Delaware
|
|
95-2698708
|
||
(State of Incorporation)
|
|
(I.R.S. Employer Identification No.)
|
||
|
|
|
|
||
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock
|
JACK
|
NASDAQ Global Select Market
|
Large accelerated filer
|
þ
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
|
|
Emerging growth company
|
☐
|
|
|
Page
|
|
PART I – FINANCIAL INFORMATION
|
|
Item 1.
|
|
|
|
||
|
Condensed Consolidated Statements of Earnings
|
|
|
||
|
||
|
||
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
Item 3.
|
||
Item 4.
|
||
|
PART II – OTHER INFORMATION
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
||
Item 3.
|
Defaults of Senior Securities
|
|
Item 4.
|
||
Item 5.
|
||
Item 6.
|
||
|
|
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
|
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
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
|
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 (excluding depreciation and amortization)
|
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
|
|
||||
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
|
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 tax (benefit) expense
|
(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 income 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 (1)
|
$
|
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 (1)
|
$
|
0.50
|
|
|
$
|
1.60
|
|
|
$
|
2.77
|
|
|
$
|
3.59
|
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per common share
|
$
|
0.40
|
|
|
$
|
0.40
|
|
|
$
|
1.20
|
|
|
$
|
1.20
|
|
(1)
|
Earnings per share may not add due to rounding.
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 7,
2019 |
|
July 8,
2018 |
|
July 7,
2019 |
|
July 8,
2018 |
||||||||
Net earnings
|
$
|
13,189
|
|
|
$
|
45,307
|
|
|
$
|
72,376
|
|
|
$
|
105,102
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
||||||||
Net change in fair value of derivatives
|
(11,499
|
)
|
|
1,494
|
|
|
(23,625
|
)
|
|
16,080
|
|
||||
Net loss reclassified to earnings
|
23,715
|
|
|
539
|
|
|
24,328
|
|
|
3,089
|
|
||||
|
12,216
|
|
|
2,033
|
|
|
703
|
|
|
19,169
|
|
||||
Tax effect
|
(6,132
|
)
|
|
(517
|
)
|
|
(3,165
|
)
|
|
(4,868
|
)
|
||||
|
6,084
|
|
|
1,516
|
|
|
(2,462
|
)
|
|
14,301
|
|
||||
Unrecognized periodic benefit costs:
|
|
|
|
|
|
|
|
||||||||
Actuarial losses and prior service costs reclassified to earnings
|
904
|
|
|
1,152
|
|
|
3,013
|
|
|
3,838
|
|
||||
Tax effect
|
(232
|
)
|
|
(292
|
)
|
|
(777
|
)
|
|
(1,126
|
)
|
||||
|
672
|
|
|
860
|
|
|
2,236
|
|
|
2,712
|
|
||||
Other:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||
Tax effect
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Derecognition of foreign currency translation adjustments due to sale
|
—
|
|
|
—
|
|
|
—
|
|
|
76
|
|
||||
|
—
|
|
|
—
|
|
|
—
|
|
|
80
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss), net of taxes
|
6,756
|
|
|
2,376
|
|
|
(226
|
)
|
|
17,093
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
$
|
19,945
|
|
|
$
|
47,683
|
|
|
$
|
72,150
|
|
|
$
|
122,195
|
|
|
Year-to-date
|
||||||
|
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 distributions
|
(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
|
|
1.
|
BASIS OF PRESENTATION
|
|
July 7,
2019 |
|
July 8,
2018 |
||
Company-operated
|
137
|
|
|
146
|
|
Franchise
|
2,105
|
|
|
2,095
|
|
Total system
|
2,242
|
|
|
2,241
|
|
|
|
|
Adjustments
|
|
|
||||||||||||||
|
As Reported
|
|
Franchise Fees
|
|
Marketing and Sourcing Fees
|
|
Technology Support Fees
|
|
Balances without Adoption
|
||||||||||
Condensed Consolidated Statements of Earnings
|
|
|
|
|
|
|
|
|
|
||||||||||
12-Weeks Ended July 7, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Franchise royalties and other
|
$
|
40,180
|
|
|
$
|
(918
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
39,262
|
|
Franchise contributions for advertising and other services
|
$
|
40,386
|
|
|
$
|
—
|
|
|
$
|
(38,133
|
)
|
|
$
|
(2,253
|
)
|
|
$
|
—
|
|
Total revenues
|
$
|
222,359
|
|
|
$
|
(918
|
)
|
|
$
|
(38,133
|
)
|
|
$
|
(2,253
|
)
|
|
$
|
181,055
|
|
Franchise advertising and other services expenses
|
$
|
41,882
|
|
|
$
|
—
|
|
|
$
|
(38,133
|
)
|
|
$
|
(3,749
|
)
|
|
$
|
—
|
|
Selling, general and administrative expenses
|
$
|
24,389
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,496
|
|
|
$
|
25,885
|
|
Total operating costs and expenses, net
|
$
|
174,098
|
|
|
$
|
—
|
|
|
$
|
(38,133
|
)
|
|
$
|
(2,253
|
)
|
|
$
|
133,712
|
|
Earnings from operations
|
$
|
48,261
|
|
|
$
|
(918
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
47,343
|
|
Earnings from continuing operations and before income taxes
|
$
|
11,425
|
|
|
$
|
(918
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10,507
|
|
Income tax (benefit) expense
|
$
|
(2,048
|
)
|
|
$
|
(237
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2,285
|
)
|
Earnings from continuing operations
|
$
|
13,473
|
|
|
$
|
(681
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,792
|
|
Net earnings
|
$
|
13,189
|
|
|
$
|
(681
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,508
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
40-Weeks Ended July 7, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Franchise royalties and other
|
$
|
130,840
|
|
|
$
|
(2,983
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
127,857
|
|
Franchise contributions for advertising and other services
|
$
|
131,189
|
|
|
$
|
—
|
|
|
$
|
(124,187
|
)
|
|
$
|
(7,002
|
)
|
|
$
|
—
|
|
Total revenues
|
$
|
728,872
|
|
|
$
|
(2,983
|
)
|
|
$
|
(124,187
|
)
|
|
$
|
(7,002
|
)
|
|
$
|
594,700
|
|
Franchise advertising and other services expenses
|
$
|
136,397
|
|
|
$
|
—
|
|
|
$
|
(124,187
|
)
|
|
$
|
(12,210
|
)
|
|
$
|
—
|
|
Selling, general and administrative expenses
|
$
|
66,057
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,208
|
|
|
$
|
71,265
|
|
Total operating costs and expenses, net
|
$
|
575,164
|
|
|
$
|
—
|
|
|
$
|
(124,187
|
)
|
|
$
|
(7,002
|
)
|
|
$
|
443,975
|
|
Earnings from operations
|
$
|
153,708
|
|
|
$
|
(2,983
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
150,725
|
|
Earnings from continuing operations and before income taxes
|
$
|
85,423
|
|
|
$
|
(2,983
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
82,440
|
|
Income tax (benefit) expense
|
$
|
15,699
|
|
|
$
|
(769
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,930
|
|
Earnings from continuing operations
|
$
|
69,724
|
|
|
$
|
(2,214
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
67,510
|
|
Net earnings
|
$
|
72,376
|
|
|
$
|
(2,214
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
70,162
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Condensed Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
|
||||||||||
July 7, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Prepaid expenses
|
$
|
17,484
|
|
|
$
|
769
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
18,253
|
|
Total current assets
|
$
|
105,997
|
|
|
$
|
769
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
106,766
|
|
Deferred tax assets
|
$
|
72,903
|
|
|
$
|
(12,958
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
59,945
|
|
Other assets, net
|
$
|
215,234
|
|
|
$
|
269
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
215,503
|
|
Total other assets
|
$
|
335,335
|
|
|
$
|
(12,689
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
322,646
|
|
Total assets
|
$
|
831,270
|
|
|
$
|
(11,920
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
819,350
|
|
Accrued liabilities
|
$
|
124,823
|
|
|
$
|
(4,968
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
119,855
|
|
Total current liabilities
|
$
|
218,849
|
|
|
$
|
(4,968
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
213,881
|
|
Other long-term liabilities
|
$
|
221,219
|
|
|
$
|
(42,067
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
179,152
|
|
Total long-term liabilities
|
$
|
1,192,982
|
|
|
$
|
(42,067
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,150,915
|
|
Retained earnings
|
$
|
1,565,287
|
|
|
$
|
35,114
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,600,401
|
|
Total stockholders’ deficit
|
$
|
(580,561
|
)
|
|
$
|
35,114
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(545,447
|
)
|
Total liabilities and stockholders’ deficit
|
$
|
831,270
|
|
|
$
|
(11,921
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
819,349
|
|
2.
|
REVENUE
|
|
Quarter
|
|
Year-to-date
|
||||
Sources of revenue:
|
|
|
|
||||
Company restaurant sales
|
$
|
78,434
|
|
|
$
|
257,948
|
|
Franchise rental revenues
|
63,359
|
|
|
208,895
|
|
||
Franchise royalties
|
38,752
|
|
|
125,407
|
|
||
Marketing fees
|
37,269
|
|
|
121,078
|
|
||
Technology and sourcing fees
|
3,117
|
|
|
10,111
|
|
||
Franchise fees and other services
|
1,428
|
|
|
5,433
|
|
||
Total revenue
|
$
|
222,359
|
|
|
$
|
728,872
|
|
|
|
Deferred Franchise Fees
|
||
Deferred franchise fees at October 1, 2018
|
|
$
|
50,018
|
|
Revenue recognized during the period
|
|
(3,953
|
)
|
|
Additions during the period
|
|
970
|
|
|
Deferred franchise fees at July 7, 2019
|
|
$
|
47,035
|
|
2019 (1)
|
|
$
|
1,145
|
|
2020
|
|
4,878
|
|
|
2021
|
|
4,856
|
|
|
2022
|
|
4,656
|
|
|
2023
|
|
4,501
|
|
|
Thereafter
|
|
26,999
|
|
|
|
|
$
|
47,035
|
|
3.
|
DISCONTINUED OPERATIONS
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 7,
2019 |
|
July 8,
2018 |
|
July 7,
2019 |
|
July 8,
2018 |
||||||||
Company restaurant sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
192,620
|
|
Franchise revenues
|
—
|
|
|
—
|
|
|
—
|
|
|
9,337
|
|
||||
Company restaurant costs (excluding depreciation and amortization)
|
—
|
|
|
—
|
|
|
—
|
|
|
(166,122
|
)
|
||||
Franchise costs (excluding depreciation and amortization)
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,338
|
)
|
||||
Selling, general and administrative expenses
|
(120
|
)
|
|
(202
|
)
|
|
123
|
|
|
(18,314
|
)
|
||||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,012
|
)
|
||||
Impairment and other charges, net
|
(262
|
)
|
|
(123
|
)
|
|
(262
|
)
|
|
(2,386
|
)
|
||||
Interest expense, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,787
|
)
|
||||
Operating (losses) earnings from discontinued operations before income taxes
|
(382
|
)
|
|
(325
|
)
|
|
(139
|
)
|
|
2,998
|
|
||||
Gain (loss) on Qdoba Sale
|
—
|
|
|
(3,648
|
)
|
|
(85
|
)
|
|
32,081
|
|
||||
(Losses) earnings from discontinued operations before income taxes
|
(382
|
)
|
|
(3,973
|
)
|
|
(224
|
)
|
|
35,079
|
|
||||
Income tax benefit (expense)
|
98
|
|
|
1,097
|
|
|
2,876
|
|
|
(15,927
|
)
|
||||
(Losses) earnings from discontinued operations, net of income taxes
|
$
|
(284
|
)
|
|
$
|
(2,876
|
)
|
|
$
|
2,652
|
|
|
$
|
19,152
|
|
|
|
|
|
|
|
|
|
||||||||
Net earnings per share from discontinued operations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.01
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
0.10
|
|
|
$
|
0.66
|
|
Diluted
|
$
|
(0.01
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
0.10
|
|
|
$
|
0.65
|
|
4.
|
INDEBTEDNESS
|
5.
|
SUMMARY OF REFRANCHISINGS AND FRANCHISEE DEVELOPMENT
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 7,
2019 |
|
July 8,
2018 |
|
July 7,
2019 |
|
July 8,
2018 |
||||||||
Restaurants sold to franchisees
|
—
|
|
|
42
|
|
|
—
|
|
|
127
|
|
||||
New restaurants opened by franchisees
|
5
|
|
|
—
|
|
|
16
|
|
|
8
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Proceeds from the sale of company-operated restaurants:
|
|
|
|
|
|
|
|
||||||||
Cash (1)
|
$
|
—
|
|
|
$
|
6,822
|
|
|
$
|
133
|
|
|
$
|
23,666
|
|
Notes receivable
|
—
|
|
|
33,042
|
|
|
—
|
|
|
64,548
|
|
||||
|
—
|
|
|
39,864
|
|
|
133
|
|
|
88,214
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net assets sold (primarily property and equipment)
|
—
|
|
|
(6,745
|
)
|
|
—
|
|
|
(19,891
|
)
|
||||
Lease commitment charges
|
—
|
|
|
—
|
|
|
—
|
|
|
(863
|
)
|
||||
Goodwill related to the sale of company-operated restaurants
|
—
|
|
|
(566
|
)
|
|
(2
|
)
|
|
(4,526
|
)
|
||||
Other (2)
|
—
|
|
|
(3,877
|
)
|
|
88
|
|
|
(19,846
|
)
|
||||
Gains on the sale of company-operated restaurants
|
$
|
—
|
|
|
$
|
28,676
|
|
|
$
|
219
|
|
|
$
|
43,088
|
|
(1)
|
The year-to-date amounts in 2019 and 2018 include additional proceeds of $0.1 million and $1.3 million, respectively, related to restaurants sold in prior years.
|
(2)
|
Amounts in 2018 are primarily related to an $8.8 million reduction of gains related to the modification of certain 2017 refranchising transactions. The quarter and year-to-date amounts in 2018 also include $2.9 million and $8.1 million, respectively, of costs related to franchise remodel incentives.
|
6.
|
FAIR VALUE MEASUREMENTS
|
|
Total
|
|
Quoted Prices
in Active
Markets for
Identical
Assets (3)
(Level 1)
|
|
Significant
Other
Observable
Inputs (3)
(Level 2)
|
|
Significant
Unobservable
Inputs (3)
(Level 3)
|
||||||||
Fair value measurements as of July 7, 2019:
|
|
|
|
|
|
|
|
||||||||
Non-qualified deferred compensation plan (1)
|
$
|
31,012
|
|
|
$
|
31,012
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total liabilities at fair value
|
$
|
31,012
|
|
|
$
|
31,012
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Fair value measurements as of September 30, 2018:
|
|
|
|
|
|
|
|
||||||||
Non-qualified deferred compensation plan (1)
|
$
|
37,447
|
|
|
$
|
37,447
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Interest rate swaps (Note 7) (2)
|
703
|
|
|
—
|
|
|
703
|
|
|
—
|
|
||||
Total liabilities at fair value
|
$
|
38,150
|
|
|
$
|
37,447
|
|
|
$
|
703
|
|
|
$
|
—
|
|
(1)
|
We maintain an unfunded defined contribution plan for key executives and other members of management. The fair value of this obligation is based on the closing market prices of the participants’ elected investments. The obligation is included in “Accrued liabilities” and “Other long-term liabilities” on our condensed consolidated balance sheets.
|
(2)
|
We entered into interest rate swaps to reduce our exposure to rising interest rates on our variable rate debt. The fair values of our interest rate swaps are based upon Level 2 inputs which include valuation models as reported by our counterparties. These valuation models use a discounted cash flow analysis on the cash flows of each derivative. The key inputs for the valuation models are quoted market prices, discount rates, and forward yield curves. The Company also considers its own nonperformance risk and the respective counter-party’s nonperformance risk in the fair value measurements. As further described in Note 7, Derivatives, the Company’s interest rate swaps were terminated on July 2, 2019 and settled in connection with our refinancing transaction on July 8, 2019.
|
(3)
|
We did not have any transfers in or out of Level 1, 2 or 3.
|
7.
|
DERIVATIVE INSTRUMENTS
|
|
Balance
Sheet
Location
|
|
Fair Value
|
||||||
|
|
July 7,
2019 |
|
September 30, 2018
|
|||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
||||
Interest rate swaps
|
Accrued liabilities
|
|
$
|
—
|
|
|
$
|
(26
|
)
|
Interest rate swaps
|
Other long-term liabilities
|
|
—
|
|
|
(1,266
|
)
|
||
Interest rate swaps
|
Other assets, net
|
|
—
|
|
|
589
|
|
||
Total derivatives
|
|
|
$
|
—
|
|
|
$
|
(703
|
)
|
|
Location in Income
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
|
July 7,
2019 |
|
July 8,
2018 |
|
July 7,
2019 |
|
July 8,
2018 |
|||||||||
(Loss) gain recognized in OCI
|
N/A
|
|
$
|
(11,499
|
)
|
|
$
|
1,494
|
|
|
$
|
(23,625
|
)
|
|
$
|
16,080
|
|
Loss reclassified from accumulated OCI into
net earnings
|
Interest expense, net
|
|
$
|
23,715
|
|
|
$
|
539
|
|
|
$
|
24,328
|
|
|
$
|
3,089
|
|
8.
|
IMPAIRMENT AND OTHER CHARGES, NET
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 7,
2019 |
|
July 8,
2018 |
|
July 7,
2019 |
|
July 8,
2018 |
||||||||
Restructuring costs
|
$
|
(64
|
)
|
|
$
|
1,872
|
|
|
$
|
6,722
|
|
|
$
|
4,805
|
|
Costs of closed restaurants and other
|
2,010
|
|
|
378
|
|
|
3,259
|
|
|
3,483
|
|
||||
Accelerated depreciation
|
416
|
|
|
538
|
|
|
1,342
|
|
|
912
|
|
||||
(Gains) losses on disposition of property and equipment, net (1)
|
(5,618
|
)
|
|
477
|
|
|
(5,756
|
)
|
|
958
|
|
||||
Operating restaurant impairment charges (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
291
|
|
||||
|
$
|
(3,256
|
)
|
|
$
|
3,265
|
|
|
$
|
5,567
|
|
|
$
|
10,449
|
|
(1)
|
In 2019, includes a $0.8 million gain recognized in the second quarter related to an eminent domain transaction and a $5.7 million gain related to a sale of property recognized in the third quarter.
|
(2)
|
In 2018, impairment charges relate to our landlord’s sale of a restaurant property to a franchisee.
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 7,
2019 |
|
July 8,
2018 |
|
July 7,
2019 |
|
July 8,
2018 |
||||||||
Employee severance and related costs
|
$
|
287
|
|
|
$
|
1,476
|
|
|
$
|
5,436
|
|
|
$
|
2,828
|
|
Strategic Alternatives Evaluation (1)
|
(351
|
)
|
|
376
|
|
|
1,286
|
|
|
1,188
|
|
||||
Qdoba Evaluation (2)
|
—
|
|
|
20
|
|
|
—
|
|
|
788
|
|
||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
|
$
|
(64
|
)
|
|
$
|
1,872
|
|
|
$
|
6,722
|
|
|
$
|
4,805
|
|
(1)
|
Strategic Alternative Evaluation costs are primarily related to third party advisory services.
|
(2)
|
Qdoba Evaluation costs are primarily related to retention compensation and third party advisory services.
|
Balance as of September 30, 2018
|
|
$
|
5,309
|
|
Costs incurred
|
|
5,946
|
|
|
Accruals released
|
|
(605
|
)
|
|
Cash payments
|
|
(8,167
|
)
|
|
Balance as of July 7, 2019
|
|
$
|
2,483
|
|
Balance as of September 30, 2018
|
|
$
|
3,534
|
|
Additions
|
|
—
|
|
|
Adjustments (1)
|
|
572
|
|
|
Interest expense
|
|
1,094
|
|
|
Cash payments
|
|
(3,156
|
)
|
|
Balance as of July 7, 2019 (2) (3)
|
|
$
|
2,044
|
|
(1)
|
Adjustments relate primarily to revisions of certain sublease and cost assumptions. Our estimates related to our future lease obligations, primarily the sublease income we anticipate, are subject to a high degree of judgment and may differ from actual sublease income due to changes in economic conditions, desirability of the sites and other factors.
|
(2)
|
The weighted average remaining lease term related to these commitments is approximately 4 years.
|
(3)
|
This balance excludes $1.7 million of restaurant closing costs that are included in “Accrued liabilities” and “Other long-term liabilities” on our condensed consolidated balance sheets, which were initially recorded as losses on the sale of company-operated restaurants to franchisees.
|
9.
|
INCOME TAXES
|
|
Quarter
|
|
Year-to-date
|
||||||||||||||||||||||||
|
July 7,
2019 |
|
July 8,
2018 |
|
July 7,
2019 |
|
July 8,
2018 |
||||||||||||||||||||
Income tax expense at statutory rate
|
$
|
2,948
|
|
|
25.8
|
%
|
|
$
|
18,715
|
|
|
28.6
|
%
|
|
$
|
22,040
|
|
|
25.8
|
%
|
|
$
|
46,752
|
|
|
28.9
|
%
|
One-time, non-cash impact of the Tax Act
|
—
|
|
|
—
|
%
|
|
878
|
|
|
1.3
|
%
|
|
—
|
|
|
—
|
%
|
|
32,082
|
|
|
19.8
|
%
|
||||
Termination of interest rate swaps
|
(2,984
|
)
|
|
(26.1
|
)%
|
|
—
|
|
|
—
|
%
|
|
(2,984
|
)
|
|
(3.5
|
)%
|
|
—
|
|
|
—
|
%
|
||||
Release of valuation reserve on state tax losses and credits
|
(873
|
)
|
|
(7.6
|
)%
|
|
(1,312
|
)
|
|
(2.0
|
)%
|
|
(1,023
|
)
|
|
(1.2
|
)%
|
|
(1,312
|
)
|
|
(0.8
|
)%
|
||||
Release of federal tax liability
|
(817
|
)
|
|
(7.2
|
)%
|
|
—
|
|
|
—
|
%
|
|
(817
|
)
|
|
(1.0
|
)%
|
|
—
|
|
|
—
|
%
|
||||
Stock compensation excess tax expense
|
(18
|
)
|
|
(0.2
|
)%
|
|
(1,268
|
)
|
|
(1.9
|
)%
|
|
(66
|
)
|
|
(0.1
|
)%
|
|
(2,084
|
)
|
|
(1.3
|
)%
|
||||
Adjustment to state tax provision
|
—
|
|
|
—
|
%
|
|
—
|
|
|
—
|
%
|
|
(1,027
|
)
|
|
(1.2
|
)%
|
|
—
|
|
|
—
|
%
|
||||
Other
|
(304
|
)
|
|
(2.6
|
)%
|
|
321
|
|
|
0.5
|
%
|
|
(424
|
)
|
|
(0.4
|
)%
|
|
460
|
|
|
0.3
|
%
|
||||
(1)
|
$
|
(2,048
|
)
|
|
(17.9
|
)%
|
|
$
|
17,334
|
|
|
26.5
|
%
|
|
$
|
15,699
|
|
|
18.4
|
%
|
|
$
|
75,898
|
|
|
46.9
|
%
|
(1)
|
Percentages may not add due to rounding.
|
10.
|
RETIREMENT PLANS
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 7,
2019 |
|
July 8,
2018 |
|
July 7,
2019 |
|
July 8,
2018 |
||||||||
Defined benefit pension plans:
|
|
|
|
|
|
|
|
||||||||
Interest cost
|
$
|
5,286
|
|
|
$
|
5,159
|
|
|
$
|
17,619
|
|
|
$
|
17,198
|
|
Service cost
|
—
|
|
|
114
|
|
|
—
|
|
|
379
|
|
||||
Expected return on plan assets (1)
|
(6,077
|
)
|
|
(6,108
|
)
|
|
(20,257
|
)
|
|
(20,360
|
)
|
||||
Actuarial loss (2)
|
914
|
|
|
1,124
|
|
|
3,046
|
|
|
3,745
|
|
||||
Amortization of unrecognized prior service costs (2)
|
27
|
|
|
34
|
|
|
89
|
|
|
113
|
|
||||
Net periodic benefit cost
|
$
|
150
|
|
|
$
|
323
|
|
|
$
|
497
|
|
|
$
|
1,075
|
|
Postretirement healthcare plans:
|
|
|
|
|
|
|
|
||||||||
Interest cost
|
$
|
229
|
|
|
$
|
220
|
|
|
$
|
766
|
|
|
$
|
734
|
|
Actuarial gain (2)
|
(37
|
)
|
|
(6
|
)
|
|
(122
|
)
|
|
(20
|
)
|
||||
Net periodic benefit cost
|
$
|
192
|
|
|
$
|
214
|
|
|
$
|
644
|
|
|
$
|
714
|
|
(1)
|
Determined as of the beginning of the year based on a return on asset assumption of 6.2%.
|
(2)
|
Amounts were reclassified from accumulated OCI into net earnings as a component of “Other pension and post-retirement expenses, net.”
|
|
SERP
|
|
Postretirement
Healthcare Plans
|
||||
Net year-to-date contributions
|
$
|
4,213
|
|
|
$
|
913
|
|
Remaining estimated net contributions during fiscal 2019
|
$
|
800
|
|
|
$
|
500
|
|
11.
|
STOCKHOLDERS’ DEFICIT
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 7,
2019 |
|
July 8,
2018 |
|
July 7,
2019 |
|
July 8,
2018 |
||||||||
Balance at beginning of period
|
$
|
(592,514
|
)
|
|
$
|
(430,910
|
)
|
|
$
|
(591,699
|
)
|
|
$
|
(388,130
|
)
|
Shares issued under stock plans, including tax benefit
|
453
|
|
|
2,325
|
|
|
696
|
|
|
2,364
|
|
||||
Share-based compensation
|
1,881
|
|
|
1,684
|
|
|
6,589
|
|
|
7,950
|
|
||||
Dividends declared
|
(10,326
|
)
|
|
(11,252
|
)
|
|
(30,967
|
)
|
|
(34,698
|
)
|
||||
Purchases of treasury stock
|
—
|
|
|
(100,000
|
)
|
|
—
|
|
|
(200,000
|
)
|
||||
Net earnings
|
13,189
|
|
|
45,307
|
|
|
72,376
|
|
|
105,102
|
|
||||
Other comprehensive income, net of taxes
|
6,756
|
|
|
2,376
|
|
|
(226
|
)
|
|
17,093
|
|
||||
Cumulative-effect from a change in accounting principle
|
—
|
|
|
—
|
|
|
(37,330
|
)
|
|
(151
|
)
|
||||
Balance at end of period
|
$
|
(580,561
|
)
|
|
$
|
(490,470
|
)
|
|
$
|
(580,561
|
)
|
|
$
|
(490,470
|
)
|
12.
|
AVERAGE SHARES OUTSTANDING
|
|
Quarter
|
|
Year-to-date
|
||||||||
|
July 7,
2019 |
|
July 8,
2018 |
|
July 7,
2019 |
|
July 8,
2018 |
||||
Weighted-average shares outstanding – basic
|
25,958
|
|
|
28,042
|
|
|
25,933
|
|
|
28,989
|
|
Effect of potentially dilutive securities:
|
|
|
|
|
|
|
|
||||
Nonvested stock awards and units
|
206
|
|
|
215
|
|
|
205
|
|
|
241
|
|
Stock options
|
10
|
|
|
32
|
|
|
10
|
|
|
47
|
|
Performance share awards
|
2
|
|
|
7
|
|
|
2
|
|
|
7
|
|
Weighted-average shares outstanding – diluted
|
26,176
|
|
|
28,296
|
|
|
26,150
|
|
|
29,284
|
|
Excluded from diluted weighted-average shares outstanding:
|
|
|
|
|
|
|
|
||||
Antidilutive
|
186
|
|
|
192
|
|
|
186
|
|
|
139
|
|
Performance conditions not satisfied at the end of the period
|
89
|
|
|
67
|
|
|
89
|
|
|
67
|
|
13.
|
CONTINGENCIES AND LEGAL MATTERS
|
14.
|
SUPPLEMENTAL CONSOLIDATED CASH FLOW INFORMATION (in thousands)
|
|
Year-to-date
|
||||||
|
July 7,
2019 |
|
July 8,
2018 |
||||
Non-cash investing and financing transactions:
|
|
|
|
||||
Decrease in obligations for treasury stock repurchases
|
$
|
14,362
|
|
|
$
|
—
|
|
Decrease in obligations for purchases of property and equipment
|
$
|
5,421
|
|
|
$
|
2,456
|
|
Increase in dividends accrued or converted to common stock equivalents
|
$
|
184
|
|
|
$
|
218
|
|
Decrease in capital lease obligations from the termination of equipment and building leases
|
$
|
41
|
|
|
$
|
3,654
|
|
Increase in notes receivable from the sale of company-operated restaurants
|
$
|
—
|
|
|
$
|
31,160
|
|
Equipment capital lease obligations incurred
|
$
|
—
|
|
|
$
|
78
|
|
15.
|
SUPPLEMENTAL CONSOLIDATED BALANCE SHEET INFORMATION (in thousands)
|
|
|||||||
|
July 7,
2019 |
|
September 30,
2018 |
||||
Accounts and other receivables, net:
|
|
|
|
||||
Trade
|
$
|
44,403
|
|
|
$
|
35,877
|
|
Notes receivable
|
1,854
|
|
|
11,480
|
|
||
Due from marketing fund
|
839
|
|
|
—
|
|
||
Income tax receivable
|
184
|
|
|
5,637
|
|
||
Other
|
12,059
|
|
|
6,123
|
|
||
Allowance for doubtful accounts
|
(1,692
|
)
|
|
(1,695
|
)
|
||
|
$
|
57,647
|
|
|
$
|
57,422
|
|
Prepaid expenses:
|
|
|
|
||||
Prepaid rent
|
$
|
11,977
|
|
|
$
|
—
|
|
Prepaid income taxes
|
—
|
|
|
4,837
|
|
||
Prepaid advertising
|
28
|
|
|
4,318
|
|
||
Other
|
5,479
|
|
|
5,288
|
|
||
|
$
|
17,484
|
|
|
$
|
14,443
|
|
Other assets, net:
|
|
|
|
||||
Company-owned life insurance policies
|
$
|
113,025
|
|
|
$
|
109,908
|
|
Deferred rent receivable
|
49,204
|
|
|
48,372
|
|
||
Franchise tenant improvement allowance
|
24,328
|
|
|
22,506
|
|
||
Other
|
28,677
|
|
|
18,480
|
|
||
|
$
|
215,234
|
|
|
$
|
199,266
|
|
Accrued liabilities:
|
|
|
|
||||
Insurance
|
$
|
30,206
|
|
|
$
|
35,405
|
|
Payroll and related taxes
|
24,807
|
|
|
29,498
|
|
||
Deferred franchise fees
|
4,968
|
|
|
375
|
|
||
Deferred rent income
|
16,960
|
|
|
1,387
|
|
||
Sales and property taxes
|
4,097
|
|
|
4,555
|
|
||
Gift card liability
|
2,109
|
|
|
2,081
|
|
||
Other
|
41,676
|
|
|
33,621
|
|
||
|
$
|
124,823
|
|
|
$
|
106,922
|
|
Other long-term liabilities:
|
|
|
|
||||
Defined benefit pension plans
|
$
|
66,185
|
|
|
$
|
69,012
|
|
Deferred franchise fees
|
42,063
|
|
|
—
|
|
||
Straight-line rent accrual
|
29,700
|
|
|
31,762
|
|
||
Other
|
83,271
|
|
|
92,675
|
|
||
|
$
|
221,219
|
|
|
$
|
193,449
|
|
16.
|
SUBSEQUENT EVENTS
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
•
|
Overview — a general description of our business and 2019 highlights.
|
•
|
Financial reporting — a discussion of changes in presentation, if any.
|
•
|
Results of operations — an analysis of our condensed consolidated statements of earnings for the periods presented in our condensed consolidated financial statements.
|
•
|
Liquidity and capital resources — an analysis of our cash flows including pension and postretirement health contributions, capital expenditures, sale of company-operated restaurants, franchise tenant improvement allowance distributions, our credit facility, share repurchase activity, dividends, known trends that may impact liquidity and the impact of inflation, if applicable.
|
•
|
Discussion of critical accounting estimates — a discussion of accounting policies that require critical judgments and estimates.
|
•
|
New accounting pronouncements — a discussion of new accounting pronouncements, dates of implementation and the impact on our consolidated financial position or results of operations, if any.
|
•
|
Cautionary statements regarding forward-looking statements — a discussion of the risks and uncertainties that may cause our actual results to differ materially from any forward-looking statements made by management.
|
•
|
Changes in sales at restaurants open more than one year (“same-store sales”), system restaurant sales, franchised restaurant sales, and average unit volumes (“AUVs”). Same-store sales, restaurant sales, and AUVs are presented for franchised restaurants and on a system-wide basis, which includes company and franchise restaurants. Franchise sales represent sales at franchise restaurants and are revenues of our franchisees. We do not record franchise sales as revenues; however, our royalty revenues and percentage rent revenues are calculated based on a percentage of franchise sales. We believe franchise and system same-store sales, franchised and system restaurant sales, and AUV information are useful to investors as they have a direct effect on the Company’s profitability.
|
•
|
Adjusted EBITDA, which represents net earnings on a generally accepted accounting principles (“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 tenant improvement allowances and other. We are presenting Adjusted EBITDA because we believe 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 believes that Adjusted EBITDA, when viewed with the Company's results of operations in accordance with GAAP and the accompanying reconciliations within MD&A, provides useful information about operating performance and period-over-period change, and provides additional information that is useful for evaluating the operating performance of the Company's core business without regard to potential distortions. Additionally, management believes that Adjusted EBITDA permits investors to gain an understanding of the factors and trends affecting our ongoing cash earnings, from which capital investments are made and debt is serviced.
|
•
|
Same-store and system sales — System same-store sales are up 0.8% year-to-date as compared with the prior year primarily due to menu price and favorable product mix, partially offset by a decline in transactions. System sales increased $14.5 million, or 0.5%, compared with a year ago primarily due to the net increase in the number of open restaurants.
|
•
|
Company restaurant operations — Company restaurant costs as a percentage of company restaurant sales decreased in 2019 to 73.1% from 73.5% a year ago primarily due to the benefit of refranchising units that had lower AUVs than the average for all company restaurants, partially offset by higher costs for labor and other operating expenses.
|
•
|
Franchise operations — Excluding the impacts of the adoption of ASC 606 further described below, franchise costs as a percentage of franchise revenues were flat compared to prior year.
|
•
|
Restructuring costs — In 2019, we have continued with our plan to reduce our general and administrative costs by revamping our organization and cost structures. Additionally, in the first quarter of fiscal 2019, we began an evaluation of strategic alternatives for the Company (the “Strategic Alternatives Evaluation”). In connection with these activities, we have recorded $6.7 million of restructuring charges in 2019, which includes $5.4 million related to severance costs, and $1.3 million related to the Strategic Alternatives Evaluation. These costs are included in “Impairment and other costs, net” in the accompanying condensed consolidated statements of earnings.
|
•
|
Return of cash to shareholders — We returned cash to shareholders in the form of cash dividends. We declared three cash dividends of $0.40 per share totaling $31.2 million.
|
•
|
Adjusted EBITDA — Adjusted EBITDA decreased in 2019 to $202.1 million from $210.1 million in 2018.
|
•
|
Franchise fee revenue for franchise services will be recognized over the franchise term beginning in 2019 compared to upfront recognition under the previous revenue guidance.
|
•
|
Franchise contribution for advertising and other services are reflected on a gross basis in 2019 compared to a net basis in 2018. Newly created captions “Franchise contribution for advertising and other services” and “Franchise advertising and other services expenses” include the gross-up of respective revenues and expenses; however, the 2018 results have not been restated to conform to current year presentation.
|
|
Quarter
|
|
Year-to-date
|
||||||||
|
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 (excluding depreciation and amortization):
|
|
|
|
|
|
|
|
||||
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 (excluding depreciation and amortization) (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.
|
|
Quarter
|
|
Year-to-date
|
||||||||
|
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
|
%
|
|
—
|
%
|
System
|
2.7
|
%
|
|
0.5
|
%
|
|
0.8
|
%
|
|
—
|
%
|
|
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
|
%
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
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.
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
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 tax (benefit) expense
|
(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
|
|
|
Quarter
|
|
Year-to-date
|
||||||||||||||||||||||||
|
July 7, 2019
|
|
July 8, 2018
|
|
July 7, 2019
|
|
July 8, 2018
|
||||||||||||||||||||
Company restaurant sales
|
$
|
78,434
|
|
|
|
|
$
|
87,574
|
|
|
|
|
$
|
257,948
|
|
|
|
|
$
|
371,149
|
|
|
|
||||
Company restaurant costs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Food and packaging
|
23,058
|
|
|
29.4
|
%
|
|
24,946
|
|
|
28.5
|
%
|
|
74,350
|
|
|
28.8
|
%
|
|
106,448
|
|
|
28.7
|
%
|
||||
Payroll and employee benefits
|
23,121
|
|
|
29.5
|
%
|
|
24,875
|
|
|
28.4
|
%
|
|
76,163
|
|
|
29.5
|
%
|
|
106,911
|
|
|
28.8
|
%
|
||||
Occupancy and other
|
11,052
|
|
|
14.1
|
%
|
|
13,715
|
|
|
15.7
|
%
|
|
38,165
|
|
|
14.8
|
%
|
|
59,608
|
|
|
16.1
|
%
|
||||
Total company restaurant costs
|
$
|
57,231
|
|
|
73.0
|
%
|
|
$
|
63,536
|
|
|
72.5
|
%
|
|
$
|
188,678
|
|
|
73.1
|
%
|
|
$
|
272,967
|
|
|
73.5
|
%
|
|
Quarter
|
|
Year-to-date
|
||||
Decrease in the average number of restaurants
|
$
|
(11.0
|
)
|
|
$
|
(116.3
|
)
|
AUV increase
|
1.9
|
|
|
3.1
|
|
||
Total change in company restaurant sales
|
$
|
(9.1
|
)
|
|
$
|
(113.2
|
)
|
|
Quarter
|
|
Year-to-date
|
||||||||
|
July 7,
2019 |
|
July 8,
2018 |
|
July 7,
2019 |
|
July 8,
2018 |
||||
Average check (1)
|
2.8
|
%
|
|
2.6
|
%
|
|
3.2
|
%
|
|
2.6
|
%
|
Transactions
|
—
|
%
|
|
(2.0
|
)%
|
|
(2.0
|
)%
|
|
(2.1
|
)%
|
Change in same-store sales
|
2.8
|
%
|
|
0.6
|
%
|
|
1.2
|
%
|
|
0.5
|
%
|
(1)
|
Amounts in 2019 include price increases of approximately 2.3% in the quarter and year-to-date. Amounts in 2018 include price increases of approximately 2.6% in the quarter and 2.2% year-to-date.
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 7,
2019 |
|
July 8,
2018 |
|
July 7,
2019 |
|
July 8,
2018 |
||||||||
Franchise rental revenues
|
$
|
63,359
|
|
|
$
|
61,622
|
|
|
$
|
208,895
|
|
|
$
|
196,682
|
|
|
|
|
|
|
|
|
|
||||||||
Royalties
|
38,752
|
|
|
36,863
|
|
|
125,407
|
|
|
118,341
|
|
||||
Franchise fees and other
|
1,428
|
|
|
1,924
|
|
|
5,433
|
|
|
6,046
|
|
||||
Franchise royalties and other
|
40,180
|
|
|
38,787
|
|
|
130,840
|
|
|
124,387
|
|
||||
Franchise contributions for advertising and other services
|
40,386
|
|
|
—
|
|
|
131,189
|
|
|
—
|
|
||||
Total franchise revenues
|
$
|
143,925
|
|
|
$
|
100,409
|
|
|
$
|
470,924
|
|
|
$
|
321,069
|
|
|
|
|
|
|
|
|
|
||||||||
Franchise occupancy expenses (excluding depreciation and amortization)
|
$
|
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
|
|
|
—
|
|
||||
Total franchise costs
|
$
|
82,948
|
|
|
$
|
40,230
|
|
|
$
|
272,436
|
|
|
$
|
127,881
|
|
Franchise costs as a percentage of total franchise revenues
|
57.6
|
%
|
|
40.1
|
%
|
|
57.9
|
%
|
|
39.8
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Average number of franchise restaurants
|
2,081
|
|
|
2,069
|
|
|
2,084
|
|
|
2,012
|
|
||||
% increase
|
0.6
|
%
|
|
|
|
3.6
|
%
|
|
|
||||||
Increase in franchise-operated same-store sales
|
2.7
|
%
|
|
0.5
|
%
|
|
0.8
|
%
|
|
—
|
%
|
||||
Franchised restaurant sales
|
$
|
747,398
|
|
|
$
|
716,453
|
|
|
$
|
2,428,708
|
|
|
$
|
2,301,031
|
|
Franchised restaurant AUVs
|
$
|
359
|
|
|
$
|
346
|
|
|
$
|
1,166
|
|
|
$
|
1,144
|
|
Royalties as a percentage of total franchised restaurant sales
|
5.2
|
%
|
|
5.1
|
%
|
|
5.2
|
%
|
|
5.1
|
%
|
|
Increase / (Decrease)
|
||||||
|
Quarter
|
|
Year-to-date
|
||||
Insurance
|
$
|
(5,062
|
)
|
|
$
|
(4,542
|
)
|
Advertising
|
(1,956
|
)
|
|
(6,975
|
)
|
||
Technology fees
|
(1,113
|
)
|
|
(3,676
|
)
|
||
Cash surrender value of COLI policies, net
|
(979
|
)
|
|
(3,035
|
)
|
||
Region administration
|
(750
|
)
|
|
(2,601
|
)
|
||
Employee litigation matter
|
7,110
|
|
|
7,122
|
|
||
Incentive compensation (including share-based compensation and related payroll taxes)
|
5,208
|
|
|
786
|
|
||
Legal fees
|
384
|
|
|
1,531
|
|
||
Other (includes transition services income and savings related to our restructuring plan)
|
1,876
|
|
|
(2,879
|
)
|
||
|
$
|
4,718
|
|
|
$
|
(14,269
|
)
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 7, 2019
|
|
July 8, 2018
|
|
July 7, 2019
|
|
July 8, 2018
|
||||||||
Restructuring costs
|
$
|
(64
|
)
|
|
$
|
1,872
|
|
|
$
|
6,722
|
|
|
$
|
4,805
|
|
Costs of closed restaurants and other
|
2,010
|
|
|
378
|
|
|
3,259
|
|
|
3,483
|
|
||||
Accelerated depreciation
|
416
|
|
|
538
|
|
|
1,342
|
|
|
912
|
|
||||
(Gains) losses on disposition of property and equipment, net
|
(5,618
|
)
|
|
477
|
|
|
(5,756
|
)
|
|
958
|
|
||||
Operating restaurant impairment charges
|
—
|
|
|
—
|
|
|
—
|
|
|
291
|
|
||||
|
$
|
(3,256
|
)
|
|
$
|
3,265
|
|
|
$
|
5,567
|
|
|
$
|
10,449
|
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 7, 2019
|
|
July 8, 2018
|
|
July 7, 2019
|
|
July 8, 2018
|
||||||||
Number of restaurants sold to franchisees
|
—
|
|
|
42
|
|
|
—
|
|
|
127
|
|
||||
Gains on the sale of company-operated restaurants
|
$
|
—
|
|
|
$
|
28,676
|
|
|
$
|
219
|
|
|
$
|
43,088
|
|
|
Quarter
|
|
Year-to-date
|
||||||||||||
|
July 7, 2019
|
|
July 8, 2018
|
|
July 7, 2019
|
|
July 8, 2018
|
||||||||
Interest expense
|
$
|
36,561
|
|
|
$
|
11,209
|
|
|
$
|
67,587
|
|
|
$
|
34,491
|
|
Interest income
|
(67
|
)
|
|
(336
|
)
|
|
(443
|
)
|
|
(425
|
)
|
||||
Interest expense, net
|
$
|
36,494
|
|
|
$
|
10,873
|
|
|
$
|
67,144
|
|
|
$
|
34,066
|
|
•
|
working capital;
|
•
|
capital expenditures for restaurant renovations;
|
•
|
income tax payments;
|
•
|
debt service requirements;
|
•
|
franchise tenant improvement allowance distributions; and
|
•
|
obligations related to our benefit plans.
|
|
Year-to-date
|
||||||
|
July 7, 2019
|
|
July 8, 2018
|
||||
Total cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
116,793
|
|
|
$
|
59,368
|
|
Investing activities
|
950
|
|
|
40,793
|
|
||
Financing activities
|
(108,001
|
)
|
|
(386,405
|
)
|
||
Net cash flows
|
$
|
9,742
|
|
|
$
|
(286,244
|
)
|
|
Year-to-date
|
||||||
|
July 7, 2019
|
|
July 8, 2018
|
||||
Jack in the Box:
|
|
|
|
||||
Restaurant facility expenditures
|
$
|
14,970
|
|
|
$
|
16,343
|
|
New restaurants
|
701
|
|
|
723
|
|
||
Other, including information technology
|
8,565
|
|
|
5,770
|
|
||
|
24,236
|
|
|
22,836
|
|
||
Corporate Services:
|
|
|
|
||||
Information technology
|
120
|
|
|
2,773
|
|
||
Other, including facility improvements
|
685
|
|
|
121
|
|
||
|
805
|
|
|
2,894
|
|
||
|
|
|
|
||||
Total capital expenditures
|
$
|
25,041
|
|
|
$
|
25,730
|
|
|
|
Payments Due by Fiscal Year
|
||||||||||||||||||
|
|
Total
|
|
Less than
1 year
|
|
1-3 years
|
|
3-5 years
|
|
After 5 years
|
||||||||||
Contractual Obligations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Principal payments
|
|
$
|
1,300,000
|
|
|
$
|
9,750
|
|
|
$
|
26,000
|
|
|
$
|
573,688
|
|
|
$
|
690,562
|
|
Interest payments
|
|
$
|
393,387
|
|
|
$
|
50,586
|
|
|
$
|
113,270
|
|
|
$
|
94,524
|
|
|
$
|
135,007
|
|
•
|
We face significant competition in the food service industry and our inability to compete may adversely affect our business.
|
•
|
Changes in demographic trends and in customer tastes and preferences could cause sales and the royalties we receive from franchisees to decline.
|
•
|
Changes in consumer confidence and declines in general economic conditions could negatively impact our financial results.
|
•
|
Increases in food and commodity costs could decrease our profit margins or result in a modified menu, which could adversely affect our financial results.
|
•
|
Changes in the structure or management of our distribution organization, or failure of our restaurants to receive scheduled deliveries of high quality food ingredients and other supplies at favorable costs could negatively impact the financial success of our franchise and company restaurants, and could harm our operations, promotions and reputation.
|
•
|
We have a limited number of suppliers for our major products and rely on a distribution network with a limited number of distribution partners for the majority of our national distribution program in the United States. If our suppliers or distributors are unable to fulfill their obligations under their contracts, it could harm our operations.
|
•
|
Food safety and food-borne illness concerns may have an adverse effect on our business by reducing demand and increasing costs.
|
•
|
Negative publicity relating to our business or industry could adversely impact our reputation.
|
•
|
Our business could be adversely affected by increased labor costs or difficulties in finding and retaining top-performing personnel.
|
•
|
We may not have the same resources as our competitors for advertising and promotion.
|
•
|
We may be adversely impacted by severe weather conditions, natural disasters, terrorist acts or civil unrest that could result in property damage, injury to employees and staff, and lost restaurant sales.
|
•
|
Our business is subject to seasonal fluctuations.
|
•
|
We may not achieve our development goals.
|
•
|
Our highly franchised business model presents a number of risks, and the failure of our franchisees to operate successful and profitable restaurants could negatively impact our business.
|
•
|
We are subject to financial and regulatory risks associated with our owned and leased properties and real estate development projects.
|
•
|
Changes to estimates related to our property, fixtures, and equipment or operating results that are lower than our current estimates at certain restaurant locations may cause us to incur impairment charges on certain long-lived assets, which may adversely affect our results of operations.
|
•
|
Our tax provision may fluctuate due to changes in expected earnings.
|
•
|
Activities related to our sale of Qdoba, and our refranchising, restructuring, and cost savings initiatives entail various risks and may negatively impact our financial results.
|
•
|
We are subject to the risk of cybersecurity breaches, intrusions, data loss, or other data security incidents.
|
•
|
We may not be able to adequately protect our intellectual property, which could harm the value of our brands and adversely affect our business.
|
•
|
The securitized debt instruments issued by certain of our wholly-owned subsidiaries have restrictive terms, and any failure to comply with such terms could result in default, which could harm the value of our brand and adversely affect our business.
|
•
|
We have a significant amount of debt outstanding that, along with the other contractual commitments, could affect our ability or that of certain of our subsidiaries to meet debt obligations, or could otherwise adversely affect our business.
|
•
|
The securitization transaction documents impose certain restrictions on our activities or the activities of our subsidiaries, and the failure to comply with such restrictions could adversely affect our business.
|
•
|
Changes in accounting standards may negatively impact our results of operations.
|
•
|
We are subject to increasing legal complexity and may be subject to claims or lawsuits that are costly to defend and could result in our payment of substantial damages or settlement costs.
|
•
|
Unionization activities or labor disputes may disrupt our operations and affect our profitability.
|
•
|
Our insurance may not provide adequate levels of coverage against claims.
|
•
|
Our quarterly results and, as a result, the price of our common stock, may fluctuate significantly and could fall below the expectations of securities analysts and investors due to various factors.
|
•
|
Activities of activist stockholders could cause us to incur substantial costs, divert management’s attention and resources, and have an adverse effect on our business.
|
•
|
Governmental regulation may adversely affect our existing and future operations and results, including by harming our ability to profitably operate our restaurants.
|
•
|
The proliferation of federal, state, and local regulations increases our compliance risks, which in turn could adversely affect our business.
|
•
|
Legislation and regulations regarding our products and ingredients, including the nutritional content of our products, could impact customer preferences and negatively impact our financial results.
|
•
|
Failure to obtain and maintain required licenses and permits or to comply with food control regulations could lead to the loss of our food service licenses and, thereby, harm our business.
|
•
|
Jack in the Box may be subject to risk associated with disagreements with key stakeholders, such as franchisees.
|
•
|
our available cash flow in the future to fund working capital, capital expenditures, acquisitions, and general corporate or other purposes could be impaired, and our ability to obtain additional financing for such purposes is limited;
|
•
|
a substantial portion of our cash flows could be required for debt service and, as a result, might not be available for our operations or other purposes;
|
•
|
any substantial decrease in net operating cash flows or any substantial increase in expenses could make it difficult for us to meet our debt service requirements or could force us to modify our operations or sell assets;
|
•
|
our ability to operate our business and our ability to repurchase stock or pay cash dividends to our stockholders may be restricted by the financial and other covenants set forth in the Indenture;
|
•
|
the variable interest rate on the $150 million of Series 2019-1 Class A-1 Notes subjects us to an increased sensitivity to interest rate increases on indebtedness;
|
•
|
our ability to withstand competitive pressures may be decreased; and
|
•
|
our level of indebtedness may make us more vulnerable to economic downturns and reduce our flexibility in responding to changing business, regulatory, and economic conditions.
|
•
|
incur or guarantee additional indebtedness;
|
•
|
sell certain assets;
|
•
|
alter the business conducted by our subsidiaries;
|
•
|
create or incur liens on certain assets to secure indebtedness; or
|
•
|
consolidate, merge, sell or otherwise dispose of all or substantially all of the assets held within the securitization entities.
|
Number
|
Description
|
Form
|
Filed with SEC
|
3.1
|
—
|
Filed herewith
|
|
4.1
|
8-K
|
7/8/2019
|
|
4.2
|
|
8-K
|
7/8/2019
|
10.1
|
8-K
|
7/8/2019
|
|
10.1.19
|
8-K
|
5/2/2019
|
|
10.2
|
8-K
|
7/8/2019
|
|
10.3
|
8-K
|
7/8/2019
|
|
31.1
|
—
|
Filed herewith
|
|
31.2
|
—
|
Filed herewith
|
|
32.1
|
—
|
Filed herewith
|
|
32.2
|
—
|
Filed herewith
|
|
101.INS
|
XBRL Instance Document
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
JACK IN THE BOX INC.
|
|
|
|
|
|
By:
|
/S/ LANCE TUCKER
|
|
|
Lance Tucker
|
|
|
Executive Vice President and Chief Financial Officer (principal financial officer)
(Duly Authorized Signatory)
|
(i)
|
on the date fixed pursuant to Section 6.05 of these By-laws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting; or
|
(ii)
|
if no such record date shall have been so fixed, then (a) at the close of business on the day next preceding the day on which notice of the meeting shall be given or (b) if notice of the meeting shall be waived, at the close of business on the day next preceding the day on which the meeting shall be held.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Jack in the Box Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated:
|
August 8, 2019
|
/S/ LEONARD A. COMMA
|
|
|
Leonard A. Comma
|
|
|
Chief Executive Officer & Chairman of the
Board
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Jack in the Box Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions)
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Dated:
|
August 8, 2019
|
/S/ LANCE TUCKER
|
|
|
Lance Tucker
|
|
|
Chief Financial Officer
|
(1)
|
the quarterly report on Form 10-Q of the Registrant, to which this certification is attached as an exhibit (the “Report”), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
Dated:
|
August 8, 2019
|
/S/ LEONARD A. COMMA
|
|
|
Leonard A. Comma
|
|
|
Chief Executive Officer
|
(1)
|
the quarterly report on Form 10-Q of the Registrant, to which this certification is attached as an exhibit (the “Report”), fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
|
Dated:
|
August 8, 2019
|
/S/ LANCE TUCKER
|
|
|
Lance Tucker
|
|
|
Chief Financial Officer
|