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Jack In The Box Inc. Reports Fourth Quarter FY 2013 Earnings; Issues Guidance For FY 2014; Updates Long-term Goals

Below is a reconciliation of non-GAAP operating earnings per share to the most directly comparable GAAP measure, diluted earnings per share from continuing operations. Figures may not add due to rounding.

12 Weeks Ended       52 Weeks Ended
Sept. 29,2013 Sept. 30,2012 Sept. 29,2013 Sept. 30,2012
Diluted earnings per share fromcontinuing operations – GAAP

$0.54

$0.42

$1.84

$1.52

Restructuring charges 0.03 0.04 0.05 0.23
Gains from refranchising (0.13) (0.16) (0.07) (0.44)
Operating earnings per share – Non-GAAP $0.45 $0.31 $1.82 $1.31
 

 
JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
 
 
  Quarter     Year-to-Date
September 29,

2013

  September 30,

2012

September 29,

2013

  September 30,

2012

Revenues:
Company restaurant sales $ 255,215 $ 270,190 $ 1,143,780 $

1,183,483

Franchise revenues  

82,766

    78,707     346,087     325,812  
  337,981     348,897     1,489,867    

1,509,295

 
Operating costs and expenses, net:
Company restaurant costs:
Food and packaging 83,426 88,168 372,685 389,235
Payroll and employee benefits 70,378 75,539 320,384 338,210
Occupancy and other   60,215     62,760     255,586     266,440  
Total company restaurant costs 214,019 226,467 948,655 993,885
Franchise costs 41,303 39,619 173,567 166,078
Selling, general and administrative expenses 49,394 53,657 220,641 224,852
Impairment and other charges, net 4,385 8,254 13,439 32,809
Gains on the sale of company-operated restaurants   (7,819 )   (10,212 )   (4,640 )   (29,145 )
  301,282     317,785     1,351,662     1,388,479  
Earnings from operations 36,699 31,112 138,205

120,816

Interest expense, net   3,190     3,912     15,251    

18,874

 
Earnings from continuing operations and before income taxes 33,509 27,200 122,954 101,942
Income taxes   9,392     7,984     40,346     33,838  
Earnings from continuing operations 24,117 19,216 82,608 68,104
Losses from discontinued operations, net of income tax benefit   (1,289 )   (6,739 )   (31,456 )  

(10,453

)
Net earnings $ 22,828   $ 12,477   $ 51,152   $

57,651

 
 
Net earnings per share - basic:
Earnings from continuing operations $ 0.56 $ 0.44 $ 1.91 $ 1.55
Losses from discontinued operations   (0.03 )   (0.15 )   (0.73 )   (0.24 )
Net earnings per share (1) $ 0.53   $ 0.28   $ 1.18   $ 1.31  
Net earnings per share - diluted:
Earnings from continuing operations $ 0.54 $ 0.42 $ 1.84 $ 1.52
Losses from discontinued operations   (0.03 )   (0.15 )   (0.70 )   (0.23 )
Net earnings per share (1) $ 0.51   $ 0.27   $ 1.14   $ 1.28  
 
Weighted-average shares outstanding:
Basic 43,069 44,069 43,351 43,999
Diluted 44,532 45,411 44,899 44,948
 
(1) Earnings per share may not add due to rounding

   
JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(Unaudited)
 
September 29,

2013

September 30,

2012

ASSETS
Current assets:
Cash and cash equivalents $ 9,644 $ 8,469
Accounts and other receivables, net 41,749 78,798
Inventories 7,181 7,752
Prepaid expenses 19,970 32,821
Deferred income taxes 26,685 26,932
Assets held for sale 11,875 45,443
Assets of discontinued operations held for sale 30,591
Other current assets   108     375  
Total current assets   117,212     231,181  
Property and equipment, at cost:
Land 112,673 109,295
Buildings 1,068,405 1,054,967
Restaurant and other equipment 305,769 328,031
Construction in progress   30,066     37,357  
1,516,913 1,529,650
Less accumulated depreciation and amortization   (746,054 )   (708,858 )
Property and equipment, net   770,859     820,792  
Intangible assets, net 16,390 17,206
Goodwill 148,988 140,622
Other assets, net   265,760     253,924  
$ 1,319,209   $ 1,463,725  
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt $ 20,889 $ 15,952
Accounts payable 36,899 94,713
Accrued liabilities   153,886     164,637  
Total current liabilities   211,674     275,302  
Long-term debt, net of current maturities 349,393 405,276
Other long-term liabilities

286,124

371,202
Stockholders’ equity:
Preferred stock $0.01 par value, 15,000,000 shares authorized, none issued

Common stock $0.01 par value, 175,000,000 shares authorized, 78,515,171 and 75,827,894 issued, respectively

785 758
Capital in excess of par value 296,764 221,100
Retained earnings

1,171,823

1,120,671
Accumulated other comprehensive loss (62,662 ) (136,013 )

Treasury stock, at cost, 35,926,269 and 31,955,606 shares, respectively

  (934,692 )   (794,571 )
Total stockholders’ equity  

472,018

    411,945  
$ 1,319,209   $ 1,463,725  
 

JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
 
  Year-to-Date
September 29,

2013

  September 30,

2012

Cash flows from operating activities:
Net earnings $ 51,152 $ 57,651
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 96,219 97,958
Deferred finance cost amortization 2,277 2,695
Deferred income taxes (18,604 ) (6,615 )
Share-based compensation expense 11,392 6,883
Pension and postretirement expense 31,147 33,526
Gains on cash surrender value of company-owned life insurance (8,998 ) (12,137 )
Gains on the sale of company-operated restaurants (4,640 ) (29,145 )
Losses on the disposition of property and equipment 3,344 6,281
Impairment charges and other 28,230 9,403
Loss on early retirement of debt 939
Changes in assets and liabilities, excluding acquisitions and dispositions:
Accounts and other receivables 33,994 3,497
Inventories 27,415 4,334
Prepaid expenses and other current assets 13,117 (12,849 )
Accounts payable (26,945 ) (3,264 )
Accrued liabilities (10,560 ) 247
Pension and postretirement contributions (23,886 ) (20,318 )
Other   (6,721 )   (1,417 )
Cash flows provided by operating activities   198,872     136,730  
Cash flows from investing activities:
Purchases of property and equipment (84,690 ) (80,200 )
Purchases of assets intended for sale and leaseback (26,058 ) (35,927 )
Proceeds from sale and leaseback of assets 47,431 27,844
Proceeds from the sale of company-operated restaurants 30,619 47,115
Collections on notes receivable 6,448 12,230
Disbursements for loans to franchisees (3,977 )
Acquisitions of franchise-operated restaurants (12,064 ) (48,945 )
Other   4,375     344  
Cash flows used in investing activities   (33,939 )   (81,516 )
Cash flows from financing activities:
Borrowings on revolving credit facilities 646,000 576,380
Repayments of borrowings on revolving credit facilities (721,000 ) (602,540 )
Proceeds from issuance of debt 200,000
Principal repayments on debt (175,946 ) (21,110 )
Debt issuance costs (4,392 ) (741 )
Proceeds from issuance of common stock 61,993 10,167
Repurchases of common stock (132,833 ) (30,013 )
Excess tax benefits from share-based compensation arrangements 2,094 1,115
Change in book overdraft   (39,678 )   8,573  
Cash flows used in financing activities   (163,762 )   (58,169 )
 
Effect of exchange rate changes on cash and cash equivalents 4
   
Net increase (decrease) in cash and cash equivalents 1,175 (2,955 )
Cash and cash equivalents at beginning of period   8,469     11,424  
Cash and cash equivalents at end of period $ 9,644   $ 8,469  

 
JACK IN THE BOX INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(Unaudited)
       
The following table presents certain income and expense items included in our consolidated statements of earnings as a percentage of total revenues, unless otherwise indicated. Percentages may not add due to rounding.
 
CONSOLIDATED STATEMENTS OF EARNINGS DATA
 
Quarter Year-to-Date
September 29,

2013

September 30,

2012

September 29,

2013

September 30,

2012

Revenues:
Company restaurant sales 75.5 % 77.4 % 76.8 % 78.4 %
Franchise revenues 24.5 % 22.6 % 23.2 % 21.6 %
Total revenues 100.0 % 100.0 % 100.0 % 100.0 %
Operating costs and expenses, net:
Company restaurant costs:
Food and packaging (1) 32.7 % 32.6 % 32.6 % 32.9 %
Payroll and employee benefits (1) 27.6 % 28.0 % 28.0 % 28.6 %
Occupancy and other (1) 23.6 % 23.2 % 22.3 % 22.5 %
Total company restaurant costs (1) 83.9 % 83.8 % 82.9 % 84.0 %
Franchise costs (1) 49.9 % 50.3 % 50.2 % 51.0 %
Selling, general and administrative expenses 14.6 % 15.4 % 14.8 % 14.9 %
Impairment and other charges, net 1.3 % 2.4 % 0.9 % 2.2 %
Gains on the sale of company-operated restaurants (2.3 )% (2.9 )% (0.3 )% (1.9 )%
Earnings from operations 10.9 % 8.9 % 9.3 % 8.0 %
Income tax rate (2) 28.0 % 29.4 % 32.8 % 33.2 %
 
(1) As a percentage of the related sales and/or revenues.
(2) As a percentage of earnings from continuing operations and before income taxes.
 
The following table presents Jack in the Box and Qdoba company restaurant sales, costs and costs as a percentage of the related sales. Percentages may not add due to rounding.
               
SUPPLEMENTAL COMPANY-OPERATED RESTAURANTS STATEMENTS OF OPERATIONS DATA
(Dollars in thousands)
 
Quarter Year-to-Date
September 29, 2013 September 30, 2012 September 29, 2013 September 30, 2012
Jack in the Box:
Company restaurant sales $ 182,657 $ 207,130 $ 850,512 $ 943,990
Company restaurant costs:
Food and packaging 61,675 33.8 % 69,735 33.7 % 284,221 33.4 % 319,415 33.8 %
Payroll and employee benefits 51,020 27.9 % 59,208 28.6 % 241,149 28.4 % 275,678 29.2 %
Occupancy and other   41,226 22.6 %   47,289 22.8 %   182,493 21.5 %   207,920 22.0 %
Total company restaurant costs $ 153,921 84.3 % $ 176,232 85.1 % $ 707,863 83.2 % $ 803,013 85.1 %
Qdoba:
Company restaurant sales $ 72,558 $ 63,060 $

293,268

$ 239,493
Company restaurant costs:
Food and packaging 21,751 30.0 % 18,433 29.2 % 88,464 30.2 % 69,820 29.2 %
Payroll and employee benefits 19,358 26.7 % 16,331 25.9 % 79,235 27.0 % 62,532 26.1 %
Occupancy and other   18,989 26.2 %  

15,471

24.5 %   73,093 24.9 %   58,520 24.4 %
Total company restaurant costs $ 60,098 82.8 % $

50,235

79.7 % $ 240,792 82.1 % $ 190,872 79.7 %
 

 
JACK IN THE BOX INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION
(Unaudited)
 
           
The following table summarizes the changes in the number and mix of Jack in the Box and Qdoba company and franchise restaurants in each fiscal year:
 
September 29, 2013 September 30, 2012
Company Franchise Total Company Franchise Total
Jack in the Box:
Beginning of year 547 1,703 2,250 629 1,592 2,221
New 6 11 17 19 18 37
Refranchised (78 ) 78 (97 ) 97
Acquired from franchisees 1 (1 )
Closed (11 ) (5 ) (16 ) (4 ) (4 ) (8 )
End of period 465   1,786   2,251   547   1,703   2,250  
% of Jack in the Box system 21 % 79 % 100 % 24 % 76 % 100 %
% of consolidated system 61 % 85 % 79 % 63 % 85 % 78 %
Qdoba:
Beginning of year 316 311 627 245 338 583
New 34 34 68 26 32 58
Refranchised (3 ) 3
Acquired from franchisees 13 (13 ) 46 (46 )
Closed (64 ) (16 ) (80 ) (1 ) (13 ) (14 )
End of period 296   319   615   316   311   627  
% of Qdoba system 48 % 52 % 100 % 50 % 50 % 100 %
% of consolidated system 39 % 15 % 21 % 37 % 15 % 22 %
Consolidated:            
Total system 761   2,105   2,866   863   2,014   2,877  
% of consolidated system 27 % 73 % 100 % 30 % 70 % 100 %




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