-----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, K8CO1QofMWnQcMw02TB2+fhQjkLfPOM40aQ4xa58rpG8XtEr7jCkhg5idVvUN0q+ Xm3lIMPEHzythOy3dg66VA== /in/edgar/work/20000821/0000807882-00-000005/0000807882-00-000005.txt : 20000922 0000807882-00-000005.hdr.sgml : 20000922 ACCESSION NUMBER: 0000807882-00-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000709 FILED AS OF DATE: 20000821 FILER: COMPANY DATA: COMPANY CONFORMED NAME: JACK IN THE BOX INC /NEW/ CENTRAL INDEX KEY: 0000807882 STANDARD INDUSTRIAL CLASSIFICATION: [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: 706977 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 0001.txt FORM 10-Q FOR THIRD QUARTER OF FY 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 July 9, 2000 ------------ Commission file no. 1-9390 ------ JACK IN THE BOX INC. (Exact name of registrant as specified in its charter) DELAWARE 5-2698708 - ------------------------------------------------------------------------------- (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 August 15, 2000 - 38,324,861. 1 JACK IN THE BOX INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands) July 9, October 3, 2000 1999 - --------------------------------------------------- --------------- ------------ (Unaudited) ASSETS Current assets: Cash and cash equivalents...................... $ 7,268 $ 10,925 Accounts receivable, net....................... 10,665 9,156 Inventories.................................... 25,303 20,159 Prepaid expenses............................... 15,121 15,387 Assets held for sale........................... 52,326 41,607 ---------- ---------- Total current assets......................... 110,683 97,234 ---------- ---------- Trading area rights............................... 72,413 73,033 ---------- ---------- Lease acquisition costs........................... 14,038 15,352 ---------- ---------- Other assets...................................... 42,713 40,741 ---------- ---------- Property and equipment, at cost................... 923,950 858,685 Accumulated depreciation and amortization...... (280,502) (251,401) ---------- ---------- 643,448 607,284 ---------- ---------- TOTAL........................................ $ 883,295 $ 833,644 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt........... $ 1,983 $ 1,695 Accounts payable............................... 33,530 44,180 Accrued expenses................................ 184,390 183,151 ---------- ---------- Total current liabilities.................... 219,903 229,026 ---------- ---------- Deferred income taxes............................. 8,955 8,055 ---------- ---------- Long-term debt, net of current maturities......... 299,918 303,456 ---------- ---------- Other long-term liabilities....................... 84,078 75,270 ---------- ---------- Stockholders' equity: Common stock................................... 414 411 Capital in excess of par value................. 291,449 290,336 Retained earnings (deficit).................... 18,838 (38,447) Treasury stock................................. (40,260) (34,463) ---------- ---------- Total stockholders' equity................... 270,441 217,837 ---------- ---------- TOTAL........................................ $ 883,295 $ 833,644 ========== ========== See accompanying notes to consolidated financial statements. 2 JACK IN THE BOX INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data)
Twelve Weeks Ended Forty Weeks Ended -------------------------------- --------------------------- July 9, July 4, July 9, July 4, 2000 1999 2000 1999 - -------------------------------------------------------------------------------------------------------------- Revenues: Restaurant sales.............................. $ 364,314 $ 323,727 $ 1,159,989 $ 1,011,833 Distribution and other sales.................. 14,599 9,175 43,508 28,365 Franchise rents and royalties................. 9,740 9,086 31,684 29,686 Other......................................... 1,658 460 2,431 1,671 --------- --------- ----------- ----------- 390,311 342,448 1,237,612 1,071,555 --------- --------- ----------- ----------- Costs and expenses: Costs of revenues: Restaurant costs of sales.................. 111,638 100,133 359,702 320,906 Restaurant operating costs................. 177,599 156,779 569,221 473,372 Costs of distribution and other sales...... 14,318 9,038 42,738 27,919 Franchised restaurant costs................ 4,606 5,003 15,448 17,943 Selling, general and administrative........... 43,009 37,574 139,094 117,385 Interest expense.............................. 6,133 6,344 20,424 21,815 --------- --------- ----------- ----------- 357,303 314,871 1,146,627 979,340 --------- --------- ----------- ----------- Earnings before income taxes..................... 33,008 27,577 90,985 92,215 Income taxes..................................... 12,200 10,200 33,700 34,100 --------- --------- ----------- ----------- Net earnings..................................... $ 20,808 $ 17,377 $ 57,285 $ 58,115 ========= ========= =========== =========== Net earnings per share: Basic......................................... $ .54 $ .45 $ 1.50 $ 1.53 Diluted....................................... $ .53 $ .44 $ 1.46 $ 1.48 Weighted average shares outstanding: Basic......................................... 38,269 38,209 38,249 38,104 Diluted....................................... 39,371 39,446 39,336 39,229
See accompanying notes to consolidated financial statements. 3 JACK IN THE BOX INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Forty Weeks Ended ------------------------ July 9, July 4, 2000 1999 - -------------------------------------------------------------------------------- Cash flows from operations: Net earnings........................................ $ 57,285 $ 58,115 Non-cash items included above: Depreciation and amortization.................... 44,427 35,491 Deferred income taxes............................ 900 1,800 Decrease (increase) in receivables.................. (1,509) 3,369 Increase in inventories............................. (5,144) (2,563) Decrease (increase) in prepaid expenses............. 266 (4,737) Decrease in accounts payable........................ (10,650) (17,384) Increase in other liabilities....................... 9,807 12,728 -------- -------- Cash flows provided by operations................ 95,382 86,819 -------- -------- Cash flows from investing activities: Additions to property and equipment................. (77,156) (81,939) Dispositions of property and equipment.............. 3,286 4,776 Increase in trading area rights..................... (2,541) (1,910) Increase in other assets............................ (3,665) (2,665) Increase in assets held for sale.................... (10,719) (2,777) --------- -------- Cash flows used in investing activities.......... (90,795) (84,515) --------- -------- Cash flows from financing activities: Borrowings under revolving bank loans............... 338,000 256,500 Principal repayments under revolving bank loans..... (341,000) (267,000) Proceeds from issuance of long-term debt............ 825 3,375 Principal payments on long-term debt, including current maturities............................... (1,385) (2,308) Repurchase of common stock.......................... (5,797) - Proceeds from issuance of common stock.............. 1,116 2,407 --------- -------- Cash flows used in financing activities.......... (8,241) (7,026) --------- -------- Net decrease in cash and cash equivalents............... $ (3,654) $ (4,722) ========= ======== See accompanying notes to consolidated 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 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. 3. 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 Company-operated restaurants by October 2005. The Company has begun to make modifications to its restaurants to improve accessibility and anticipates investing an estimated $24 million in capital improvements in connection with these modifications, including approximately $11 million spent through July 9, 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. A settlement agreement has been reached which provides for injunctive relief requiring franchisees to bring their franchised restaurants into compliance with the ADA and requiring payment by the Company of monitoring expenses to ensure compliance and attorney's fees. 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. 5 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 fiscal years 2000 and 1999 refer to the 12-week and 40-week periods ended July 9, 2000 and July 4, 1999, respectively, unless otherwise indicated. Restaurant sales increased $40.6 million and $148.2 million, respectively, to $364.3 million and $1,160.0 million in 2000 from $323.7 million and $1,011.8 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 for the 40-week period increased 11.0% to 1,228 in 2000 from 1,106 restaurants in 1999. PSA sales for comparable Company-operated restaurants, those open more than one year, grew 2.6% and 3.9%, respectively, in the 12-week and 40-week periods of 2000 compared with the same periods in 1999. Sales growth resulted from increases in the average transaction amounts of 2.3% and 2.0% in the respective 2000 periods and the remainder from higher average number of transactions. 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 $5.4 million and $15.1 million, respectively, to $14.6 million and $43.5 million in 2000 from $9.2 million and $28.4 million in 1999, primarily due to an increase in other sales at fuel and convenience stores to $7.0 million and $20.8 million in 2000 from $2.0 million and $5.6 million in 1999. At July 9, 2000, the Company had seven fuel and convenience store locations compared with two a year ago. Franchise rents and royalties increased $.6 million and $2.0 million, respectively, to $9.7 million and $31.7 million in 2000 from $9.1 million and $29.7 million in 1999, which represent slightly over 10.5% of franchise restaurant sales in 2000 and a slightly lower percentage in 1999. Franchise restaurant sales grew to $91.1 million and $301.1 million, respectively, in 2000 from $88.3 million and $286.2 million in 1999, benefiting from the Company's strategic initiatives described above. Other revenues, primarily franchise fees and interest income from investments and notes receivable, increased to $1.7 million and $2.4 million, respectively, in 2000 from $.5 million and $1.7 million in 1999. The increase is principally due to $1.2 million received in the quarter for additional franchise fees from refranchising 13 restaurants and fees that franchisees paid to extend the term of their franchises for three years. 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 $111.6 million and $359.7 million in 2000 from $100.1 million and $320.9 million in 1999. As a percent of restaurant sales, costs of sales declined to 30.6% and 31.0%, respectively, in 2000 from 30.9% and 31.7% in 1999, primarily due to lower ingredient costs, especially dairy, shortening and bakery, partially offset by higher beef and pork costs. Restaurant operating costs increased to $177.6 million and $569.2 million, respectively, in 2000 from $156.8 million and $491.4 million in 1999, excluding an unusual adjustment. In the second quarter of 1999, the Company reduced accrued expenses and restaurant operating costs by $18.0 million, primarily due to a change in estimates resulting from improvements to its loss prevention and risk management programs, which have been more successful than anticipated. As a percent of restaurant sales, operating costs increased to 48.7% and 49.1%, respectively, in 2000 from 48.4% and 48.6% in 1999 excluding the unusual adjustment, reflecting cost increases related to initiatives described above which are designed to improve the overall guest experience and slightly higher percentages of labor-related expenses. Costs of distribution and other sales increased to $14.3 million and $42.7 million, respectively, in 2000 from $9.0 million and $27.9 million in 1999, reflecting an increase in the related sales. As a percent of distribution and other sales, these costs were 98.1% and 98.2%, respectively, in 2000 compared to 98.5% and 98.4% a year ago. 6 Franchised restaurant costs, which consist principally of rents and depreciation on properties leased to franchisees and other miscellaneous costs, declined to $4.6 million and $15.4 million, respectively, in 2000 from $5.0 million and $17.9 million in 1999, primarily due to lower franchise-related legal expenses. Selling, general and administrative costs increased to $43.0 million and $139.1 million, respectively, in 2000 from $37.6 million and $117.4 million in 1999. Advertising and promotion costs increased to $18.6 million and $59.1 million, respectively, in 2000 from $16.6 million and $52.0 million in 1999, slightly over 5% of restaurant sales in all periods. General, administrative and other costs were 6.3% and 6.5% of revenues, respectively, in 2000 compared to 6.1% of revenues in both periods of 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 $.2 million and $1.4 million, respectively, to $6.1 million and $20.4 million in 2000 from $6.3 million and $21.8 million in 1999, reflecting a reduction in total average debt 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. In 2000, net earnings were $20.8 million, or $.53 per diluted share, in the 12-week period and $57.3 million, or $1.46 per diluted share, in the 40-week period. In 1999, net earnings were $17.4 million, or $.44 per diluted share, in the 12-week period and $58.1 million, or $1.48 per diluted share, in the 40-week period. Excluding the unusual adjustment to restaurant operating costs and related tax effects, net earnings in 1999 were $46.8 million, or $1.19 per diluted share, in the 40-week period. Net earnings increased 19.7% and 22.5%, respectively, in 2000 compared to the same periods in 1999, excluding this unusual item, reflecting the impact of sales growth and improved margins. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents decreased slightly to $7.3 million at July 9, 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 $22.6 million to $109.2 million at July 9, 2000 from $131.8 million at October 3, 1999, primarily due to an increase in assets held for sale and 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 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 July 9, 2000, the Company had borrowings of $83.0 million and approximately $83.0 million of availability under the agreement. Total debt outstanding decreased slightly to $301.9 million at July 9, 2000 from $305.2 million at the beginning of the fiscal year. 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 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. 7 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. The Company is subject to normal and routine litigation. 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 July 9, 2000, the Company had acquired 305,800 shares under this authorization for an aggregate cost of $5.8 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 July 9, 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 July 9, 2000, the Company's applicable margin was set at .625%. During the third quarter of fiscal year 2000, the average interest rate on the credit facility was 7.0%. At July 9, 2000, a hypothetical one percentage point increase in short-term interest rates would result in a reduction of $.6 million in annual pre-tax earnings. The estimated reduction is based on holding the unhedged portion of bank debt at its July 9, 2000 level. At July 9, 2000, the Company had no other material financial instruments subject to significant market exposure. 8 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 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. Multi-unit food service businesses such as JACK IN THE BOX restaurants can be materially and adversely affected by publicity about allegations of poor food quality, foreign objects in food, illness, injury or other health concerns with respect to the nutritional value of certain foods. The deregulation of utilities and power shortages or interruptions may adversely affect the profitability of businesses, including the Company's business in the areas in which they occur. 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, as amended, is effective for the Company's first quarter in the fiscal year ending September 30, 2001. Management has not yet addressed the effect of this standard on the Company's current reporting and disclosures. 9 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 3 to the Unaudited Consolidated Financial Statements. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits Number Description 10.1 Fifth Amendment dated as of May 3, 2000 to the Revolving Credit Agreement dated as of April 1, 1998 by and between Jack in the Box Inc. and the Banks named therein. 27 Financial Data Schedule (included only with electronic filing) (b) Reports on Form 8-K - None 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: August 21, 2000 EX-10.1 2 0002.txt FIFTH AMENDMENT TO BANK CREDIT AGREEMENT FIFTH AMENDMENT Dated as of May 3, 2000 This FIFTH 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, the Third Amendment, dated as of September 17, 1999, and the Fourth Amendment, dated as of December 6, 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 Section 6.02 of the Credit Agreement to permit the Borrower to provide short-term financing to certain franchise purchasers for the acquisition by such purchasers of certain Jack In The Box franchises and (ii) amend Section 6.02(o) of the Credit Agreement with respect to the restrictions relating to Qualifying Subsidiaries. 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 6.02 of the Credit Agreement is hereby amended by deleting the word "and" as it appears immediately following clause (xi) of Section 6.02(f), by deleting the period as it appears immediately following clause (xii) of Section 6.02(f) and substituting in lieu thereof the phrase "; and", and by adding immediately following clause (xii) of Section 6.02(f) the following new clause (xiii): "(xiii) an Investment consisting of secured promissory notes payable by certain franchise purchasers to the Borrower on or before July 31, 2000 in an aggregate amount for all such notes at any one time outstanding not to exceed $17,500,000 in order to finance, in whole or in part, the acquisition by such purchasers from the Borrower of thirteen Jack In The Box franchises; provided that such promissory notes are paid in full in immediately available funds on or before August 31, 2000." 1 (b) Section 6.02 of the Credit Agreement is hereby amended by deleting Section 6.02(o) in its entirety and substituting in lieu 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 (x) 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, and (y) Debt incurred by a Qualifying Subsidiary in the ordinary course of business to states that require domestic corporations to hold alcohol licenses in respect of license fees payable by such Qualifying Subsidiary relating to alcohol licenses held by such Qualifying Subsidiary in an aggregate amount not to exceed $15,000 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 $25,000 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 $25,000 in the aggregate for any Qualifying Subsidiary); or (v) create more than 40 Qualifying Subsidiaries." 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 listed therein (such Guarantors, 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. 2 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. 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. 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. (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. 3 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 FIFTH AMENDMENT IN WITNESS WHEREOF, the parties hereto have caused this Fifth 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 NEW YORK BRANCH By: ROBERT J. IVOSEVICH ------------------------------- Name: Robert J. Ivosevich Title: Senior Vice President ROYAL BANK OF CANADA By: ------------------------------- Name: Title: UNION BANK OF CALIFORNIA, N.A. By: LINDA WALKER ------------------------------ Name: Linda Walker Title: Vice President S-1 thru S-6 U.S. BANK NATIONAL ASSOCIATION By: ------------------------------ Name: Title: BANK ONE, TEXAS, N.A. By: JOSEPH PERDENZA ------------------------------ Name: Joseph Perdenza Title: Assistant Vice President CIBC INC. By: STEPHANIE E. DeVANE ------------------------------ Name: Stephanie E. DeVane Title: Executive Director CIBC World Markets Corp., As Agent MORGAN GUARANTY TRUST CO. By: DENNIS WILCZEK ------------------------------ Name: Dennis Wilczek Title: Associate SANWA BANK CALIFORNIA By: LYNN MYERNICK ------------------------------ Name: Lynn Myernick Title: Assistant Vice President NATEXIS BANQUE - BFCE By: GARY KANIA ------------------------------ Name: Gary Kania Title: Vice President By: FRANK H. MADDEN, JR. ------------------------------ Name: Frank H. Madden, Jr. Title: Vice President & Group Manager S-7 thru S-12 FIFTH AMENDMENT CONSENT Dated as of May 3, 2000 The undersigned, as Guarantors under the "Guaranty" (as such terms are defined in and under the Credit Agreement referred to in the foregoing Fifth Amendment), each hereby consents and agrees to the foregoing Fifth Amendment and hereby confirms and agrees that the Guaranty is, and shall continue to be, in full force and effect and is hereby ratified and confirmed in all respects except that, upon the effectiveness of, and on and after the date of, said Fifth Amendment, each reference in the Guaranty 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 Fifth Amendment. 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 --------------------------------- Name: Harold L. Sachs Title: Treasurer 7 EX-27 3 0003.txt FDS FOR FISCAL YEAR 2000 THIRD QUARTER 10-Q
5 FISCAL YEAR THRU THIRD QUARTER CONTAINS 40 WEEKS 1000 9-MOS OCT-01-2000 OCT-04-1999 JUL-09-2000 7,268 0 11,308 1,552 25,303 110,683 923,950 280,502 883,295 219,903 299,918 414 0 0 270,027 883,295 1,203,497 1,237,612 402,440 987,109 0 0 20,424 90,985 33,700 57,285 0 0 0 57,285 1.50 1.46
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