Jack in the Box Inc. Reports Third Quarter 2008 Earnings; Updates FY 2008 Earnings...

Jack in the Box Inc. Reports Third Quarter 2008 Earnings; Updates FY 2008 Earnings Guidance

SAN DIEGO--(Business Wire)--
Jack in the Box Inc. (NYSE: JBX) today reported net income of
$29.9 million, or 51 cents per diluted share, for the quarter ended
July 6, 2008. This compared to $34.5 million, or 54 cents per diluted
share, for the same quarter in 2007, which included a benefit of
approximately 4 cents per diluted share due primarily to an insurance
recovery. Diluted per-share earnings for the first three quarters of
fiscal 2008 increased to $1.54 versus $1.44 for the same period in
fiscal 2007.

Third quarter financial highlights

Same-store sales at Jack in the Box(R) company restaurants
decreased 0.4 percent in the third quarter compared with a year-ago
increase of 7.4 percent. Through the first three quarters of fiscal
2008, same-store sales at Jack in the Box company restaurants were up
0.4 percent on top of a prior-year increase of 6.4 percent. The
year-to-date increase in fiscal 2008 reflects price increases of
approximately 2.5 percent at company restaurants.

"Our Real Fruit Smoothies, which we began rolling out in April,
have been very popular with guests and helped Jack in the Box improve
upon the 2 percent same-store sales decrease we forecast in mid-May
for the quarter," said Linda A. Lang, chairman and chief executive
officer. "Same-store sales on a two-year cumulative basis remained
strong and were up 7.0 percent at company Jack in the Box restaurants
for the third quarter, which improved upon our 6.3 percent two-year
cumulative increase in the second quarter. Although same-store sales
in California, Phoenix and Las Vegas remained negative during the
quarter, results were better on both a one-year and two-year
cumulative basis as compared to the second quarter."

System same-store sales at Qdoba Mexican Grill(R) increased 0.5
percent in the third quarter, within the range forecast in mid-May, on
top of a year-ago increase of 5.0 percent. Through the first three
quarters of fiscal 2008, system same-store sales at Qdoba were up 2.5
percent on top of a prior-year increase of 4.2 percent.

The company's restaurant operating margin was 16.7 percent of
sales in the third quarter of 2008, which was consistent with
management's internal expectations and compared with 17.4 percent in
last year's third quarter. The decrease versus the year-ago margin was
attributable to higher costs for food and utilities, which were
partially offset by lower labor costs. Food and packaging costs were
50 basis points higher than the same quarter last year. Commodity
costs continued to run significantly higher than last year for cheese,
eggs and shortening. Beef costs were up approximately 1 percent
compared with the same quarter a year ago. Utilities were 40 basis
points higher as compared to last year. Effective labor management
drove a 30 basis point reduction in labor costs.

The company's SG&A expense rate in the third quarter was 9.2
percent of revenues compared with 9.1 percent last year, with the
slight increase due primarily to the previously mentioned insurance
recovery recognized in the 2007 quarter. Facility charges were
approximately $2.0 million (30 basis points) higher in the third
quarter of fiscal 2008 due primarily to the Jack in the Box re-image
program and kitchen enhancement project. Year to date, the company's
SG&A expense rate improved to 9.6 percent of revenues from 10.1
percent in fiscal 2007, with the improvement due primarily to lower
field and corporate G&A and the impact of the company's refranchising
strategy. Year to date, facility charges were $3.3 million higher than
for the same period a year ago.

Gains on sale of 17 company-operated Jack in the Box restaurants
to franchisees totaled $15.2 million in the third quarter compared
with $12.3 million in the year-ago quarter from the sale of 22
restaurants. The refranchised restaurants were all located in
California, which, in general, have higher average unit volumes.
Through the first three quarters of the year, the company has sold 68
Jack in the Box restaurants to franchisees, with gains on sale
totaling $43.2 million versus $26.2 million in gains on sale of 52
company restaurants in the first three quarters of fiscal 2007.

"Through the first three quarters of fiscal 2008, we've sold 30
percent more restaurants than a year ago and are on track with our
long-term goal to increase the percentage of franchise ownership in
the Jack in the Box system to 70-80 percent, which should create a
business model that is less capital intensive and not as susceptible
to cost fluctuations," Lang said.

Third quarter results and historical data in this news release
reflect the impact of a recent accounting change in which the company
will write off a portion of goodwill as company restaurants are sold
to franchisees. The change reduced gains on sale of restaurants by
$391,000 for the third quarter, or less than 1 cent per diluted share,
and $1.2 million, or approximately 1 cent per diluted share for the
first three quarters of fiscal 2008. Gains on sale of restaurants for
fiscal 2007 were reduced by $356,000 in the third quarter and $798,000
(or approximately 1 cent per diluted share) for the first three
quarters of that year. These adjustments are non-cash and had no
impact on total cash flows.

The tax rate for the third quarter was 38.9 percent compared with
35.2 percent in the prior year, which represents an impact of
approximately 3 cents per diluted share. The higher tax rate was
attributable to market performance of insurance investment products
used to fund certain non-qualified retirement plans. Changes in the
cash value of the insurance products are not deductible or taxable.

Capital expenditures through the first three quarters of fiscal
2008 were $113.0 million compared with $107.0 million for the same
period last year, with the increase due primarily to investment in
kitchen enhancements and the Jack in the Box restaurant re-image
program. The kitchen enhancements are expected to increase restaurant
capacity for new product introductions while also reducing utility
expense through the use of energy-efficient equipment. The re-image
program is part of the chain's brand-reinvention initiative and is
intended to create a warm and inviting dining experience for Jack in
the Box guests.

In the third quarter, the company repurchased 2.1 million shares
of its common stock at an average per-share price of $23.89 for an
aggregate cost of approximately $50 million. For the 40-week period
ended July 6, the company has repurchased approximately 3.9 million
shares of its common stock at an average per-share price of $25.31 for
an aggregate cost of approximately $100 million. Approximately $100
million remains available for additional repurchases in a three-year
stock-buyback program authorized by the company's board of directors
in November 2007.

Restaurant openings and new market expansion

Seven new company and franchised Jack in the Box restaurants
opened in the third quarter compared with 10 last year. Franchisees
continued expanding the Jack in the Box brand into new contiguous
markets in Texas during the third quarter.

Including the addition of a restaurant in the new market of
Eugene, Ore., Qdoba opened 18 company and franchised restaurants in
the third quarter, the same as last year.

At July 6, the company's system total comprised 2,148 Jack in the
Box restaurants, including 770 franchised locations, and 438 Qdoba
restaurants, including 339 franchised locations.

Third quarter initiatives

Early in the third quarter, Jack in the Box launched a new premium
beverage platform - Real Fruit Smoothies. Made with real fruit, Minute
Maid(R) fruit juice and nonfat frozen yogurt, Jack's Real Fruit
Smoothies come in three flavors - Strawberry Banana, Mango and Orange
Sunrise. The new beverages are now available systemwide.

In April, Jack in the Box expanded its line of entree salads by
re-introducing the Acapulco Chicken Salad, which features a mix of
fresh lettuce topped with shredded pepper jack cheese, grape tomatoes,
cucumber slices, red onion and lime wedges served with blue corn
tortilla strips and cilantro lime dressing on the side. The salad is
served with a choice of chicken - grilled chicken strips, crispy
chicken strips or Spicy Chicken Bites.

Iced Coffees debuted in May at most Jack in the Box restaurants,
as the chain expanded its coffee beverage platform. Jack's version of
the popular drink offers a choice of original, vanilla or caramel
flavors. Also in May, Jack in the Box expanded its line of real ice
cream shakes by adding a Kona Coffee flavor.

On June 26, Jack in the Box held a systemwide promotion that
addressed the impact of rising fuel prices on consumer spending. For
the entire day, guests received two free tacos in exchange for a
receipt from a gas station. The event was very popular among guests,
increasing traffic at restaurants and prompting trial of other
products while generating extensive media coverage for the chain.

Along with the menu enhancements, the company continues to make
progress in its strategic initiative to reinvent the Jack in the Box
brand through improvements to guest service and restaurant facilities.
During the third quarter, the company and franchisees continued
re-imaging Jack in the Box restaurants with a comprehensive program
that includes a redesign of the dining room and common areas. Finishes
include ceramic tile floors, a mix of seating styles ranging from
booths and bars to high-top round tables, decorative pendant lighting,
graphics and wall collages, music, new paint schemes and landscaping.
Through the first three quarters of fiscal 2008, the company and its
franchisees re-imaged 250 restaurants, including 120 restaurants in
the third quarter. Since the current re-image program was adopted in
2006, more than 620 company and franchised Jack in the Box
restaurants, representing approximately 29 percent of the system, have
been re-imaged. The entire Jack in the Box system, including
franchised locations, is expected to be re-imaged over the next 3-4
years.

Fourth quarter initiatives

In July, Jack in the Box expanded its value menu offerings with a
Nacho Cheese Burger and Nacho Cheese Chicken Sandwich, which feature a
choice of a beef or chicken patty topped with cheddar cheese sauce and
spicy, sliced jalapenos.

"Enhancing our value menu with compelling new products like our
Nacho Cheese Burger and Nacho Cheese Chicken Sandwich is especially
important these days as economic pressures impact discretionary
consumer spending," Lang said. "All of the products on our value menu,
including the new items, are engineered to provide great value to our
guests without negatively impacting our restaurant margins."

Also in July, Jack in the Box added a new side item, Cheesy
Macaroni Bites, which feature wedges of macaroni noodles and real
Kraft(R) cheese enveloped in a crunchy tempura-style coating.
Available in either three- or six-piece orders, Cheesy Macaroni Bites
are easy to eat on the go.

Next week, Jack in the Box will expand its line of breakfast
products with a new product platform: Breakfast Bowls. Two versions
will initially be offered, both including a blend of hash brown
sticks, scrambled eggs, white cheddar cheese sauce, shredded cheddar
cheese and seasoning, with the Hearty Breakfast Bowl also including
bacon and sausage, and the Denver Breakfast Bowl including sliced ham,
and red and green peppers.

Later this month, Jack in the Box will launch another new product
platform when it begins rolling out Pita Snacks. Initially, this new
product line will feature three varieties, each featuring a whole
grain pita stuffed with shredded cheddar cheese, shredded lettuce, a
smoky chipotle sauce and choice of grilled or crispy chicken fillet,
strips of marinated sirloin steak or a fish fillet.

Fiscal 2008 guidance

The following guidance and underlying assumptions reflect the
company's current expectations for the fourth quarter and fiscal year
ending Sept. 28, 2008, in approximate amounts:

Q4 guidance

-- Approximately flat same-store sales at Jack in the Box company
restaurants on top of a 5.2 percent increase in the year-ago
quarter.

-- Flat to 1 percent same-store sales increase at Qdoba system
restaurants on top of a 5.8 percent increase in the year-ago
quarter.

Fiscal year 2008 guidance

-- $2.01-2.05 per diluted share in earnings.

-- Flat to 1 percent increase in same-store sales at Jack in the
Box company restaurants on top of a 6.1 percent increase in
fiscal 2007.

-- 1 to 2 percent increase in same-store sales at Qdoba system
restaurants on top of a 4.6 percent increase in fiscal 2007.

-- 35-45 new Jack in the Box restaurants, including 13-17
franchised locations.

-- 75-85 new Qdoba restaurants, including 55-65 franchised
locations.

-- $55-60 million in gains on the sale of approximately 100 Jack
in the Box restaurants to franchisees, with $70-75 million in
cash flow resulting from the sales.

-- Approximately 350 re-imaged Jack in the Box restaurants,
including approximately 100 franchised locations.

-- $175-180 million in capital expenditures, including investment
costs related to the Jack in the Box restaurant re-image
program and kitchen enhancements.

-- SG&A expense in the high 9 percent range.

-- Tax rate of approximately 37 percent.

Long-term goals (3-5 years)

-- Earnings growth of 12-15 percent per year, with continued
focus on improving returns on invested capital.

-- Same-store sales growth of 2-4 percent annually at Jack in the
Box restaurants.

-- Same-store sales growth of 3-5 percent annually at Qdoba
restaurants.

-- Sale of approximately 110-130 Jack in the Box restaurants to
franchisees annually, generating gains of $45-60 million per
year, with approximately $65-80 million in cash flow resulting
from the sales.

-- Capital expenditures are estimated to decrease by
approximately $10-20 million per year until 2010 or 2011 when
the company completes the restaurant re-image program, at
which time annual capital expenditures are expected to return
to historical levels of approximately $125 million or less.
The company's long-term outlook for capital expenditures could
be impacted by an increase in Qdoba's company-operated new
restaurant growth.

Conference Call

The company will host a conference call for financial analysts and
investors on Wednesday, Aug. 6, 2008, beginning at 8:30 a.m. PDT
(11:30 a.m. EDT). The conference call will be broadcast live over the
Internet via the Jack in the Box website. To access the live call
through the Internet, log onto the Jack in the Box Inc. home page at
www.jackinthebox.com at least 15 minutes prior to the event in order
to download and install any necessary audio software. A replay of the
call will be available through the conference-call link on the Jack in
the Box Inc. home page for 21 days, beginning at approximately 11:00
a.m. PDT on Aug. 6.

About Jack in the Box Inc.

Jack in the Box Inc. (NYSE: JBX), based in San Diego, is a
restaurant company that operates and franchises Jack in the Box(R)
restaurants, one of the nation's largest hamburger chains, with more
than 2,100 restaurants in 18 states. Additionally, through a wholly
owned subsidiary, the company operates and franchises Qdoba Mexican
Grill(R), a leader in fast-casual dining, with more than 400
restaurants in 40 states. The company also operates a proprietary
chain of convenience stores called Quick Stuff(R), with 61 locations,
each built adjacent to a full-size Jack in the Box restaurant and
including a major-brand fuel station. For more information, visit
www.jackinthebox.com.

Safe harbor statement

This press release contains forward-looking statements within the
meaning of the federal securities laws. Such statements are subject to
substantial risks and uncertainties. A variety of factors could cause
the company's actual results to differ materially from those expressed
in the forward-looking statements. These factors are discussed in the
company's annual report on Form 10-K and its periodic reports on Form
10-Q filed with the Securities Exchange Commission which are available
online at www.jackinthebox.com or in hard copy upon request. The
company undertakes no obligation to update or revise any
forward-looking statement, whether as the result of new information or
otherwise.

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JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)

Twelve Weeks Ended Forty Weeks Ended
-------------------------------------------
July 6, July 8, July 6, July 8,
2008 2007 2008 2007
---------------------------------------------- -----------------------

Revenues:
Restaurant sales $489,223 $503,080 $1,627,748 $1,654,933
Distribution and other
sales 183,020 143,972 558,482 437,529
Franchised restaurant
revenues 37,260 33,151 121,729 105,100
--------- --------- ----------- -----------
709,503 680,203 2,307,959 2,197,562
--------- --------- ----------- -----------
Operating costs and
expenses:
Restaurant costs of
sales 162,658 164,665 537,392 522,731
Restaurant operating
costs 245,039 250,705 817,341 833,358
Distribution and other
costs of sales 181,470 142,329 555,533 433,483
Franchised restaurant
costs 15,310 13,201 49,150 42,544
Selling, general and
administrative
expenses 65,351 62,170 221,710 221,074
Gains on the sale of
company-operated
restaurants (15,247) (12,282) (43,225) (26,241)
--------- --------- ----------- -----------
654,581 620,788 2,137,901 2,026,949
--------- --------- ----------- -----------

Earnings from operations 54,922 59,415 170,058 170,613

Interest expense 6,050 7,129 21,920 25,244
Interest income (77) (1,030) (370) (8,370)
--------- --------- ----------- -----------
Interest expense, net 5,973 6,099 21,550 16,874

Earnings before income tax
expense 48,949 53,316 148,508 153,739

Income tax expense 19,033 18,792 56,103 54,924
--------- --------- ----------- -----------

Net earnings $ 29,916 $ 34,524 $ 92,405 $ 98,815
========= ========= =========== ===========

Net earnings per share:
Basic $ 0.52 $ 0.55 $ 1.57 $ 1.48
Diluted $ 0.51 $ 0.54 $ 1.54 $ 1.44

Weighted-average shares
outstanding:
Basic 57,746 62,359 58,785 66,656
Diluted 58,767 64,054 59,963 68,534

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

July 6, September 30,
2008 2007
----------------------------------------------------------------------

ASSETS
Current assets:
Cash and cash equivalents $ 14,470 $ 15,702
Accounts and other receivables, net 56,036 41,091
Inventories 52,404 46,933
Prepaid expenses 27,393 29,311
Deferred income taxes 47,063 47,063
Assets held for sale and leaseback 52,896 42,583
Other current assets 8,150 5,383
----------- -------------
Total current assets 258,412 228,066
----------- -------------

Property and equipment, at cost 1,629,871 1,586,577
Less accumulated depreciation and
amortization (669,160) (634,409)
----------- -------------
Property and equipment, net 960,711 952,168

Other assets, net 201,779 194,456
----------- -------------
$1,420,902 $1,374,690
=========== =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Current maturities of long-term debt $ 2,959 $ 5,787
Accounts payable 76,263 97,489
Accrued liabilities 219,078 223,540
----------- -------------
Total current liabilities 298,300 326,816
----------- -------------

Long-term debt, net of current maturities 495,489 427,516

Other long-term liabilities 168,207 168,722

Deferred income taxes 38,989 42,051

Stockholders' equity:
Preferred stock $.01 par value, 15,000,000
authorized, none issued - -
Common stock $.01 par value, 175,000,000
authorized, 73,427,093 and 72,515,171
issued, respectively 734 725
Capital in excess of par value 151,576 132,081
Retained earnings 768,783 676,378
Accumulated other comprehensive loss, net (26,717) (25,140)
Treasury stock, at cost, 16,726,032 and
12,779,609 shares, respectively (474,459) (374,459)
----------- -------------
Total stockholders' equity 419,917 409,585
----------- -------------
$1,420,902 $1,374,690
=========== =============
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Jack in the Box Inc.
Investor Contact:
Carol DiRaimo, 858-571-2407
or
Media Contact:
Brian Luscomb, 858-571-2291

Copyright Business Wire 2008