Exhibit 99.1
Jack in the Box Inc. Earns $19.8 Million in
Third Quarter; Updates Earnings Guidance for Fiscal 2003
SAN DIEGO--(BUSINESS WIRE)--Aug. 6, 2003--Jack in the Box Inc.
(NYSE: JBX), operator and franchiser of Jack in the Box(R) and Qdoba
Mexican Grill(R) restaurants, today announced net earnings of $19.8
million for the third quarter ended July 6, compared with $24.2
million in the third quarter of fiscal 2002. Earnings per diluted
share were 54 cents compared with 60 cents last year.
Jack in the Box exceeded its earnings-per-share estimate by 5
cents, primarily due to the favorable resolution of a tax matter. The
company reported that its fiscal 2003 earnings-per-share estimate was
now $2.03-$2.06, due to a lower effective tax rate resulting from this
resolution. Year to date, Jack in the Box earned $57.3 million, or
$1.54 per diluted share, compared with fiscal 2002 earnings of $69.1
million, or $1.72 per diluted share.
Same-store sales decreased 0.2 percent compared with a 1.5 percent
decrease in the third quarter last year. Benefiting from the
introduction of a new line of premium salads called Jack's Ultimate
Salads(TM), same-store sales improved from the 3.3 percent decline
reported for the first half of the year, as well as third-quarter
guidance of a 2.5 percent decrease.
Qdoba continued to produce double-digit same-store sales increases
during the quarter on top of double-digit increases last year, while
the Quick Stuff(R) concept, combining a convenience store and fuel
station with a Jack in the Box restaurant, continued to maintain
year-to-date, double-digit same-store sales increases. Qdoba and Quick
Stuff operations are not material components of Jack in the Box Inc.
consolidated financial results or projections.
"We are pleased to see the improvement in Jack in the Box
same-store sales despite continued economic weakness," said Chairman
and CEO Robert J. Nugent. "In addition, our other brands, Qdoba and
Quick Stuff, continue to exceed same-store sales expectations."
During the quarter, the company introduced three new premium
salads: Asian Chicken, Southwest Chicken and Chicken Club. At the
beginning of the fourth quarter, the company introduced its Turkey
Jack(TM) sandwich, the quick-serve restaurant segment's first turkey
burger.
Consolidated company restaurant sales were $444 million during the
third quarter compared with $428 million last year. Year to date,
company restaurant sales increased to $1.42 billion compared with $1.4
billion a year ago.
Other revenues during the quarter were $6.9 million compared with
$4.7 million last year. Jack in the Box completed conversions of 14
restaurants to franchises in the quarter versus five last year. Year
to date, other revenues were $25.4 million versus $12.9 million,
primarily due to the sale of 28 restaurants to franchisees compared
with 14 restaurants in fiscal 2002. Total revenues for the quarter
were $489 million compared with $461 million in last year's third
quarter, and were $1.57 billion year to date compared with $1.5
billion in 2002.
Consolidated systemwide sales were $569 million in the third
quarter versus $525 million last year, and year to date were $1.79
billion compared with $1.72 billion in 2002.
During the third quarter, the company opened 21 new
Jack in the Box restaurants, bringing to 1,534 the total number of
company-operated restaurants. At the end of the third quarter, there
were 1,920 Jack in the Box units systemwide compared with 1,840 a year
ago.
The company also operated 13 Quick Stuff convenience stores at
quarter-end compared with 12 last year. Qdoba operated or franchised
98 units at quarter-end, compared with 79 restaurants at the same time
last year.
Gross profit rate in the third quarter was 17.7 percent of
revenues compared with 20 percent last year, due primarily to higher
workers' compensation insurance, utilities, and food and packaging
costs, as well as costs related to a new point-of-sale (POS) system
rollout. Year to date, gross profit rate was 18.1 percent of revenues
versus 19.4 percent in 2002.
Restaurant operating margin was 16.5 percent of sales compared
with 19.4 percent in last year's third quarter for the same reasons.
Year to date, restaurant operating margin was 16.6 percent of sales
versus 18.6 percent last year.
The company reported that legislative changes plus higher medical
costs have significantly increased workers' compensation costs in
California, Washington, and to a lesser extent, Texas.
Additionally, the company's food and packaging costs were higher
than last year due to the introduction of its new salad program, which
was also impacted by higher produce costs. Restricted beef shipments
from Canada reduced supply throughout the industry, resulting in
increased beef costs in the quarter.
Finally, the company incurred higher costs than last year related
to equipment leases and maintenance contracts for its new POS system
rollout, which is expected to be completed in January 2004. The new
system replaces an older technology platform, and upgrades will enable
all company restaurants to process debit/credit-card transactions. The
company expects that cost increases associated with insurance, medical
benefits, and the new POS system, as well as pension costs, will
continue into the next fiscal year.
SG&A expense rate in the quarter was 10.6 percent of revenues
compared with 11.2 percent forecast and 11.1 percent last year,
primarily due to the company's ongoing Profit Improvement Program
initiatives, which have helped offset increases in pension costs. Year
to date, SG&A expense rate was 11.1 percent of revenues, the same as
2002.
Third-quarter earnings from operations, or operating income, were
$34.8 million compared with $41 million in 2002, and included $2.1
million in additional other revenues, primarily related to gains and
fees on restaurant sales to franchisees. Year to date, operating
income was $109 million versus $124 million last year, and included
$12.5 million in additional other revenues.
Operating income was $34.8 million, and depreciation and
amortization was $16.3 million during the quarter compared with $41
million and $16.3 million, respectively, last year. Year to date,
operating income was $109.3 million, and depreciation and amortization
was $53.5 million versus $124.2 million and $53.6 million,
respectively, in 2002.
Interest expense in the third quarter was $5.5 million versus $5.1
million last year, primarily due to borrowing costs associated with
the Qdoba acquisition and fees related to the company's refinancing
this past January.
The company reported a favorable resolution of a tax matter, which
improved the quarter's income tax rate to 32.5 percent compared with
38 percent forecast and 32.7 percent in last year's third quarter.
Year to date, the company's income tax rate was 36.2 percent compared
with 35.2 percent in fiscal 2002. The company now expects its 2003
income tax rate to be 36.2 percent versus 33.9 percent last year, and
expects to return to its normal rate of 38 percent in fiscal 2004.
Capital expenditures were $31.4 million versus $37.2 million in
last year's third quarter and were lower than guidance. The company is
now leasing a greater portion of its new stores instead of purchasing
them due to favorable financing terms. Year to date, capital
expenditures were $81 million compared with $91 million in 2002.
Regarding the company's balance sheet, the quarter-end current
ratio was 0.6 versus 0.5 last year, debt-to-equity ratio was 0.6
versus 0.5, and total debt was $303 million compared with $251
million, primarily related to the $45 million acquisition of Qdoba in
January of this year.
Accounts receivables were $9 million higher than 2002, due to
short-term bridge loans made to qualified Jack in the Box franchisees
on restaurant purchases.
Other current assets were $27 million lower than last year,
primarily due to a reduction in sinking funds related to the
retirement of 10.3 percent financing lease obligations, and to a
decrease in assets held for sale/leaseback.
Other assets were up $52 million from 2002, primarily related to
the establishment of intangible assets for the Qdoba acquisition,
approximately $9 million of which is amortizable.
Current liabilities were $66 million lower than last year,
primarily related to reclassification of the company's senior facility
to long-term debt following a refinancing transaction in January, and
to the retirement of financing lease obligations.
Long-term debt was up $122 million from 2002, primarily related to
the senior credit facility reclassification and to the Qdoba
acquisition financing.
Other long-term liabilities were $27 million higher than last
year, primarily due to increases in deferred taxes, straight-line rent
and pension obligations.
Stockholders' equity was slightly lower than last year, as
increases to retained earnings were essentially offset by reductions
for share repurchases and a pension liability adjustment.
Fourth-Quarter Guidance
The company currently expects to earn approximately 49 cents per
share in the fourth quarter compared with 35 cents per share reported
in 2002, or 57 cents per share when adjusted for the following
factors: normalizing the annual income tax rate to 36.2 percent;
eliminating the amortization of indefinite life intangible assets of
approximately $1 million (related to this year's adoption of FAS 142);
and excluding one-time pre-tax charges of $15.7 million in the fourth
quarter of 2002. The primary assumptions supporting this
earnings-per-share estimate are as follows, in approximate amounts:
-- 27 new Jack in the Box restaurants open, including six Quick
Stuff convenience stores co-branded with Jack in the Box
restaurants and fuel stations. Two Quick Stuff sites
originally planned for 2003 will open in the first quarter of
2004. They will be replaced by two additional Jack in the Box
sites, bringing total company restaurant openings for the year
to 90 as planned.
-- A 1 percent increase in Jack in the Box same-store sales
compared with a 2.7 percent decrease last year due to new
product and promotional introductions that are expected to
offset continued economic weakness and competitive discounting
activity. For the full year, the company estimates that
same-store sales will decrease approximately 1.5 to 1.8
percent compared with last year's 0.8 percent decrease.
-- $27 million in distribution and other sales versus $20.3
million last year, due to higher fuel revenues from co-branded
sites, and additional distribution to Qdoba restaurants.
Margins are expected to be slightly lower, primarily due to a
higher percentage of fuel sales at low margins and higher
distribution costs associated with more frequent restaurant
deliveries.
-- Eight Jack in the Box conversions to franchises, the same as
last year, producing approximately $5.5 million in other
revenues compared with $7.2 million in 2002. For the full
year, the company expects to convert 36 restaurants to
franchises, producing approximately $31 million in other
revenues, compared with approximately $20 million from the
conversion of 22 restaurants last year. These conversions
represent only 2 percent of all company-operated restaurants.
-- $493 million in total revenues versus $463 million in 2002.
-- Gross profit rate of 17.5 percent of revenues compared with
19.6 percent last year, due to higher costs for food and
packaging, workers' compensation and medical insurance,
utilities and the new POS system.
-- SG&A expense rate of 10.7 percent of revenues compared with
10.9 percent last year, excluding one-time pre-tax charges of
$15.7 million, incurred in the fourth quarter of 2002, for the
settlement of a class-action lawsuit and the closure of eight
underperforming restaurants.
-- Income tax rate of 36.2 percent versus 26.6 percent last year,
due to one-time tax benefits in both years. The company
expects to return to its normal income tax rate of 38 percent
in fiscal 2004.
-- Weighted average shares outstanding of 36.7 million versus
39.7 million in 2002.
-- Capital expenditures of approximately $55 million compared
with $51.8 million last year, bringing total capital
expenditures in 2003 to $135 million versus $143 million in
fiscal 2002.
-- Operating income plus depreciation and amortization of
approximately $50 million versus $56.8 million a year ago,
when adjusting 2002 for the items mentioned above.
About Jack in the Box Inc.
Jack in the Box Inc. (NYSE: JBX) operates and franchises
Jack in the Box and Qdoba Mexican Grill restaurants in 30 states
combined. Jack in the Box is the nation's first major drive-thru
hamburger chain, with more than 1,900 restaurants. Qdoba Mexican Grill
is an emerging leader in fast-casual dining, with nearly 100
restaurants. With headquarters in San Diego, Jack in the Box Inc. has
more than 44,000 employees. For more information, visit
www.jackinthebox.com and www.qdoba.com.
Safe Harbor
This news release contains forward-looking statements about, among
other items, the company's projected earnings, sales, including same
store sales trends, revenues, growth, completion of a POS system
rollout, costs and expenses, including insurance, utilities and
pension costs, sales of franchises, franchise conversions, profits,
tax rates, shares outstanding, new products, and marketing plans.
These forward-looking statements are subject to risks and
uncertainties. The statements reflect management's current
expectations regarding future events.
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: the effect of competition, including
pricing, marketing initiatives and new products introduced by
competitors; the availability and cost of food ingredients, labor,
utilities, workers' compensation and other insurance, and real estate;
increases in expenses related to technology and equipment upgrades;
the success of the company's new products and marketing initiatives;
delays in the opening of restaurants and of the innovation center; the
availability of financing on terms satisfactory to franchisees and
potential franchisees; timely payment of franchisee obligations due
the company; the attractiveness of the company's franchise offerings;
the continuation of franchise conversions; adverse weather conditions
and business, economic and other local or national conditions or
events which affect consumer confidence and spending patterns; the
company's ability to successfully execute its strategic plans; the
volume of advertising the company is able to purchase compared to its
competitors; consumer health concerns about fast food in general or
the company's products specifically; the effect of negative or
positive publicity regarding the company or the restaurant industry in
general; changes in government regulations; changes in accounting
standards, policies and practices; changes in effective tax rates;
potential variances between estimated and actual liabilities; effects
of legal claims; the possibility of unforeseen events affecting the
industry in general and other risk factors listed from time to time in
the company's reports filed with the Securities and Exchange
Commission. Statements about the company's past performance are not
necessarily indicative of its future results. The company undertakes
no obligation to publicly 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 6, July 7, July 6, July 7,
2003 2002 2003 2002
------------------ ----------------------
Revenues:
Restaurant sales $443,990 $428,150 $1,421,695 $1,398,816
Distribution and other
sales 25,927 19,051 78,351 57,153
Franchise rents and
royalties 11,803 9,271 39,799 34,157
Other 6,854 4,747 25,411 12,903
------------------ ----------------------
488,574 461,219 1,565,256 1,503,029
------------------ ----------------------
Costs of revenues:
Restaurant costs of sales 140,129 128,395 436,950 426,093
Restaurant operating costs 230,557 216,756 748,804 713,144
Costs of distribution and
other sales 25,277 18,491 76,556 55,630
Franchised restaurant costs 6,157 5,215 19,402 16,979
------------------ ----------------------
402,120 368,857 1,281,712 1,211,846
------------------ ----------------------
Gross profit 86,454 92,362 283,544 291,183
Selling, general and
administrative 51,629 51,341 174,210 167,020
------------------ ----------------------
Earnings from operations 34,825 41,021 109,334 124,163
Interest expense 5,538 5,086 19,598 17,582
------------------ ----------------------
Earnings before income taxes 29,287 35,935 89,736 106,581
Income taxes 9,515 11,733 32,485 37,519
------------------ ----------------------
Net earnings $19,772 $24,202 $57,251 $69,062
================== ======================
Net earnings per share:
Basic $.55 $.61 $1.56 $1.75
Diluted $.54 $.60 $1.54 $1.72
Weighted-average shares
outstanding:
Basic 36,007 39,513 36,608 39,393
Diluted 36,559 40,482 37,082 40,232
JACK IN THE BOX INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
July 6, July 7,
2003 2002
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ASSETS
Current assets:
Cash and cash equivalents $10,328 $6,695
Accounts receivable, net 31,827 22,542
Inventories 32,404 30,055
Other current assets 45,646 73,121
-----------------------
Total current assets 120,205 132,413
-----------------------
Property and equipment, at cost 1,269,476 1,180,896
Accumulated depreciation and amortization (412,019) (365,768)
-----------------------
Property and equipment, net 857,457 815,128
-----------------------
Other assets, net 158,816 106,873
-----------------------
TOTAL $1,136,478 $1,054,414
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $2,604 $72,456
Accounts payable 42,328 46,173
Other current liabilities 171,265 163,233
-----------------------
Total current liabilities 216,197 281,862
-----------------------
Long-term debt, net of current maturities 300,835 178,524
Other long-term liabilities 147,653 120,974
Total stockholders' equity 471,793 473,054
-----------------------
TOTAL $1,136,478 $1,054,414
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CONTACT: Jack in the Box Inc.
Karen Bachmann, 858-571-2229
Vice President, Corporate Communications
karen.bachmann@jackinthebox.com
www.jackinthebox.com