the calendar year, with some softening in beef prices
versus the third quarter.
SG&A expense rate in the third quarter improved to 9.1 percent of
revenues compared with 10.6 percent last year, due primarily to
leverage from higher sales and franchise revenues, lower pension
expense, an insurance recovery, profit improvement program initiatives
and the impact of the company's refranchising strategy.
Jack in the Box opened 10 new company and franchised restaurants
in the third quarter, the same as last year, and Qdoba opened 18
company and franchised restaurants versus 14 last year. In the
quarter, Qdoba purchased nine franchised restaurants in western
Michigan, which it plans to develop as a company market. Year to date,
Jack in the Box added 30 new restaurants, including 11 franchised
locations, versus 19 new restaurants last year, which included 4
franchised locations. Qdoba added 60 new company and franchised
restaurants in the first three quarters of fiscal 2007 compared with
50 a year ago. At July 8, the company's system total comprised 2,107
company and franchised Jack in the Box restaurants, including 58 with
Quick Stuff(R) convenience stores, and 371 company and franchised
Qdoba restaurants.
Gains on sale of company-operated restaurants were $12.6 million
in the third quarter, resulting from the sale of 22 Jack in the Box
company restaurants to franchisees. In the third quarter of fiscal
2006, gains on sale of company-operated restaurants totaled $5.6
million, resulting from the sale of 17 Jack in the Box company
restaurants to franchisees. The difference in average gains is related
to the specific sales and cash flows of restaurants sold.
The effective tax rate in the third quarter was 35.3 percent
versus 34.1 percent a year ago, with the lower rate in 2006 due
primarily to specific tax-planning initiatives and tax credits.
Capital expenditures were $38.3 million in the quarter compared
with $35.0 million in fiscal 2006, with the increase due primarily to
investment in the Jack in the Box re-image program.
Franchising and new market expansion
Included among the 22 Jack in the Box restaurants refranchised in
the third quarter was a transaction involving 14 locations in Houston,
which was previously an entirely company-operated market.
The company has signed franchise development agreements to expand
the Jack in the Box brand into three new contiguous markets:
Albuquerque, N.M., Midland/Odessa, Texas, and Abilene/San Angelo,
Texas. The first restaurants in these new markets are scheduled to
open in 2008.
Additionally, construction is currently underway on
company-operated Jack in the Box restaurants in two new contiguous
markets: Denver, Colo., and Corpus Christi, Texas. The first
restaurants in these new markets are scheduled to open in the next few
months.
Third quarter initiatives
-- In the third quarter, Jack in the Box became the first major
quick-serve chain to offer an all-sirloin hamburger patty,
which weighs in at nearly one-third of a pound after cooking.
The 100% Sirloin Burger is served on a toasted bakery-style
bun with peppercorn mayo, pickle strips, lettuce and tomato.
Guests have the opportunity to customize their burger with
American, cheddar or Swiss cheese, grilled or red onions, and
bacon.
-- In June, Jack in the Box enhanced its entire line of entree
salads with a new blend of mostly romaine lettuce and spring
mix and another customization option - a choice of grilled or
crispy chicken strips. Jack in the Box also added a BBQ Ranch
Chicken Salad, which is topped with real cheddar cheese, fresh
cucumber slices and red onion rings, and served with crunchy
barbecue tortilla strips, barbecue sauce and ranch dressing on
the side.
-- Other menu additions include the following: a Blackberry
Shake, made with real vanilla ice cream blended with pieces of
real blackberries and served with creamy whipped topping and a
maraschino cherry; and a Chocolate Overload Cake, a
bundt-style dessert made from dark European and double-dutch
cocoa mixed with bittersweet chocolate chips and topped with a
drizzle of chocolate butter cream frosting.
Upgrading the menu with innovative products featuring high-quality
ingredients, along with improving the guest experience through service
initiatives and enhancements to the restaurant environment, is a
primary focus of the company's strategy to holistically reinvent the
Jack in the Box brand. Through the first three quarters of fiscal
2007, Jack in the Box re-imaged 118 restaurants with a comprehensive
program that includes a complete redesign of the dining room and
common areas. Interior finishes include ceramic tile floors, a mix of
seating styles ranging from booths and bars to high-top round tables,
decorative pendant lighting, and graphics and wall collages. The
program, which is expected to be rolled out to 150-200 restaurants in
fiscal 2007 and to the entire Jack in the Box system in 4-5 years,
also includes music, uniforms and packaging, along with new paint
schemes, landscaping and other exterior enhancements.
"We're continuing to see positive sales trends and higher guest
satisfaction ratings in markets that have been re-imaged," Lang said.
2-for-1 stock split
In a separate news release issued yesterday, Jack in the Box Inc.
announced that its Board of Directors has approved a 2-for-1 split of
the company's common stock, to be effected in the form of a special
100 percent stock dividend. The split is subject to stockholder
approval of a charter amendment to increase the number of shares of
the company's authorized common stock. The proposed increase in
authorized common stock would provide sufficient authorized and
unissued shares of common stock to ensure consummation of the split,
satisfy the company's obligations under its benefit plans, and
accommodate other corporate purposes. The company will hold a special
meeting of stockholders, which is tentatively set for Sept. 21, 2007,
to vote on the charter amendment to increase the number of authorized
shares of common stock.
Fiscal year 2007 guidance update (in approximate amounts)
Jack in the Box Inc. today updated its earnings guidance and
certain underlying assumptions for fiscal year 2007:
-- $3.62-3.66 per diluted share in earnings.
-- 5.5-6.0 percent same-store sales increase at Jack in the Box
company-operated restaurants.
-- 3.0-5.0 percent same-store sales increase at Qdoba system
restaurants.
-- $38-40 million in gains from the sale of 75-80 restaurants to
franchisees.
-- Tax rate of approximately 36 percent.
-- 45-50 new company and franchise-operated Jack in the Box
restaurants.
-- 80-90 new company and franchise-operated Qdoba restaurants.
-- $170-175 million in capital expenditures, including investment
costs related to the Jack in the Box restaurant re-image
program, kitchen enhancements, and Qdoba's third-quarter
acquisition of nine franchised restaurants.
Fourth quarter guidance (in approximate amounts)
Jack in the Box Inc. also today announced the following guidance
for the fourth quarter of 2007:
-- 72-76 cents per diluted share in earnings.
-- 4.0-4.5 percent same-store sales increase at Jack in the Box
company-operated restaurants, on top of a 5.9 percent increase
in 2006.
Fourth quarter initiatives
Among the company's fourth-quarter marketing events are the
following:
-- Last month, Jack in the Box introduced Real Ice Cream Floats,
delightfully refreshing beverages featuring vanilla ice cream
mixed with a choice of soda, including Barq's(R) Root Beer, Dr
Pepper(R) and Fanta(R) orange. Beginning August 13, Jack in
the Box will launch a limited-time promotion to "Float Your
Combo," whereby guests can upgrade their combo meal beverages
with a Real Ice Cream Float for a slight charge.
-- Next week, the company will enhance its breakfast menu with a
Sirloin Steak & Egg Burrito, which will feature a flour
tortilla stuffed with 100% sirloin steak, shredded cheddar and
pepper jack cheeses, scrambled eggs and hash browns, topped
with a chipotle sauce and served with a side of fire-roasted
salsa.
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 2,100 restaurants in 17 states. The company also operates a
proprietary chain of convenience stores called Quick Stuff(R), with
more than 50 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 370 restaurants in 39 states. For more information, visit
www.jackinthebox.com.
Safe harbor statement
Except for the historical information contained herein, the
matters discussed and statements made 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 "believe," "expects," "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: rising costs for food, wages, employee
benefits, construction, fuel and utilities, which may not be offset by
price increases or operational efficiencies; delays in the opening of
new or remodeled restaurants; the uncertainty whether localized
results for products or facility enhancements are predictive of
successful results on a larger scale; loss of sales due to restaurant
closures related to weather or other adverse conditions in the regions
in which restaurants are located; changes in laws, regulations and
accounting rules and interpretations; the costs of legal claims by
employees, franchisees, customers, stockholders and others; and
adverse economic and other local, national and international
conditions or events which affect consumer confidence and spending.
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 August 7, 2007. The company undertakes no obligation
to update or revise any forward-looking statement, whether as the
result of new information 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 8, July 9, July 8, July 9,
2007 2006 2007 2006
------------------- -----------------------
Revenues:
Restaurant sales $503,080 $488,054 $1,654,933 $1,615,756
Distribution and other
sales 143,972 130,076 437,529 378,159
Franchised restaurant
revenues 33,151 25,216 105,100 81,197
--------- --------- ----------- -----------
680,203 643,346 2,197,562 2,075,112
--------- --------- ----------- -----------
Operating costs and
expenses:
Restaurant costs of sales 164,372 149,399 521,703 504,913
Restaurant operating
costs 250,998 247,598 834,386 829,164
Distribution and other
costs of sales 142,329 128,218 433,483 373,510
Franchised restaurant
costs 13,201 10,679 42,544 33,530
Selling, general and
administrative expenses 62,170 68,193 221,074 226,874
Gains on sale of company-
operated restaurants (12,638) (5,642) (27,039) (19,829)
--------- --------- ----------- -----------
620,432 598,445 2,026,151 1,948,162
--------- --------- ----------- -----------
Earnings from operations 59,771 44,901 171,411 126,950
Interest expense, net 6,099 2,685 16,874 10,115
--------- --------- ----------- -----------
Earnings before income
taxes 53,672 42,216 154,537 116,835
Income taxes 18,929 14,375 55,231 41,984
--------- --------- ----------- -----------
Net earnings $ 34,743 $ 27,841 $ 99,306 $ 74,851
========= ========= =========== ===========
Net earnings per share:
Basic $ 1.11 $ .79 $ 2.98 $ 2.15
Diluted $ 1.08 $ .77 $ 2.90 $ 2.09
Weighted-average shares
outstanding:
Basic 31,180 35,073 33,328 34,858
Diluted 32,027 36,018 34,267 35,850
JACK IN THE BOX INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 8, July 9,
2007 2006
- ----------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 86,512 $ 191,523
Accounts and other receivables, net 47,003 28,608
Inventories 44,879 40,964
Other current assets 105,434 98,595
---------- ----------
Total current assets 283,828 359,690
---------- ----------
Property and equipment, net 920,305 883,424
Other assets, net 224,055 178,920
---------- ----------
TOTAL $1,428,188 $1,422,034
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $ 5,960 $ 7,916
Other current liabilities 273,952 278,863
---------- ----------
Total current liabilities 279,912 286,779
---------- ----------
Long-term debt, net of current maturities 428,441 284,105
Other long-term liabilities 214,166 214,428
---------- ----------
Total liabilities 922,519 785,312
---------- ----------
Stockholders' equity 505,669 636,722
---------- ----------
TOTAL $1,428,188 $1,422,034
========== ==========
CONTACT: Jack in the Box Inc.
Brian Luscomb, 858-571-2229
Division Vice President, Corporate Communications
brian.luscomb@jackinthebox.com
www.jackinthebox.com