-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PFwmHCrd5bq1DIHI6ykafaerxwnB8PCbaxzcqm1zlOUf0nXwcdGbbYTKiAkhp2be IfVTOwiNcX9hOj0qZgGg/w== 0000807882-00-000002.txt : 20000309 0000807882-00-000002.hdr.sgml : 20000309 ACCESSION NUMBER: 0000807882-00-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000123 FILED AS OF DATE: 20000308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JACK IN THE BOX INC /NEW/ CENTRAL INDEX KEY: 0000807882 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 952698708 STATE OF INCORPORATION: DE FISCAL YEAR END: 1003 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09390 FILM NUMBER: 563465 BUSINESS ADDRESS: STREET 1: 9330 BALBOA AVE CITY: SAN DIEGO STATE: CA ZIP: 92123-1516 BUSINESS PHONE: 6195712121 MAIL ADDRESS: STREET 1: 9330 BALBOA AVENUE CITY: SAN DIEGO STATE: CA ZIP: 92123-1516 FORMER COMPANY: FORMER CONFORMED NAME: FOODMAKER INC /DE/ DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q FOR FIRST QUARTER OF FISCAL YEAR 2000 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended January 23, 2000 ---------------- Commission file no. 1-9390 ------ JACK IN THE BOX INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 95-2698708 - ---------------------------------------- -------------------------------------- (State of Incorporation) (I.R.S. Employer Identification No.) 9330 BALBOA AVENUE, SAN DIEGO, CA 92123 - ---------------------------------------- -------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (858) 571-2121 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Number of shares of common stock, $.01 par value, outstanding as of the close of business February 29, 2000 - 38,205,327. 1 JACK IN THE BOX INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS (In thousands) January 23, October 3, 2000 1999 - ---------------------------------------------------- ----------- ----------- ASSETS Current assets: Cash and cash equivalents........................ $ 7,480 $ 10,925 Accounts receivable, net......................... 5,822 9,156 Inventories...................................... 22,780 20,159 Prepaid expenses................................. 11,354 15,387 Assets held for sale............................. 46,838 41,607 --------- --------- Total current assets........................... 94,274 97,234 --------- --------- Trading area rights................................. 72,829 73,033 --------- --------- Lease acquisition costs............................. 14,808 15,352 --------- --------- Other assets........................................ 41,792 40,741 --------- --------- Property and equipment, at cost..................... 878,322 858,685 Accumulated depreciation and amortization........ (262,700) (251,401) --------- --------- 615,622 607,284 --------- --------- TOTAL.......................................... $ 839,325 $ 833,644 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt............. $ 1,899 $ 1,695 Accounts payable................................. 27,739 44,180 Accrued expenses................................. 158,259 183,151 --------- --------- Total current liabilities...................... 187,897 229,026 --------- --------- Deferred income taxes............................... 8,355 8,055 --------- --------- Long-term debt, net of current maturities........... 327,693 303,456 --------- --------- Other long-term liabilities......................... 79,390 75,270 --------- --------- Stockholders' equity: Common stock..................................... 411 411 Capital in excess of par value................... 290,533 290,336 Accumulated deficit.............................. (18,055) (38,447) Treasury stock................................... (36,899) (34,463) --------- --------- Total stockholders' equity..................... 235,990 217,837 --------- --------- TOTAL.......................................... $ 839,325 $ 833,644 ========= ========= See accompanying notes to financial statements. 2 JACK IN THE BOX INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data) Sixteen Weeks Ended ------------------------- January 23, January 17, 2000 1999 - ---------------------------------------------------- ----------- ----------- Revenues: Restaurant sales................................. $ 448,226 $ 384,440 Distribution and other sales..................... 15,528 10,297 Franchise rents and royalties.................... 12,640 11,701 Other............................................ 412 696 --------- --------- 476,806 407,134 --------- --------- Costs and expenses: Costs of revenues: Restaurant costs of sales..................... 139,988 123,596 Restaurant operating costs.................... 221,234 187,341 Costs of distribution and other sales......... 15,332 10,170 Franchised restaurant costs................... 6,142 7,154 Selling, general and administrative.............. 53,533 44,905 Interest expense................................. 8,285 9,017 --------- --------- 444,514 382,183 --------- --------- Earnings before income taxes........................ 32,292 24,951 Income taxes........................................ 11,900 9,200 --------- --------- Net earnings........................................ $ 20,392 $ 15,751 ========= ========= Earnings per share: Basic............................................ $ 0.53 $ 0.41 Diluted.......................................... $ 0.52 $ 0.40 Weighted average shares outstanding: Basic............................................ 38,256 38,000 Diluted.......................................... 39,395 38,991 See accompanying notes to financial statements. 3 JACK IN THE BOX INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Sixteen Weeks Ended --------------------------- January 23, January 17, 2000 1999 - --------------------------------------------------- ------------ ------------ Cash flows from operations: Net earnings.................................... $ 20,392 $ 15,751 Non-cash items included above: Depreciation and amortization................ 17,252 13,697 Deferred income taxes........................ 300 500 Decrease in receivables......................... 3,334 451 Increase in inventories......................... (2,621) (3,477) Decrease (increase) in prepaid expenses......... 4,033 (2,051) Increase (decrease) in accounts payable......... (16,441) 1,598 Decrease in other liabilities................... (20,347) (12,492) -------- --------- Cash flows provided by operations............ 5,902 13,977 -------- --------- Cash flows from investing activities: Additions to property and equipment............. (24,492) (28,183) Dispositions of property and equipment.......... 1,096 565 Increase in trading area rights................. (1,060) (30) Increase in other assets........................ (1,738) (1,023) Decrease (increase) in assets held for sale..... (5,231) 2,788 -------- --------- Cash flows used in investing activities...... (31,425) (25,883) -------- --------- Cash flows from financing activities: Borrowings under revolving bank loans........... 158,000 100,500 Principal repayments under revolving bank loans. (134,000) (96,000) Proceeds from issuance of long-term debt........ 825 500 Principal payments on long-term debt, including current maturities................. (508) (496) Repurchase of common stock...................... (2,436) - Proceeds from issuance of common stock.......... 197 880 -------- --------- Cash flows provided by financing activities.. 22,078 5,384 -------- --------- Net decrease in cash and cash equivalents........... $ (3,445) $ (6,522) ======== ========= See accompanying notes to financial statements. 4 JACK IN THE BOX INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying unaudited consolidated financial statements of Jack in the Box Inc. (the "Company") and its subsidiaries do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation of financial condition and results of operations for the interim periods have been included. Operating results for any interim period are not necessarily indicative of the results for any other interim period or for the full year. The Company reports results quarterly with the first quarter having 16 weeks and each remaining quarter having 12 weeks. Certain financial statement reclassifications have been made in the prior year to conform to the current year presentation. These financial statements should be read in conjunction with the 1999 financial statements. 2. The Company adopted Statement of Position ("SOP") 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, in 2000. SOP 98-1 requires that certain costs related to the development or purchase of internal use software be capitalized and amortized over the estimated useful life of the software. The Statement also requires that costs related to the preliminary project stage and the post-implementation/operations stage of an internal use computer software development project be expensed as incurred. The adoption of SOP 98-1 did not result in a material impact in the financial position or results of operations of the Company. 3. The income tax provisions reflect the projected annual tax rate of 37% of earnings before income taxes in 2000 and the actual tax rate of 37% of pretax earnings in 1999. The favorable income tax rates result from the Company's ability to realize previously unrecognized tax benefits. The Company cannot determine with certainty the 2000 annual tax rate until the end of the fiscal year; thus the rate could differ from expectations. 4. Contingent Liabilities On February 2, 1995, an action by Concetta Jorgensen was filed against the Company in the U.S. District Court in San Francisco, California alleging that restrooms at a JACK IN THE BOX restaurant failed to comply with laws regarding disabled persons and seeking damages in unspecified amounts, punitive damages, injunctive relief, attorneys' fees and prejudgment interest. In an amended complaint, damages were also sought on behalf of all physically disabled persons who were allegedly denied access to restrooms at the restaurant. In February 1997, the Court ordered that the action for injunctive relief proceed as a nationwide class action on behalf of all persons in the United States with mobility disabilities. The Company has reached agreement on settlement terms both as to the individual plaintiff Concetta Jorgensen and the claims for injunctive relief, and the settlement agreement has been approved by the U.S. District Court. The settlement requires the Company to make access improvements at Company-operated restaurants to comply with the standards set forth in the Americans with Disabilities Act ("ADA") Access Guidelines. The settlement requires compliance at 85% of the Company-operated restaurants by April 2001 and for the balance of Company-operated restaurants by October 2005. The Company has begun to make modifications to its restaurants to improve accessibility and anticipates investing an estimated $19 million in capital improvements in connection with these modifications, including 5 approximately $6 million spent through January 23, 2000. Similar claims have been made against JACK IN THE BOX franchisees and the Company relating to franchised locations which may not be in compliance with the ADA. The relief sought is (i) injunctive relief to bring these additional restaurants into compliance with the ADA, (ii) monitoring expenses to ensure compliance and (iii) attorneys' fees. On November 5, 1996, an action was filed by the National JIB Franchisee Association, Inc. (the "Franchisee Association") and several of the Company's franchisees in the Superior Court of California, County of San Diego in San Diego, California, against the Company and others. The lawsuit alleged that certain Company policies are unfair business practices and violate sections of the California Corporations Code regarding material modifications of franchise agreements and interfere with franchisees' right of association. It sought injunctive relief, a declaration of the rights and duties of the parties, unspecified damages and rescission of alleged material modifications of plaintiffs' franchise agreements. The complaint contained allegations of fraud, breach of a fiduciary duty and breach of a third party beneficiary contract in connection with certain payments that the Company received from suppliers and sought unspecified damages, interest, punitive damages and an accounting. However, on August 31, 1998, the Court granted the Company's request for summary judgment on all claims regarding an accounting, conversion, fraud, breach of fiduciary duty and breach of third party beneficiary contracts. On March 10, 1999, the Court granted motions by the Company, ruling, in essence, that the franchisees would be unable to prove their remaining claims. On April 22, 1999, the Court entered an order granting the Company's motion to enforce a settlement with the Franchisee Association covering various aspects of the franchise relationship, but involving no cash payments by the Company. In accordance with that order, the Franchisee Association's claims were dismissed with prejudice. On June 10, 1999, a final judgment was entered in favor of the Company and against those plaintiffs with whom the Company did not settle. The Franchisee Association and certain individual plaintiffs filed an appeal on August 13, 1999. The Company has settled with all franchisees except one individual franchisee and the three corporate entities in which that franchisee owns a substantial interest. Those entities continue to pursue the appeal. Settlements have involved no cash payments by the Company. Management intends to vigorously defend the appeal. On December 10, 1996, a suit was filed by the Company's Mexican licensee, Foodmex, Inc., in the U.S. District Court in San Diego, California against the Company and its international franchising subsidiary. Foodmex formerly operated several JACK IN THE BOX franchise restaurants in Mexico, but its licenses were terminated by the Company for, among other reasons, chronic insolvency and failure to meet operational standards. The Foodmex suit alleged wrongful termination of its master license, breach of contract and unfair competition and sought an injunction to prohibit termination of its license as well as unspecified monetary damages. The Company and its subsidiary counterclaimed and sought a preliminary injunction against Foodmex. On February 24, 1998, the Court issued an order dismissing Foodmex's complaint without prejudice. In March 1998, Foodmex filed a Second Amended Complaint in the U.S. District Court in San Diego, California alleging contractual, tort and law violations arising out of the same business relationship and seeking damages in excess of $10 million, attorneys' fees and costs. On June 25, 1999, the Court granted the Company's motion for summary judgement on the plaintiff's Second Amended Complaint, resulting in the complete dismissal of Foodmex's claim against 6 the Company. On the same day, the Court granted the Company's motion for partial summary judgement on its breach of contract, trademark infringement, unfair competition and related claims, including the Company's claim for a permanent injunction. The Court ordered Foodmex to cease using any of the Company's proprietary marks, and ordered it to cause its Mexican sublicensees to cease using any of the Company's proprietary marks. On December 22, 1999 Foodmex filed for bankruptcy protection in the United States Bankruptcy Court for the District of Nevada under Chapter 7 of the bankruptcy laws. While the Company continues to seek damages for Foodmex's breach of promissory note, the remaining issues and amounts at issue are not material to the Company's results of operations or financial condition. No trial date has been set. The Company is also subject to normal and routine litigation. The amount of liability from the claims and actions against the Company cannot be determined with certainty, but in the opinion of management, the ultimate liability from all pending legal proceedings, asserted legal claims and known potential legal claims which are probable of assertion should not materially affect the results of operations and liquidity of the Company. 7 JACK IN THE BOX INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS All comparisons under this heading between 2000 and 1999 refer to the 16-week periods ended January 23, 2000 and January 17, 1999, respectively, unless otherwise indicated. Restaurant sales increased $63.8 million, or 16.6%, to $448.2 million in 2000 from $384.4 million in 1999, reflecting increases in both the number of Company-operated restaurants and in per store average ("PSA") sales. The average number of Company-operated restaurants increased 11.3% to 1,203 in 2000 from 1,081 restaurants in 1999. PSA sales for comparable Company-operated restaurants, those open more than one year, grew 5.7% in 2000 compared with the same period in 1999. Sales growth resulted from increases in the average number of transactions of 3.4% and average transaction amounts of 2.3% compared to a year ago. Management believes that the sales growth is attributable to effective advertising and strategic initiatives, including the Assemble-To-Order program in which sandwiches are made when customers order them, new menu boards that showcase combo meals and an order confirmation system at drive-thru windows. Distribution and other sales increased $5.2 million to $15.5 million in 2000 from $10.3 million in 1999, primarily due to an increase in fuel and convenience store sales to $7.0 million in 2000 from $1.8 million in 1999. At quarter-end, the Company had seven locations compared with two a year ago. Franchise rents and royalties increased $.9 million to $12.6 million in 2000 from $11.7 million in 1999, which represent approximately 10.5% of franchise restaurant sales in both years. Franchise restaurant sales grew 7.1% to $120.6 million in 2000 from $112.6 million in 1999, benefiting from the Company's strategic initiatives described above. Other revenues, primarily interest income from investments and notes receivable, declined slightly to $.4 million in 2000 from $.7 million in 1999. Restaurant costs of sales and operating costs increased with sales growth and the addition of Company-operated restaurants. Restaurant costs of sales, which include food and packaging costs, increased to $140.0 million in 2000 from $123.6 million in 1999. As a percent of restaurant sales, costs of sales declined to 31.2% in 2000 from 32.1% in 1999, primarily due to lower ingredient costs, especially cheese, shortening and produce. Restaurant operating costs increased to $221.2 million in 2000 from $187.3 million in 1999. As a percent of restaurant sales, operating costs increased to 49.4% in 2000 from 48.7% in 1999, reflecting cost increases related to initiatives designed to improve the overall guest experience and slightly higher percentages of labor-related expenses. Costs of distribution and other sales increased to $15.3 million in 2000 from $10.2 million in 1999, reflecting an increase in the related sales. As a percent of distribution and other sales, these costs were 98.7% in 2000 compared to 98.8% a year ago. 8 Franchise restaurant costs, which consist principally of rents and depreciation on properties leased to franchisees and other miscellaneous costs, declined to $6.1 million in 2000 from $7.2 million in 1999, primarily due to lower franchise-related legal expenses. Selling, general and administrative costs increased to $53.5 million in 2000 from $44.9 million in 1999. Advertising and promotion costs increased $3.0 million to $22.8 million in 2000 from $19.8 million in 1999, slightly over 5% of restaurant sales in both quarters. General, administrative and other costs increased to $30.7 million, or 6.4% of revenues, in 2000 from $25.1 million, or 6.2% of revenues, in 1999, primarily due to a decision to increase staffing levels in the field to accommodate the growth program and other costs to support restaurant and revenue growth. Interest expense declined $.7 million to $8.3 million in 2000 from $9.0 million in 1999 reflecting a reduction in total average debt during the quarter compared to a year ago. The income tax provisions reflect the projected annual tax rate of 37% of earnings before income taxes in 2000 and the actual tax rate of 37% of pretax earnings in 1999. The favorable income tax rates result from the Company's ability to realize previously unrecognized tax benefits. The Company cannot determine with certainty the 2000 annual tax rate until the end of the fiscal year; thus the rate could differ from expectations. Net earnings increased $4.6 million, or $.12 per diluted share, to $20.4 million, or $.52 per diluted share, in 2000 from $15.8 million, or $.40 per diluted share, in 1999. The earnings improvement reflects the impact of sales growth and improved margins. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents decreased $3.4 million to $7.5 million at January 23, 2000 from $10.9 million at the beginning of the fiscal year. The Company expects to maintain low levels of cash and cash equivalents, reinvesting available cash flows from operations to develop new or enhance existing restaurants, and to reduce borrowings under the revolving credit agreement. The Company's working capital deficit decreased $38.2 million to $93.6 million at January 23, 2000 from $131.8 million at October 3, 1999, primarily due to a decline in current liabilities. The Company and the restaurant industry in general maintain relatively low levels of accounts receivable and inventories and vendors grant trade credit for purchases such as food and supplies. The Company also continually invests in its business through the addition of new units and refurbishment of existing units, which are reflected as long-term assets and not as part of working capital. In 1998, the Company entered into a new revolving bank credit agreement, which provides for a credit facility expiring in 2003 of up to $175 million, including letters of credit of up to $25 million. At January 23, 2000, the Company had borrowings of $110 million and approximately $58.5 million of availability under the agreement. Total debt outstanding increased to $329.6 million at January 23, 2000 from $305.2 million at the beginning of the fiscal year reflecting additional borrowings under the credit agreement which were used to reduce current liabilities. The Company is subject to a number of covenants under its various debt instruments including limitations on additional borrowings, capital expenditures, lease commitments and dividend payments, and requirements to maintain certain financial ratios, cash flows and net worth. The bank credit 9 facility is secured by a first priority security interest in certain assets and properties of the Company. In addition, certain of the Company's real estate and equipment secure other indebtedness. The Company requires capital principally to grow the business through new restaurant construction, as well as to maintain, improve and refurbish existing restaurants, and for general operating purposes. The Company's primary sources of liquidity are expected to be cash flows from operations, the revolving bank credit facility, and the sale and leaseback of restaurant properties. Additional potential sources of liquidity include financing opportunities and the conversion of Company-operated restaurants to franchised restaurants. Based upon current levels of operations and anticipated growth, the Company expects that cash flows from operations, combined with other financing alternatives available, will be sufficient to meet debt service, capital expenditure and working capital requirements. Although the amount of liability from claims and actions against the Company cannot be determined with certainty, management believes the ultimate liability of such claims and actions should not materially affect the results of operations and liquidity of the Company. On December 3, 1999, the Company's Board of Directors authorized the purchase of the Company's outstanding common stock in the open market for an aggregate amount not to exceed $10 million. At January 23, 2000, the Company had acquired 127,800 shares for an aggregate cost of $2.4 million. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's primary exposure relating to financial instruments is to changes in interest rates. The Company uses interest rate swap agreements to reduce exposure to interest rate fluctuations. At January 23, 2000, the Company had a $25 million notional amount interest rate swap agreement expiring in June 2001. This agreement effectively converts a portion of the Company's variable rate bank debt to fixed rate debt and has a pay rate of 6.38%. The Company's credit facility bears interest at an annual rate equal to the prime rate or the London Interbank Offered Rate ("LIBOR") plus an applicable margin based on a financial leverage ratio. As of January 23, 2000, the Company's applicable margin was set at 0.625%. During the first quarter of fiscal year 2000, the average interest rate on the credit facility was 6.7%. At January 23, 2000, a hypothetical one percentage point increase in short-term interest rates would result in a reduction of $0.85 million in annual pre-tax earnings. The estimated reduction is based on holding the unhedged portion of bank debt at its January 23, 2000 level. At January 23, 2000, the Company had no other material financial instruments subject to significant market exposure. YEAR 2000 COMPLIANCE The Company's Year 2000 Activities. In 1995, the Company began to prepare a plan to address the impact of the arrival of the Year 2000 on its business. The Company assessed its information technology systems and embedded microprocessor technology to determine which required modification or replacement and which are critical to the Company's operations. The Company 10 applied internal and external resources to upgrade, repair or replace significant systems that were not Year 2000 ready and had contingency plans in place for any unavoidable Year 2000 risks. There can be no assurance that the Company will not incur Year 2000 related problems in the future, but the Company has incurred no significant Year 2000 related problems to date. The Company's Franchisees. Approximately one-fifth of JACK IN THE BOX restaurants are operated by franchisees. The Company provided information to its franchisees about the business risks associated with the Year 2000 and shared information with franchisees regarding the compliance status of point-of-sale hardware and software and other restaurant equipment. The Company replaced, at franchisees' expense, the non-compliant personal computers it had leased and non-compliant software it had licensed to franchisees of approximately 92% of franchised restaurants. Franchisees have not reported any significant Year 2000 related problems. The Costs to Address the Company's Year 2000 Issues. At January 23, 2000, the Company had incurred costs of approximately $13 million, which substantially completed its Year 2000 efforts, with approximately 25% relating to new systems which have been or will be capitalized. Some planned system replacements, which are anticipated to provide significant future benefits, were accelerated due to Year 2000 concerns. CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains forward-looking statements including, but not limited to, the Company's expectations regarding its effective tax rate, its continuing investment in new restaurants and refurbishment of existing facilities, Year 2000 compliance and sources of liquidity. Forward-looking statements are generally identifiable by the use of the words "believe," "expect," "intend," "anticipate," "estimate," "project" and similar expressions. Forward-looking statements are subject to known and unknown risks and uncertainties which may cause actual results to differ materially from expectations. The following is a discussion of some of those factors. The Company's tax provision is highly sensitive to expected earnings and as expectations change the Company's income tax provision may vary more significantly from quarter to quarter and year to year than companies which have been continuously profitable. However, the Company's effective tax rates are expected to increase in the future. There can be no assurances that growth objectives in the regional domestic markets in which the Company operates will be met or that capital will be available for refurbishment of existing facilities. Additional risk factors associated with the Company's business are detailed in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. NEW ACCOUNTING STANDARDS In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative Instruments and Hedging Activities, which establishes accounting and reporting standards for derivative instruments and hedging activities. SFAS 133 requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This Statement was amended by SFAS 137 which defers the effective date to all fiscal quarters of fiscal years beginning after June 15, 2000. SFAS 133 is effective for the Company's first quarter in the fiscal year ending September 30, 2001 and is not expected to have a material effect on the Company's financial position or results of operations. 11 PART II - OTHER INFORMATION There is no information required to be reported for any items under Part II, except as follows: Item 1. Legal Proceedings - See Note 4 to the Unaudited Consolidated Financial Statements. Item 4. Submission of Matters to a Vote of Security Holders. No matters were submitted to a vote of stockholders in the first quarter ended January 23, 2000. The Company's annual meeting was held February 18, 2000 at which the following matters were voted as indicated: For Withheld ---------- ---------- 1. Election of the following directors to serve until the next annual meeting of stockholders and until their successors are elected and qualified. Michael E. Alpert..................... 32,549,414 1,234,753 Jay W. Brown.......................... 33,157,787 626,380 Paul T. Carter........................ 33,338,627 445,540 Charles W. Duddles.................... 33,331,382 452,785 Edward W. Gibbons..................... 33,330,819 453,348 Jack W. Goodall....................... 32,547,792 1,236,375 Alice B. Hayes, Ph.D.................. 33,290,293 493,874 Murray H. Hutchison................... 33,295,508 488,659 Robert J. Nugent...................... 33,146,187 637,980 L. Robert Payne....................... 33,315,405 468,762 For Against Abstain Not Voted --------- ------- ------- --------- 2. Ratification of the appointment of KPMG LLP as independent accountants.... 33,384,719 33,463 365,985 0 Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Number Description ------ ----------- 10.1 Fourth Amendment dated as of December 6, 1999 to the Revolving Credit Agreement dated as of April 1, 1998 by and between Foodmaker, Inc. and the Banks named therein. 27 Financial Data Schedule (included only with electronic filing) (b) Reports on Form 8-K - None 12 SIGNATURE 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 thereunto duly authorized and in the capacities indicated. JACK IN THE BOX INC. By: DARWIN J. WEEKS --------------- Darwin J. Weeks Vice President, Controller and Chief Accounting Officer (Duly Authorized Signatory) Date: March 8, 2000 13 EX-10.1 2 FOURTH AMENDMENT TO BANK CREDIT AGREEMENT FOURTH AMENDMENT Dated as of December 6, 1999 This FOURTH AMENDMENT (this "Amendment") is among JACK IN THE BOX INC. (formerly Foodmaker, Inc.), a Delaware corporation (the "Borrower"), the financial institutions and other entities party to the Credit Agreement referred to below (the "Lenders"), and BANK OF AMERICA, N.A. (formerly NationsBank, N.A. (successor to NationsBank of Texas, N.A.)), as L/C Bank (as defined in the Credit Agreement) and as agent (the "Agent") for the Lenders and the Issuing Banks thereunder. PRELIMINARY STATEMENTS: 1. The Borrower, the Lenders, the Arranger, the Documentation Agent and the Agent have entered into a Credit Agreement dated as of April 1, 1998, as amended by the First Amendment, dated as of August 24, 1998, the Second Amendment, dated as of February 27, 1999 and the Third Amendment, dated as of September 17, 1999 (as so amended, the "Credit Agreement"; capitalized terms used and not otherwise defined herein have the meanings assigned to such terms in the Credit Agreement). 2. The Borrower has requested that the Lenders (i) amend the Credit Agreement to permit the Borrower to create Qualifying Subsidiaries (as defined below), (ii) amend Sections 6.01(k) and 6.02(i) of the Credit Agreement with respect to Qualifying Subsidiaries, and (iii) amend Section 6.02(g)(v) of the Credit Agreement with respect to the repurchase by the Borrower of its capital stock. 3. The Required Lenders are, on the terms and conditions stated below, willing to grant the request of the Borrower. NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Amendments to Credit Agreement. Effective as of the date hereof and subject to satisfaction of the conditions precedent set forth in Section 2 hereof, the Credit Agreement is hereby amended as follows: (a) Section 1.01 of the Credit Agreement is hereby amended by inserting in appropriate alphabetical order the following new definition: "Qualifying Subsidiary" means any direct wholly-owned Subsidiary of the Borrower created on or after December 6, 1999 that is designated by the Borrower in writing to the Agent as a Qualifying Subsidiary; provided that, both before and immediately after giving effect to such designation, there shall be no default in the performance or observance of any agreement contained in Section 6.02(o)." 1 (b) Section 6.01(k) of the Credit Agreement is hereby amended by (i) inserting immediately following the words "Collateral Release Date" in the first and second lines thereof the words "(with respect to clauses (ii) through (vi) below) and at all times (with respect to clause (i) below)", and (ii) by deleting the words "(other than an Excluded Subsidiary or a Foreign Subsidiary)" as they appear in the third line thereof and substituting in lieu thereof the words "(other than an Excluded Subsidiary, a Qualifying Subsidiary or a Foreign Subsidiary)". (c) Section 6.02(g)(v) of the Credit Agreement is hereby amended and restated in its entirety to read as follows: "(v) the Borrower may acquire capital stock of the Borrower, provided that the aggregate purchase price for all such capital stock acquired on or after December 6, 1999 shall not exceed $40,000,000 in the aggregate and that at the time of and immediately after any such acquisition, the Borrower would not be in Default hereunder." (d) Section 6.02(i) of the Credit Agreement is hereby amended by deleting the words "(other than Excluded Subsidiaries)" as they appear in the first and second lines thereof and substituting in lieu thereof the words "(other than Excluded Subsidiaries or Qualifying Subsidiaries)". (e) Section 6.02 of the Credit Agreement is hereby amended by inserting immediately following Section 6.02(n) thereof the following new Section 6.02(o): "(o) Qualifying Subsidiaries. (i) Permit, or permit any of its Subsidiaries to permit, any Qualifying Subsidiary to create, incur, assume or suffer to exist, any Lien on or with respect to any of its assets or properties of any character (whether now owned or hereafter acquired); (ii) permit, or permit any of its Subsidiaries to permit, any Qualifying Subsidiary to create, incur, assume or suffer to exist any Debt (other than Debt incurred by a Qualifying Subsidiary in the ordinary course of business to the state in which such Qualifying Subsidiary is organized in respect of franchise taxes and related fees payable by such Qualifying Subsidiary in an amount not to exceed $1,000 in the aggregate for any Qualifying Subsidiary); (iii) sell, lease, or otherwise transfer, or permit any of its Subsidiaries to sell, lease or otherwise transfer, any assets or property to any Qualifying Subsidiary or grant, or permit any of its Subsidiaries to grant, any option or other right to any Qualifying Subsidiary to purchase, lease or otherwise acquire any assets or property (except a capital contribution by the Borrower to a Qualifying Subsidiary in an amount not to exceed $2,000 in the aggregate for any Qualifying Subsidiary); (iv) make or hold, or permit any of its Subsidiaries to make or hold, any Investment in a Qualifying Subsidiary (except a capital contribution by the Borrower to a Qualifying Subsidiary in an amount not to exceed $2,000 in the aggregate for any Qualifying Subsidiary);or (v) create more than five Qualifying Subsidiaries." 2 SECTION 2. Conditions to Effectiveness. This Amendment shall not be effective until each of the following conditions precedent shall have been satisfied: (a) the Agent shall have executed this Amendment and shall have received counterparts of this Amendment executed by the Borrower and the Required Lenders and counterparts of the Consent appended hereto (the "Consent") executed by each of the Guarantors and Grantors (as defined in the Security Agreement) listed therein (such Guarantors and Grantors, together with the Borrower, each a "Loan Party" and, collectively, the "Loan Parties"); and (b) each of the representations and warranties in Section 3 below shall be true and correct. SECTION 3. Representations and Warranties. The Borrower represents and warrants as follows: (a) Authority. The Borrower and each other Loan Party has the requisite corporate power and authority to execute and deliver this Amendment and the Consent, as applicable, and to perform its obligations hereunder and under the Loan Documents (as amended hereby) to which it is a party. The execution, delivery and performance by the Borrower of this Amendment and by each other Loan Party of the Consent, and the performance by each Loan Party of each Loan Document (as amended hereby) to which it is a party have been duly approved by all necessary corporate action of such Loan Party and no other corporate proceedings on the part of such Loan Party are necessary to consummate such transactions. (b) Enforceability. This Amendment has been duly executed and delivered by the Borrower. The Consent has been duly executed and delivered by each Guarantor and each Grantor. This Amendment and each Loan Document (as amended hereby) is the legal, valid and binding obligation of each Loan Party party hereto and thereto, enforceable against such Loan Party in accordance with its terms, and is in full force and effect. (c) Representations and Warranties. The representations and warranties contained in each Loan Document (other than any such representations and warranties that, by their terms, are specifically made as of a date other than the date hereof) are true and correct on and as of the date hereof as though made on and as of the date hereof. (d) No Default. No event has occurred and is continuing that constitutes a Default or Event of Default. 3 SECTION 4. Reference to and Effect on the Loan Documents. (a) Upon and after the effectiveness of this Amendment, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof" or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to "the Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended hereby. (b) Except as specifically amended above, the Credit Agreement and the other Loan Documents are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. Without limiting the generality of the foregoing, the Collateral Documents and all of the Collateral described therein do and shall continue to secure the payment of all Secured Obligations under and as defined therein. (c) The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of any Lender, any Issuing Bank, the Arranger, the Documentation Agent or the Agent under any of the Loan Documents, nor constitute a waiver or amendment of any provision of any of the Loan Documents. SECTION 5. Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. Delivery of an executed counterpart of a signature page to this Amendment or the Consent by facsimile shall be effective as delivery of a manually executed counterpart of this Amendment or such Consent. SECTION 6. Governing Law. This Amendment shall be governed by, and construed in accordance with, the laws of the State of California. [Signature Pages Follow] 4 IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to be executed by their respective officers thereunto duly authorized, as of the date first written above. JACK IN THE BOX INC. (successor to Foodmaker, Inc.), a Delaware corporation By: HAROLD L. SACHS ------------------------- Name: Harold L. Sachs Title: Vice President and Treasurer BANK OF AMERICA, N.A. as Agent By: RICHARD G. PARKHURST, JR. ------------------------- Name: Richard G. Parkhurst, Jr. Title: Managing Director Lenders BANK OF AMERICA, N.A. By: RICHARD G. PARKHURST, JR. ------------------------- Name: Richard G. Parkhurst, Jr. Title: Managing Director CREDIT LYONNAIS LOS ANGELES BRANCH By: DIANNE M. SCOTT ------------------------- Name: Dianne M. Scott Title: First Vice President and Branch Manager ROYAL BANK OF CANADA By: JOHN CRAWFORD ------------------------- Name: John Crawford Title: UNION BANK OF CALIFORNIA, N.A. By: LINDA WELKER ------------------------- Name: Linda Welker Title: Vice President S-1 thru S-6 U.S. BANK NATIONAL ASSOCIATION By: Name: Title: BANK ONE, TEXAS, N.A. By: THOMAS R. FREAS ------------------------- Name: Thomas R. Freas Title: Managing Director CIBC INC. By: Name: Title: MORGAN GUARANTY TRUST CO. By: FRANCOIS BERTHELOT ------------------------- Name: Francois Berthelot Title: Vide President SANWA BANK CALIFORNIA By: L.D. HART ------------------------- Name: L.D. Hart Title: Vice President NATEXIS BANQUE - BFCE By: PEYMAN PARHAMI ------------------------- Name: Peyman Parhami Title: Assistant Treasurer By: IAIN A. WHYTE ------------------------- Name: Iain A. Whyte Title: Vice President and Group Manager Corporate Finance S-7 thru S-12 CONSENT Dated as of December 6, 1999 The undersigned, as Guarantors under the "Guaranty" and as Grantors under the "Security Agreement" (as such terms are defined in and under the Credit Agreement referred to in the foregoing Fourth Amendment), each hereby consents and agrees to the foregoing Fourth Amendment and hereby confirms and agrees that (i) the Guaranty and the Security Agreement are, and shall continue to be, in full force and effect and are hereby ratified and confirmed in all respects except that, upon the effectiveness of, and on and after the date of, said Fourth Amendment, each reference in the Guaranty and the Security Agreement to the "Credit Agreement", "thereunder", "thereof" and words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended by said Fourth Amendment, and (ii) the Security Agreement and all of the Collateral described therein do, and shall continue to, secure the payment of all of the Secured Obligations as defined in the Security Agreement. CP DISTRIBUTION CO., a Delaware corporation, CP WHOLESALE CO., a Delaware corporation, and JACK IN THE BOX, INC., a New Jersey corporation By: LAWRENCE E. SCHAUF ------------------------------------- Name: Lawrence E. Schauf Title: Executive Vice President and Secretary FOODMAKER INTERNATIONAL FRANCHISING, INC., a Delaware corporation By: HAROLD L. SACHS ------------------------------------- Harold L. Sachs Vice President and Treasurer 7 EX-27 3 ARTICLE 5 FDS FOR FY 2000 FIRST QUARTER 10-Q
5 FISCAL YEAR THRU FIRST QUARTER CONTAINS 16 WEEKS 1000 3-MOS OCT-01-2000 OCT-04-1999 JAN-23-2000 7,480 0 7,470 1,888 22,780 94,274 878,322 (262,700) 839,325 187,897 327,693 411 0 0 235,579 839,325 463,754 476,806 155,320 382,696 0 0 8,285 32,292 11,900 20,392 0 0 0 20,392 0.53 0.52
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