UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):
August 7, 2019


JACK IN THE BOX INC.
(Exact name of registrant as specified in its charter)
 

DELAWARE
1-9390
95-2698708
(State or other jurisdiction
      of incorporation)
(Commission File
Number)
(I.R.S. Employer Identification
Number)


9330 BALBOA AVENUE, SAN DIEGO, CA
92123
(Address of principal executive offices)
(Zip Code)

(858) 571-2121
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
JACK
The NASDAQ Stock Market LLC
(NASDAQ Global Select Market)


Not Applicable
 (Former Name or Former Address, if Changed Since Last Report)


Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act  (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company    

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    

ITEM 2.02           RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On August 7, 2019, Jack in the Box Inc. issued a press release announcing its third quarter fiscal 2019 financial results and disclosing other information.

A copy of the press release is attached as Exhibit 99.1.

ITEM 9.01           FINANCIAL STATEMENTS AND EXHIBITS

(d)            Exhibits.

Exhibit
  No.                     Description
-----------                            ---------------
99.1                      Press Release of Jack in the Box Inc. dated August 7, 2019



 
SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
JACK IN THE BOX INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Lance Tucker
 
 
Lance Tucker
 
 
Executive Vice President
 
 
Chief Financial Officer
 
 
(Principal Financial Officer)
 
 
(Duly Authorized Signatory)
 
 
Date: August 7, 2019

Exhibit 99.l

Jack in the Box Inc. Reports Third Quarter FY 2019 Earnings; Updates Fiscal 2019 Guidance; Declares Quarterly Cash Dividend; Announces Additional $200 Million Share Repurchase Authorization Bringing Total to $301 Million

SAN DIEGO--(BUSINESS WIRE)--August 7, 2019--Jack in the Box Inc. (NASDAQ: JACK) today reported financial results for the third quarter ended July 7, 2019.

Increase in same-store sales:

 


12 Weeks Ended

 

40 Weeks Ended

 

 

July 7, 2019

 

July 8, 2018

 

July 7, 2019

 

July 8, 2018

Company


2.8%

 

0.6%

 

1.2%

 

0.5%

Franchise


2.7%

 

0.5%

 

0.8%

 

0.0%

System


2.7%

 

0.5%

 

0.8%

 

0.0%

Jack in the Box® system same-store sales increased 2.7 percent for the quarter. Company same-store sales increased 2.8 percent in the third quarter driven by average check growth as transactions improved to flat for the quarter.

Lenny Comma, chairman and chief executive officer, said, "Our greater emphasis on bundled value in the third quarter resulted in a substantial improvement in both traffic and sales trends while also driving check and maintaining strong restaurant margins. Our guests have responded favorably to the breadth of our promotions, which leverage our strategy around compelling value bundles, including both new product innovation as well as guest favorites, without devaluing our core menu items. This momentum has accelerated thus far into our fourth quarter.


"With our recent refinancing completed, we've achieved our target leverage ratio of approximately 5.0 times EBITDA. We remain firmly committed to returning cash to shareholders and now have $301 million available for share repurchases.

"Our long-term goals continue to center around meeting evolving consumer needs, with emphasis on improving operations consistency and targeted investments designed to maximize our returns. We remain focused on balancing the interests of all our stakeholders, including our franchisees, customers, employees and shareholders."

Earnings from continuing operations were $13.5 million, or $0.51 per diluted share, for the third quarter of fiscal 2019 compared with $48.1 million, or $1.70 per diluted share, for the third quarter of fiscal 2018. In connection with the refinancing of the company's senior credit facility, the company terminated its existing interest rate swaps. This resulted in a pre-tax charge of $23.6 million, which is reflected in interest expense, net, in the third quarter of fiscal 2019, or $0.56 per diluted share after the associated tax benefit of approximately $9.0 million.

Operating Earnings Per Share(1), a non-GAAP measure, were $1.07 in the third quarter of fiscal 2019 compared with $1.00 in the prior year quarter. A reconciliation of non-GAAP Operating Earnings Per Share to GAAP results is provided below, with additional information included in the attachment to this release.

 

12 Weeks Ended

 

40 Weeks Ended

 

July 7,
2019

 

July 8,
2018

 

July 7,
2019

 

July 8,
2018

Diluted earnings per share from continuing operations - GAAP

$

0.51

 

 

$

1.70

 

 

$

2.67

 

 

$

2.94

 

Loss on early termination of interest rate swaps

0.56

 

 

 

 

0.56

 

 

 

Gains on the sale of company-operated restaurants

 

 

(0.74

)

 

(0.01

)

 

(1.05

)

Restructuring charges

 

 

0.05

 

 

0.19

 

 

0.12

 

Non-cash impact of the Tax Cuts and Jobs Act

 

 

0.03

 

 

 

 

1.10

 

Excess tax benefits from share-based compensation arrangements

 

 

(0.04

)

 

 

 

(0.07

)

Operating Earnings Per Share – non-GAAP

$

1.07

 

 

$

1.00

 

 

$

3.41

 

 

$

3.02

 


In the first quarter of fiscal 2018, the company entered into a definitive agreement to sell Qdoba Restaurant Corporation ("Qdoba"), a wholly owned subsidiary of the company, to certain funds managed by affiliates of Apollo Global Management, LLC. The transaction closed on March 21, 2018, and operating results for Qdoba are included in discontinued operations for all periods presented. However, the company did not allocate any general and administrative shared services expenses to discontinued operations prior to the sale.

__________________________

(1) Operating Earnings Per Share represents diluted earnings per share from continuing operations on a GAAP basis excluding gains or losses on the sale of company-operated restaurants, restructuring charges, loss on early termination of interest rate swaps, the non-cash impact of the Tax Cuts and Jobs Act in fiscal year 2018, and the excess tax benefits from share-based compensation arrangements which are now recorded as a component of income tax expense versus equity prior to fiscal year 2018. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

Adjusted EBITDA(2), a non-GAAP measure, was $57.8 million in the third quarter of fiscal 2019 compared with $64.4 million for the prior year quarter.

Restaurant-Level Margin(3), a non-GAAP measure, decreased by 50 basis points to 27.0 percent of company restaurant sales in the third quarter of fiscal 2019 from 27.5 percent a year ago. The decrease was due primarily to wage and commodity inflation, partially offset by the benefit of refranchising and lower maintenance and repairs expenses. Food and packaging costs, as a percentage of company restaurant sales, increased 90 basis points in the quarter driven by higher ingredient costs, which were partially offset by menu price increases and favorable product mix. Commodity costs increased 2.9 percent in the quarter as compared with the prior year.

Effective fiscal 2019, the company adopted the new US GAAP revenue recognition standard (Topic 606) using the modified retrospective method, and therefore no prior periods have been restated. The new revenue standard resulted in an increase to franchise revenues and a corresponding increase to franchise expenses primarily related to the reclassification of marketing fees received from franchisees. In addition, certain amounts previously netted in general and administrative expenses are now reflected as franchise revenues and expenses. Although the prior year results have not been restated for the impact of this accounting change, a reconciliation to a recast statement of earnings is included within the "Supplemental Information" section of this release.

Also effective fiscal 2019, the company adopted the new US GAAP pension standard (Topic 715) and began presenting certain pension cost components in Other pension and post-retirement expenses, net, in its condensed consolidated statements of earnings. The prior year condensed consolidated statement of earnings was adjusted to conform with this new presentation.


Franchise-Level Margin(3), a non-GAAP measure, as a percentage of total franchise revenues, was 42.6 percent in the third quarter of fiscal 2019. This compared with 60.2 percent in the prior year quarter, or 42.4 percent using recast 2018 figures as though Topic 606 had been applied retrospectively to the prior year.

_____________________________

(2) Adjusted EBITDA represents net earnings on a GAAP basis excluding earnings or losses from discontinued operations, income taxes, interest expense, net, gains or losses on the sale of company-operated restaurants, impairment and other charges, net, depreciation and amortization, and the amortization of franchise tenant improvement allowances. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

(3) Restaurant-Level Margin and Franchise-Level Margin are non-GAAP measures. These non-GAAP measures are reconciled to earnings from operations, the most comparable GAAP measure, in the attachment to this release. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

SG&A expenses for the third quarter of fiscal 2019 increased by $4.7 million and were 11.0 percent of revenues compared with 10.5 percent in the prior year quarter, or 8.2 percent using recast 2018 figures. Advertising costs, which are included in SG&A, were $4.0 million in the third quarter compared with $5.9 million in the prior year quarter. The $1.9 million decrease in advertising costs was due to a $0.4 million decrease resulting from refranchising, and a decrease of $1.5 million resulting from incremental spending in the prior year quarter. The $6.7 million increase in G&A, which excludes advertising, was primarily driven by:

  • $7.1 million related to an unfavorable jury verdict in a wrongful termination lawsuit delivered in the quarter. As previously disclosed, the company intends to appeal this verdict;
  • a $5.2 million increase in incentive compensation; and
  • a $2.7 million decrease in transition services income as compared with the prior year resulting from the sale of Qdoba, which resulted in an increase to G&A.

These increases were partially offset by:

  • a $5.1 million decrease in insurance related to workers' compensation and general liability;
  • a $1.1 million decrease related to technology fees and costs netted in G&A in the prior year, which are now reflected as franchise revenues and expenses in the condensed consolidated statement of earnings in 2019;
  • mark-to-market adjustments on investments supporting the company's non-qualified retirement plans resulting in a $1.0 million year-over-year decrease in G&A; and
  • a $0.8 million decrease due primarily to workforce reductions related to refranchising.

As a percentage of system-wide sales, G&A, which excludes advertising, was 2.5 percent in the third quarter of fiscal 2019 compared with 1.7 percent in the 2018 quarter, or 1.6 percent using recast 2018 figures. Full-year G&A is expected to be approximately 1.8 to 2.0 percent of system-wide sales, consistent with prior guidance.

Impairment and other charges, net, decreased $6.5 million in the third quarter. The decrease was due primarily to a $5.7 million gain related to the sale of a restaurant property. In addition, restructuring charges, which are included in Impairment and other charges, net, in the accompanying condensed consolidated statements of earnings, decreased $1.9 million in the quarter.

Interest expense, net, increased by $25.6 million in the third quarter due primarily to the termination of interest rate swaps, which resulted in a pre-tax charge of $23.6 million. The remaining increase was due to a higher effective interest rate for fiscal 2019 and higher debt balances.

The Tax Cuts and Jobs Act (the "Tax Act"), enacted into law on December 22, 2017, reduced the statutory federal rate from 35 percent to 21 percent as of January 1, 2018. The tax rate reduction was phased in, resulting in a blended statutory federal tax rate of 24.5 percent for the fiscal year ended September 30, 2018. In addition, the Tax Act resulted in a non-cash increase to the provision for income taxes of $0.9 million, or $0.03 per diluted share, for the third quarter of fiscal 2018 related primarily to the revaluation of deferred tax assets and liabilities at the new lower rates. The statutory federal tax rate for fiscal year 2019 is 21.0 percent. The effective tax rate for the third quarter of fiscal 2019 was a benefit of 17.9 percent, including a $9.0 million benefit related to the termination of interest rate swaps. Excluding this impact, the effective tax rate in the third quarter was 19.9 percent. The expected full-year effective tax rate is approximately 20.0 percent, or 23.0 to 24.0 percent excluding the impact of the termination of interest rate swaps.


Capital Allocation

The company did not repurchase any shares of its common stock in the third quarter of fiscal 2019. The company has approximately $101.0 million remaining under share repurchase programs authorized by its Board of Directors that expire in November 2019. On August 2, 2019, the company's Board of Directors authorized an additional $200.0 million share repurchase program that expires in November 2020.

The company also announced today that on August 2, 2019, its Board of Directors declared a cash dividend of $0.40 per share on the company's common stock. The dividend is payable on September 10, 2019, to shareholders of record at the close of business on August 19, 2019.

Guidance

This release includes forward-looking guidance for certain non-GAAP financial measures, including Restaurant-Level Margin and Adjusted EBITDA. The company is unable without unreasonable effort to provide reconciliations of these forward-looking non-GAAP measures.

Fiscal Year 2019 Guidance

The following guidance and underlying assumptions reflect the company’s current expectations for the fiscal year ending September 29, 2019. Fiscal 2019 and fiscal 2018 are 52-week years, with 16 weeks in the first quarter, and 12 weeks in each of the second, third and fourth quarters.

Updated from prior guidance:

  • System same-store sales increase of at least 1.0 percent.
  • Tax rate of approximately 20.0 percent, or 23.0 to 24.0 percent excluding the termination of interest rate swaps in the third quarter. The expected tax rate in the fourth quarter is approximately 26.0 to 27.0 percent. These rates are subject to fluctuations arising from the impact of excess tax benefits from share-based compensation arrangements.
  • Tenant improvement allowances of approximately $15 to $20 million.

Consistent with prior guidance:

  • Commodity cost inflation of approximately 2.0 percent.
  • Restaurant-Level Margin of approximately 26.0 to 27.0 percent of company restaurant sales.
  • SG&A as a percentage of revenues of approximately 8.5 to 9.0 percent, which reflects the new revenue recognition standard.
  • G&A as a percentage of system-wide sales of approximately 1.8 to 2.0 percent, which reflects the new revenue recognition standard.
  • Approximately 25 to 35 new restaurants opening system-wide, the majority of which will be franchise locations.
  • Capital expenditures of approximately $30 to $35 million, excluding purchases of assets held for sale or leaseback.
  • Adjusted EBITDA of approximately $260 to $270 million.

Conference Call

The company will host a conference call for financial analysts and investors on Thursday, August 8, 2019, beginning at 8:30 a.m. PT (11:30 a.m. ET). The conference call will be broadcast live over the Internet via the Jack in the Box Inc. corporate website. To access the live call through the Internet, log onto the Investors section of the Jack in the Box Inc. website at http://investors.jackinthebox.com at least 15 minutes prior to the event in order to download and install any necessary audio software. A replay of the call will be available through the Jack in the Box Inc. corporate website for 21 days, beginning at approximately 11:30 a.m. PT on August 8, 2019.


About Jack in the Box Inc.

Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, is a restaurant company that operates and franchises Jack in the Box® restaurants, one of the nation’s largest hamburger chains, with more than 2,200 restaurants in 21 states and Guam. For more information on Jack in the Box, including franchising opportunities, visit www.jackinthebox.com.


Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “goals,” “guidance,” “intend,” “plan,” “project,” “may,” “will,” “would” and similar expressions. These statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate. These estimates and assumptions involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. Factors that may cause our actual results to differ materially from any forward-looking statements include, but are not limited to: the success of new products, marketing initiatives and restaurant remodels and drive-thru enhancements; the impact of competition, unemployment, trends in consumer spending patterns and commodity costs; the company's ability to reduce G&A and operate efficiently; the company’s ability to achieve and manage its planned growth, which is affected by the availability of a sufficient number of suitable new restaurant sites, the performance of new restaurants, risks relating to expansion into new markets and successful franchisee development; litigation risks; risks associated with disagreements with franchisees; supply chain disruption; food-safety incidents or negative publicity impacting the reputation of the company's brand; risks associated with the amount and terms of the securitized debt issued by certain of our wholly owned subsidiaries; and stock market volatility. These and other factors are discussed in the company’s annual report on Form 10-K and its periodic reports on Form 10-Q filed with the Securities and Exchange Commission, which are available online at http://investors.jackinthebox.com or in hard copy upon request. 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

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)


 


12 Weeks Ended

 

40 Weeks Ended

 


July 7,
2019

 

July 8,
2018

 

July 7,
2019

 

July 8,
2018

Revenues:


 

 

 

 

 

 

 

Company restaurant sales


$

78,434

 

 

$

87,574

 

 

$

257,948

 

 

$

371,149

 

Franchise rental revenues


63,359

 

 

61,622

 

 

208,895

 

 

196,682

 

Franchise royalties and other


40,180

 

 

38,787

 

 

130,840

 

 

124,387

 

Franchise contributions for advertising and other services(1)


40,386

 

 

 

 

131,189

 

 

 

 


222,359

 

 

187,983

 

 

728,872

 

 

692,218

 

Operating costs and expenses, net:


 

 

 

 

 

 

 

Company restaurant costs (excluding depreciation and amortization):


 

 

 

 

 

 

 

Food and packaging


23,058

 

 

24,946

 

 

74,350

 

 

106,448

 

Payroll and employee benefits


23,121

 

 

24,875

 

 

76,163

 

 

106,911

 

Occupancy and other


11,052

 

 

13,715

 

 

38,165

 

 

59,608

 

Total company restaurant costs


57,231

 

 

63,536

 

 

188,678

 

 

272,967

 

Franchise occupancy expenses


38,371

 

 

37,401

 

 

127,702

 

 

119,987

 

Franchise support and other costs


2,695

 

 

2,829

 

 

8,337

 

 

7,894

 

Franchise advertising and other services expenses(1)


41,882

 

 

 

 

136,397

 

 

 

Selling, general and administrative expenses(2)


24,389

 

 

19,671

 

 

66,057

 

 

80,326

 

Depreciation and amortization


12,786

 

 

13,194

 

 

42,645

 

 

46,306

 

Impairment and other charges, net


(3,256

)

 

3,265

 

 

5,567

 

 

10,449

 

Gains on the sale of company-operated restaurants


 

 

(28,676

)

 

(219

)

 

(43,088

)

 


174,098

 

 

111,220

 

 

575,164

 

 

494,841

 

Earnings from operations


48,261

 

 

76,763

 

 

153,708

 

 

197,377

 

Other pension and post-retirement expenses, net(2)


342

 

 

423

 

 

1,141

 

 

1,410

 

Interest expense, net


36,494

 

 

10,873

 

 

67,144

 

 

34,066

 

Earnings from continuing operations and before income taxes


11,425

 

 

65,467

 

 

85,423

 

 

161,901

 

Income taxes


(2,048

)

 

17,334

 

 

15,699

 

 

75,898

 

Earnings from continuing operations


13,473

 

 

48,133

 

 

69,724

 

 

86,003

 

(Losses) earnings from discontinued operations, net of taxes


(284

)

 

(2,826

)

 

2,652

 

 

19,099

 

Net earnings


$

13,189

 

 

$

45,307

 

 

$

72,376

 

 

$

105,102

 

 


 

 

 

 

 

 

 

Net earnings per share - basic:


 

 

 

 

 

 

 

Earnings from continuing operations


$

0.52

 

 

$

1.72

 

 

$

2.69

 

 

$

2.97

 

(Losses) earnings from discontinued operations


(0.01

)

 

(0.10

)

 

0.10

 

 

0.66

 

Net earnings per share (3)


$

0.51

 

 

$

1.62

 

 

$

2.79

 

 

$

3.63

 

Net earnings per share - diluted:


 

 

 

 

 

 

 

Earnings from continuing operations


$

0.51

 

 

$

1.70

 

 

$

2.67

 

 

$

2.94

 

(Losses) earnings from discontinued operations


(0.01

)

 

(0.10

)

 

0.10

 

 

0.65

 

Net earnings per share (3)


$

0.50

 

 

$

1.60

 

 

$

2.77

 

 

$

3.59

 

Weighted-average shares outstanding:


 

 

 

 

 

 

 

Basic


25,958

 

 

28,042

 

 

25,933

 

 

28,989

 

Diluted


26,176

 

 

28,296

 

 

26,150

 

 

29,284

 

 


 

 

 

 

 

 

 

Dividends declared per common share


$

0.40

 

 

$

0.40

 

 

$

1.20

 

 

$

1.20

 

___________________________

(1)


In 2019, the company began presenting franchise advertising and other services revenue and costs on separate line items in accordance with the new Revenue Recognition standards. The prior year condensed consolidated statement of earnings was not adjusted as the standard was adopted on a modified retrospective basis.

(2)


In 2019, the company began presenting all components of defined benefit expense, except service cost in Other pension and post-retirement expense, net in its condensed consolidated statements of earnings in accordance with ASU 2017-07. The prior year condensed consolidated statement of earnings was adjusted to conform with this new presentation.

(3)


Earnings per share may not add due to rounding.


JACK IN THE BOX INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)


 


July 7,
2019

 

September 30,
2018

ASSETS


 

 

 

Current assets:


 

 

 

Cash


$

12,447

 

 

$

2,705

 

Accounts and other receivables, net


57,647

 

 

57,422

 

Inventories


1,937

 

 

1,858

 

Prepaid expenses


17,484

 

 

14,443

 

Current assets held for sale


13,236

 

 

13,947

 

Other current assets


3,246

 

 

4,598

 

Total current assets


105,997

 

 

94,973

 

Property and equipment:


 

 

 

Property and equipment, at cost


1,178,894

 

 

1,190,031

 

Less accumulated depreciation and amortization


(788,956

)

 

(770,362

)

Property and equipment, net


389,938

 

 

419,669

 

Other assets:


 

 

 

Intangible assets, net


451

 

 

600

 

Goodwill


46,747

 

 

46,749

 

Deferred tax assets


72,903

 

 

62,140

 

Other assets, net


215,234

 

 

199,266

 

Total other assets


335,335

 

 

308,755

 

 


$

831,270

 

 

$

823,397

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT


 

 

 

Current liabilities:


 

 

 

Current maturities of long-term debt


$

42,895

 

 

$

31,828

 

Accounts payable


51,131

 

 

44,970

 

Accrued liabilities


124,823

 

 

106,922

 

Total current liabilities


218,849

 

 

183,720

 

Long-term liabilities:


 

 

 

Long-term debt, net of current maturities


971,763

 

 

1,037,927

 

Other long-term liabilities


221,219

 

 

193,449

 

Total long-term liabilities


1,192,982

 

 

1,231,376

 

Stockholders’ deficit:


 

 

 

Preferred stock $0.01 par value, 15,000,000 shares authorized, none issued


 

 

 

Common stock $0.01 par value, 175,000,000 shares authorized, 82,146,917 and 82,061,661 issued, respectively


821

 

 

821

 

Capital in excess of par value


478,256

 

 

470,826

 

Retained earnings


1,565,287

 

 

1,561,353

 

Accumulated other comprehensive loss


(94,486

)

 

(94,260

)

Treasury stock, at cost, 56,325,632 shares


(2,530,439

)

 

(2,530,439

)

Total stockholders’ deficit


(580,561

)

 

(591,699

)

 


$

831,270

 

 

$

823,397

 


JACK IN THE BOX INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


 


40 Weeks Ended

 


July 7, 2019

 

July 8, 2018

Cash flows from operating activities:


 

 

 

Net earnings


$

72,376

 

 

$

105,102

 

Earnings from discontinued operations


2,652

 

 

19,099

 

Earnings from continuing operations


69,724

 

 

86,003

 

Adjustments to reconcile net earnings to net cash provided by operating activities:


 

 

 

Depreciation and amortization


42,645

 

 

46,306

 

Amortization of franchise tenant improvement allowances and other


1,524

 

 

497

 

Deferred finance cost amortization


1,903

 

 

2,268

 

Excess tax benefits from share-based compensation arrangements


(66

)

 

(2,084

)

Deferred income taxes


(1,745

)

 

38,544

 

Share-based compensation expense


6,589

 

 

7,830

 

Pension and postretirement expense


1,141

 

 

1,789

 

Gains on cash surrender value of company-owned life insurance


(3,117

)

 

(1,335

)

Gains on the sale of company-operated restaurants


(219

)

 

(43,088

)

(Gains) losses on the disposition of property and equipment, net


(5,756

)

 

958

 

Impairment charges and other


1,624

 

 

2,205

 

Changes in assets and liabilities, excluding dispositions:


 

 

 

Accounts and other receivables


(3,555

)

 

945

 

Inventories


(79

)

 

1,330

 

Prepaid expenses and other current assets


1,509

 

 

(27,448

)

Accounts payable


24,321

 

 

3,135

 

Accrued liabilities


9,363

 

 

(34,653

)

Pension and postretirement contributions


(5,126

)

 

(4,384

)

Franchise tenant improvement allowance disbursements


(7,875

)

 

(9,099

)

Other


(16,012

)

 

(10,351

)

Cash flows provided by operating activities


116,793

 

 

59,368

 

Cash flows from investing activities:


 

 

 

Purchases of property and equipment


(25,041

)

 

(25,730

)

Purchases of assets intended for sale and leaseback


 

 

(5,491

)

Proceeds from the sale and leaseback of assets


3,056

 

 

7,571

 

Proceeds from the sale of company-operated restaurants


133

 

 

23,666

 

Collections on notes receivable


15,239

 

 

34,057

 

Proceeds from the sale of property and equipment


7,563

 

 

3,799

 

Other


 

 

2,921

 

Cash flows provided by investing activities


950

 

 

40,793

 

Cash flows from financing activities:


 

 

 

Borrowings on revolving credit facilities


229,798

 

 

560,800

 

Repayments of borrowings on revolving credit facilities


(252,800

)

 

(412,100

)

Principal repayments on debt


(32,611

)

 

(293,671

)

Debt issuance costs


(5,088

)

 

(1,367

)

Dividends paid on common stock


(30,929

)

 

(34,609

)

Proceeds from issuance of common stock


696

 

 

2,365

 

Repurchases of common stock


(14,362

)

 

(200,000

)

Change in book overdraft


 

 

(573

)

Payroll tax payments for equity award issuances


(2,705

)

 

(7,250

)

Cash flows used in financing activities


(108,001

)

 

(386,405

)

Cash flows provided by (used in) continuing operations


9,742

 

 

(286,244

)

Net cash provided by operating activities of discontinued operations


 

 

5,159

 

Net cash provided by investing activities of discontinued operations


 

 

273,653

 

Net cash used in financing activities of discontinued operations


 

 

(78

)

Net cash provided by discontinued operations


 

 

278,734

 

Effect of exchange rate changes on cash


 

 

6

 

Cash at beginning of period


2,705

 

 

7,642

 

Cash at end of period


$

12,447

 

 

$

138

 


JACK IN THE BOX INC. AND SUBSIDIARIES

SUPPLEMENTAL INFORMATION

The following table presents certain income and expense items included in our condensed consolidated statements of earnings as a percentage of total revenues, unless otherwise indicated. Percentages may not add due to rounding.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS DATA

(Unaudited)


 


12 Weeks Ended

 

40 Weeks Ended

 


July 7,
2019

 

July 8,
2018

 

July 7,
2019

 

July 8,
2018

Revenues:


 

 

 

 

 

 

 

Company restaurant sales


35.3

%

 

46.6

%

 

35.4

%

 

53.6

%

Franchise rental revenues


28.5

%

 

32.8

%

 

28.7

%

 

28.4

%

Franchise royalties and other


18.1

%

 

20.6

%

 

18.0

%

 

18.0

%

Franchise contributions for advertising and other services


18.2

%

 

%

 

18.0

%

 

%

Total revenues


100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Operating costs and expenses, net:


 

 

 

 

 

 

 

Company restaurant costs:


 

 

 

 

 

 

 

Food and packaging (1)


29.4

%

 

28.5

%

 

28.8

%

 

28.7

%

Payroll and employee benefits (1)


29.5

%

 

28.4

%

 

29.5

%

 

28.8

%

Occupancy and other (1)


14.1

%

 

15.7

%

 

14.8

%

 

16.1

%

Total company restaurant costs (1)


73.0

%

 

72.5

%

 

73.1

%

 

73.5

%

Franchise occupancy expenses (2)


60.6

%

 

60.7

%

 

61.1

%

 

61.0

%

Franchise support and other costs (3)


6.7

%

 

7.3

%

 

6.4

%

 

6.3

%

Franchise advertising and other services expenses (4)


103.7

%

 

%

 

104.0

%

 

%

Selling, general and administrative expenses


11.0

%

 

10.5

%

 

9.1

%

 

11.6

%

Depreciation and amortization


5.8

%

 

7.0

%

 

5.9

%

 

6.7

%

Impairment and other charges, net


(1.5

)%

 

1.7

%

 

0.8

%

 

1.5

%

Gains on the sale of company-operated restaurants


%

 

(15.3

)%

 

%

 

(6.2

)%

Earnings from operations


21.7

%

 

40.8

%

 

21.1

%

 

28.5

%

Income tax rate (5)


(17.9

)%

 

26.5

%

 

18.4

%

 

46.9

%

__________________________

(1)


As a percentage of company restaurant sales.

(2)


As a percentage of franchise rental revenues.

(3)


As a percentage of franchise royalties and other.

(4)


As a percentage of franchise contributions for advertising and other services.

(5)


As a percentage of earnings from continuing operations and before income taxes.

Jack in the Box system sales (dollars in thousands):

 


12 Weeks Ended

 

40 Weeks Ended

 


July 7,
2019

 

July 8,
2018

 

July 7,
2019

 

July 8,
2018

Company-owned restaurant sales


$

78,434

 

 

$

87,574

 

 

$

257,948

 

 

$

371,149

 

Franchised restaurant sales (1)


747,398

 

 

716,453

 

 

2,428,708

 

 

2,301,031

 

System sales (1)


$

825,832

 

 

$

804,027

 

 

$

2,686,656

 

 

$

2,672,180

 


____________________________

(1)

Franchised restaurant sales represent sales at franchised restaurants and are revenues of our franchisees. System sales include company and franchised restaurant sales. We do not record franchised sales as revenues; however, our royalty revenues, marketing fees and percentage rent revenues are calculated based on a percentage of franchised sales. We believe franchised and system restaurant sales information is useful to investors as they have a direct effect on the company's profitability.

The following table summarizes the year-to-date changes in the number and mix of Jack in the Box company and franchise restaurants:

SUPPLEMENTAL RESTAURANT ACTIVITY INFORMATION

(Unaudited)

 

 

2019

 

2018

 

 

Company

 

Franchise

 

Total

 

Company

 

Franchise

 

Total

 


 

 

 

 

 

 

 

 

 

 

 

Beginning of year


137

 

 

2,100

 

 

2,237

 

 

276

 

 

1,975

 

 

2,251

 

New


 

 

16

 

 

16

 

 

1

 

 

8

 

 

9

 

Refranchised


 

 

 

 

 

 

(127

)

 

127

 

 

 

Closed


 

 

(11

)

 

(11

)

 

(4

)

 

(15

)

 

(19

)

End of period


137

 

 

2,105

 

 

2,242

 

 

146

 

 

2,095

 

 

2,241

 

% of system


6

%

 

94

%

 

100

%

 

7

%

 

93

%

 

100

%


SUPPLEMENTAL INFORMATION

(Unaudited)

Recast 2018 Condensed Consolidated Statement of Earnings

The company applied the modified retrospective method upon adoption of the new revenue recognition standard. The recast condensed consolidated statement of earnings reflects adjustments for the implementation of the new revenue recognition standard as if the full retrospective method was applied upon adoption.

Below is a reconciliation of the recast condensed consolidated statement of earnings for the 12 weeks ended and 40 weeks ended July 8, 2018, to the condensed consolidated statement of earnings that was previously reported for those periods (in thousands).


 


12 Weeks Ended

 


July 8, 2018

 


As reported

 

Franchise Fees

 

Marketing and
Sourcing Fees

 

Technology
Support Fees

 

Recast

Revenues:


 

 

 

 

 

 

 

 

 

Company restaurant sales


$

87,574

 

 

$

 

 

$

 

 

$

 

 

$

87,574

 

Franchise rental revenues


61,622

 

 

 

 

 

 

 

 

61,622

 

Franchise royalties and other


38,787

 

 

(732

)

 

 

 

 

 

38,055

 

Franchise contributions for advertising and

other services


 

 

 

 

36,598

 

 

1,979

 

 

38,577

 

 


187,983

 

 

(732

)

 

36,598

 

 

1,979

 

 

225,828

 

Operating costs and expenses, net:


 

 

 

 

 

 

 

 

 

Company restaurant costs:


 

 

 

 

 

 

 

 

 

Food and packaging


24,946

 

 

 

 

 

 

 

 

24,946

 

Payroll and employee benefits


24,875

 

 

 

 

 

 

 

 

24,875

 

Occupancy and other


13,715

 

 

 

 

 

 

 

 

13,715

 

Total company restaurant costs


63,536

 

 

 

 

 

 

 

 

63,536

 

Franchise occupancy expenses


37,401

 

 

 

 

 

 

 

 

37,401

 

Franchise support and other costs


2,829

 

 

 

 

 

 

 

 

2,829

 

Franchise advertising and other services

expenses


 

 

 

 

36,598

 

 

3,092

 

 

39,690

 

Selling, general and administrative expenses


19,671

 

 

 

 

 

 

(1,113

)

 

18,558

 

Depreciation and amortization


13,194

 

 

 

 

 

 

 

 

13,194

 

Impairment and other charges, net


3,265

 

 

 

 

 

 

 

 

3,265

 

Gains on the sale of company-operated

restaurants


(28,676

)

 

 

 

 

 

 

 

(28,676

)

 


111,220

 

 

 

 

36,598

 

 

1,979

 

 

149,797

 

Earnings from operations


76,763

 

 

(732

)

 

 

 

 

 

76,031

 

Other pension and post-retirement expenses, net


423

 

 

 

 

 

 

 

 

423

 

Interest expense, net


10,873

 

 

 

 

 

 

 

 

10,873

 

Earnings from continuing operations and before

income taxes


65,467

 

 

(732

)

 

 

 

 

 

64,735

 

Income taxes


17,334

 

 

(210

)

 

 

 

 

 

17,124

 

Earnings from continuing operations


$

48,133

 

 

$

(522

)

 

$

 

 

$

 

 

$

47,611

 

 


 

 

 

 

 

 

 

 

 

Net earnings per share - basic:


 

 

 

 

 

 

 

 

 

Earnings from continuing operations


$

1.72

 

 

$

(0.02

)

 

$

 

 

$

 

 

$

1.70

 

Net earnings per share - diluted:


 

 

 

 

 

 

 

 

 

Earnings from continuing operations


$

1.70

 

 

$

(0.02

)

 

$

 

 

$

 

 

$

1.68

 


SUPPLEMENTAL INFORMATION

(Unaudited)


Recast 2018 Condensed Consolidated Statement of Earnings

 


40 Weeks Ended

 


July 8, 2018

 


As reported

 

Franchise Fees

 

Marketing and
Sourcing Fees

 

Technology
Support Fees

 

Recast

Revenues:


 

 

 

 

 

 

 

 

 

Company restaurant sales


$

371,149

 

 

$

 

 

$

 

 

$

 

 

$

371,149

 

Franchise rental revenues


196,682

 

 

 

 

 

 

 

 

196,682

 

Franchise royalties and other


124,387

 

 

(2,100

)

 

 

 

 

 

122,287

 

Franchise contributions for advertising and

other services


 

 

 

 

117,646

 

 

6,854

 

 

124,500

 

 


692,218

 

 

(2,100

)

 

117,646

 

 

6,854

 

 

814,618

 

Operating costs and expenses, net:


 

 

 

 

 

 

 

 

 

Company restaurant costs:


 

 

 

 

 

 

 

 

 

Food and packaging


106,448

 

 

 

 

 

 

 

 

106,448

 

Payroll and employee benefits


106,911

 

 

 

 

 

 

 

 

106,911

 

Occupancy and other


59,608

 

 

 

 

 

 

 

 

59,608

 

Total company restaurant costs


272,967

 

 

 

 

 

 

 

 

272,967

 

Franchise occupancy expenses


119,987

 

 

 

 

 

 

 

 

119,987

 

Franchise support and other costs


7,894

 

 

 

 

 

 

 

 

7,894

 

Franchise advertising and other services

expenses


 

 

 

 

117,646

 

 

10,530

 

 

128,176

 

Selling, general and administrative expenses


80,326

 

 

 

 

 

 

(3,676

)

 

76,650

 

Depreciation and amortization


46,306

 

 

 

 

 

 

 

 

46,306

 

Impairment and other charges, net


10,449

 

 

 

 

 

 

 

 

10,449

 

Gains on the sale of company-operated

restaurants


(43,088

)

 

 

 

 

 

 

 

(43,088

)

 


494,841

 

 

 

 

117,646

 

 

6,854

 

 

619,341

 

Earnings from operations


197,377

 

 

(2,100

)

 

 

 

 

 

195,277

 

Other pension and post-retirement expenses, net


1,410

 

 

 

 

 

 

 

 

1,410

 

Interest expense, net


34,066

 

 

 

 

 

 

 

 

34,066

 

Earnings from continuing operations and before

income taxes


161,901

 

 

(2,100

)

 

 

 

 

 

159,801

 

Income taxes


75,898

 

 

(603

)

 

 

 

 

 

75,295

 

Earnings from continuing operations


$

86,003

 

 

$

(1,497

)

 

$

 

 

$

 

 

$

84,506

 

 


 

 

 

 

 

 

 

 

 

Net earnings per share - basic:


 

 

 

 

 

 

 

 

 

Earnings from continuing operations


$

2.97

 

 

$

(0.05

)

 

$

 

 

$

 

 

$

2.92

 

Net earnings per share - diluted:


 

 

 

 

 

 

 

 

 

Earnings from continuing operations


$

2.94

 

 

$

(0.05

)

 

$

 

 

$

 

 

$

2.89

 


JACK IN THE BOX INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS

(Unaudited)

To supplement the consolidated financial statements, which are presented in accordance with GAAP, the company uses the following non-GAAP measures: Operating Earnings Per Share, Adjusted EBITDA, Restaurant-Level Margin and Franchise-Level Margin. Management believes that these measurements, when viewed with the company's results of operations in accordance with GAAP and the accompanying reconciliations in the tables below, provide useful information about operating performance and period-over-period changes, and provide additional information that is useful for evaluating the operating performance of the company's core business without regard to potential distortions.

Operating Earnings Per Share

Operating Earnings Per Share represents diluted earnings per share from continuing operations on a GAAP basis excluding gains or losses on the sale of company-operated restaurants, restructuring charges, loss on early termination of interest rate swaps, the non-cash impact of the Tax Act, and the excess tax benefits from share-based compensation arrangements which are now recorded as a component of income tax expense versus equity prior to fiscal year 2018. Operating Earnings Per Share should be considered as a supplement to, not as a substitute for, analysis of results as reported under U.S. GAAP or other similarly titled measures of other companies. Management believes Operating Earnings Per Share provides investors with a meaningful supplement of the company’s operating performance and period-over-period changes without regard to potential distortions.


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

 

40 Weeks Ended

 

 

July 7,
2019

 

July 8,
2018

 

July 7,
2019

 

July 8,
2018

Diluted earnings per share from continuing operations - GAAP

 

$

0.51

 

 

$

1.70

 

 

$

2.67

 

 

$

2.94

 

Loss on early termination of interest rate swaps

 

0.56

 

 

 

 

0.56

 

 

 

Gains on the sale of company-operated restaurants

 

 

 

(0.74

)

 

(0.01

)

 

(1.05

)

Restructuring charges

 

 

 

0.05

 

 

0.19

 

 

0.12

 

Non-cash impact of the Tax Cuts and Jobs Act

 

 

 

0.03

 

 

 

 

1.10

 

Excess tax benefits from share-based compensation arrangements

 

 

 

(0.04

)

 

 

 

(0.07

)

Operating Earnings Per Share – non-GAAP

 

$

1.07

 

 

$

1.00

 

 

$

3.41

 

 

$

3.02

 

Adjusted EBITDA

Adjusted EBITDA represents net earnings on a GAAP basis excluding earnings or losses from discontinued operations, income taxes, interest expense, net, gains or losses on the sale of company-operated restaurants, impairment and other charges, net, depreciation and amortization, and the amortization of franchise tenant improvement allowances. Adjusted EBITDA should be considered as a supplement to, not as a substitute for, analysis of results as reported under U.S. GAAP or other similarly titled measures of other companies. Management believes Adjusted EBITDA is useful to investors to gain an understanding of the factors and trends affecting the company's ongoing cash earnings, from which capital investments are made and debt is serviced.


Below is a reconciliation of non-GAAP Adjusted EBITDA to the most directly comparable GAAP measure, net earnings (in thousands).

 

 

12 Weeks Ended

 

40 Weeks Ended

 

 

July 7, 2019

 

July 8, 2018

 

July 7, 2019

 

July 8, 2018

Net earnings - GAAP

 

$

13,189

 

 

$

45,307

 

 

$

72,376

 

 

$

105,102

 

Losses (earnings) from discontinued

operations, net of taxes

 

284

 

 

2,826

 

 

(2,652

)

 

(19,099

)

Income taxes

 

(2,048

)

 

17,334

 

 

15,699

 

 

75,898

 

Interest expense, net

 

36,494

 

 

10,873

 

 

67,144

 

 

34,066

 

Gains on the sale of company-operated

restaurants

 

 

 

(28,676

)

 

(219

)

 

(43,088

)

Impairment and other charges, net

 

(3,256

)

 

3,265

 

 

5,567

 

 

10,449

 

Depreciation and amortization

 

12,786

 

 

13,194

 

 

42,645

 

 

46,306

 

Amortization of franchise tenant

improvement allowances and other

 

387

 

 

232

 

 

1,524

 

 

497

 

Adjusted EBITDA – non-GAAP

 

$

57,836

 

 

$

64,355


 

$

202,084


 

$

210,131



Restaurant-Level Margin

Restaurant-Level Margin is defined as company restaurant sales less restaurant operating costs (food and packaging, labor, and occupancy costs) and is neither required by, nor presented in accordance with GAAP. Restaurant-Level Margin excludes revenues and expenses of our franchise operations and certain costs, such as selling, general, and administrative expenses, depreciation and amortization, impairment and other charges, net, gains or losses on the sale of company-operated restaurants, and other costs that are considered normal operating costs. As such, Restaurant-Level Margin is not indicative of the overall results of the company and does not accrue directly to the benefit of shareholders because of the exclusion of corporate-level expenses. Restaurant-Level Margin should be considered as a supplement to, not as a substitute for, analysis of results as reported under GAAP or other similarly titled measures of other companies. The company is presenting Restaurant-Level Margin because it believes that it provides a meaningful supplement to net earnings of the company's core business operating results, as well as a comparison to those of other similar companies. Management utilizes Restaurant-Level Margin as a key performance indicator to evaluate the profitability of company-owned restaurants.


Below is a reconciliation of non-GAAP Restaurant-Level Margin to the most directly comparable GAAP measure, earnings from operations (in thousands):

 

 

12 Weeks Ended

 

40 Weeks Ended

 

 

July 7,
2019

 

July 8,
2018

 

July 7,
2019

 

July 8,
2018

Earnings from operations - GAAP

 

$

48,261

 

 

$

76,763

 

 

$

153,708

 

 

$

197,377

 

Franchise rental revenues

 

(63,359

)

 

(61,622

)

 

(208,895

)

 

(196,682

)

Franchise royalties and other

 

(40,180

)

 

(38,787

)

 

(130,840

)

 

(124,387

)

Franchise contributions for advertising and other

services

 

(40,386

)

 

 

 

(131,189

)

 

 

Franchise occupancy expenses

 

38,371

 

 

37,401

 

 

127,702

 

 

119,987

 

Franchise support and other costs

 

2,695

 

 

2,829

 

 

8,337

 

 

7,894

 

Franchise advertising and other services expenses

 

41,882

 

 

 

 

136,397

 

 

 

Selling, general and administrative expenses

 

24,389

 

 

19,671

 

 

66,057

 

 

80,326

 

Impairment and other charges, net

 

(3,256

)

 

3,265

 

 

5,567

 

 

10,449

 

Gains on the sale of company-operated restaurants

 

 

 

(28,676

)

 

(219

)

 

(43,088

)

Depreciation and amortization

 

12,786

 

 

13,194

 

 

42,645

 

 

46,306

 

Restaurant-Level Margin- Non-GAAP

 

$

21,203

 

 

$

24,038

 

 

$

69,270

 

 

$

98,182

 

 

 

 

 

 

 

 

 

 

Company restaurant sales

 

$

78,434

 

 

$

87,574

 

 

$

257,948

 

 

$

371,149

 

 

 

 

 

 

 

 

 

 

Restaurant-Level Margin % - Non-GAAP

 

27.0

%

 

27.5

%

 

26.9

%

 

26.5

%


Franchise-Level Margin

Franchise-Level Margin is defined as franchise revenues less franchise operating costs (occupancy expenses, advertising contributions, and franchise support and other costs) and is neither required by, nor presented in accordance with GAAP. Franchise-Level Margin excludes revenue and expenses of our company-operated restaurants and certain costs, such as selling, general, and administrative expenses, depreciation and amortization, impairment and other charges, net, amortization of tenant improvement allowances, and other costs that are considered normal operating costs. As such, Franchise-Level Margin is not indicative of the overall results of the company and does not accrue directly to the benefit of shareholders because of the exclusion of corporate-level expenses. Franchise-Level Margin should be considered as a supplement to, not as a substitute for, analysis of results as reported under GAAP or other similarly titled measures of other companies. The company is presenting Franchise-Level Margin because it believes that it provides a meaningful supplement to net earnings of the company's core business operating results, as well as a comparison to those of other similar companies. Management utilizes Franchise-Level Margin as a key performance indicator to evaluate the profitability of our franchise operations.


Below is a reconciliation of non-GAAP Franchise-Level Margin to the most directly comparable GAAP measure, earnings from operations (in thousands):

 


12 Weeks Ended

 

40 Weeks Ended

 


July 7,
2019

 

July 8,
2018

 

July 8,
2018
Recast (1)

 

July 7,
2019

 

July 8,
2018

 

July 8,
2018
Recast (1)

Earnings from operations - GAAP


$

48,261

 

 

$

76,763

 

 

$

76,031

 

 

$

153,708

 

 

$

197,377

 

 

$

195,277

 

Company restaurant sales


(78,434

)

 

(87,574

)

 

(87,574

)

 

(257,948

)

 

(371,149

)

 

(371,149

)

Food and packaging


23,058

 

 

24,946

 

 

24,946

 

 

74,350

 

 

106,448

 

 

106,448

 

Payroll and employee benefits


23,121

 

 

24,875

 

 

24,875

 

 

76,163

 

 

106,911

 

 

106,911

 

Occupancy and other


11,052

 

 

13,715

 

 

13,715

 

 

38,165

 

 

59,608

 

 

59,608

 

Selling, general and administrative

expenses


24,389

 

 

19,671

 

 

18,558

 

 

66,057

 

 

80,326

 

 

76,650

 

Impairment and other charges, net


(3,256

)

 

3,265

 

 

3,265

 

 

5,567

 

 

10,449

 

 

10,449

 

Gains on the sale of company-

operated restaurants


 

 

(28,676

)

 

(28,676

)

 

(219

)

 

(43,088

)

 

(43,088

)

Depreciation and amortization


12,786

 

 

13,194

 

 

13,194

 

 

42,645

 

 

46,306

 

 

46,306

 

Amortization of franchise tenant

improvement allowances and other


387

 

 

232

 

 

232

 

 

1,524

 

 

497

 

 

497

 

Franchise-Level Margin - Non-

GAAP


$

61,364

 

 

$

60,411

 

 

$

58,566

 

 

$

200,012

 

 

$

193,685

 

 

$

187,909

 

 


 

 

 

 

 

 

 

 

 

 

 

Franchise rental revenues


$

63,359

 

 

$

61,622

 

 

$

61,622

 

 

$

208,895

 

 

$

196,682

 

 

$

196,682

 

Franchise royalties and other


40,180

 

 

38,787

 

 

38,055

 

 

130,840

 

 

124,387

 

 

122,287

 

Franchise contributions for

advertising and other services


40,386

 

 

 

 

38,577

 

 

131,189

 

 

 

 

124,500

 

Total franchise revenues


$

143,925

 

 

$

100,409

 

 

$

138,254

 

 

$

470,924

 

 

$

321,069

 

 

$

443,469

 

 


 

 

 

 

 

 

 

 

 

 

 

Franchise-Level Margin % - Non-

GAAP


42.6

%

 

60.2

%

 

42.4

%

 

42.5

%

 

60.3

%

 

42.4

%

____________________________

(1)


Recast results for the impact of Topic 606 as shown in the "Supplemental Information" section of this release.

 

Contacts

Investor Contact:
Carol DiRaimo, (858) 571-2407
Rachel Webb, (858) 571-2683

Media Contact:
Brian Luscomb, (858) 571-2291