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
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Commission file no. 1-9390
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JACK IN THE BOX INC.
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(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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (858) 571-2121
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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.
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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.
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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
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476,806 407,134
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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
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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.
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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.
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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
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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
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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.
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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.
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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
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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
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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.
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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
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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
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
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<ARTICLE> 5
<LEGEND>
FISCAL YEAR THRU FIRST QUARTER CONTAINS 16 WEEKS
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-01-2000
<PERIOD-START> OCT-04-1999
<PERIOD-END> JAN-23-2000
<CASH> 7,480
<SECURITIES> 0
<RECEIVABLES> 7,470
<ALLOWANCES> 1,888
<INVENTORY> 22,780
<CURRENT-ASSETS> 94,274
<PP&E> 878,322
<DEPRECIATION> (262,700)
<TOTAL-ASSETS> 839,325
<CURRENT-LIABILITIES> 187,897
<BONDS> 327,693
<COMMON> 411
0
0
<OTHER-SE> 235,579
<TOTAL-LIABILITY-AND-EQUITY> 839,325
<SALES> 463,754
<TOTAL-REVENUES> 476,806
<CGS> 155,320
<TOTAL-COSTS> 382,696
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,285
<INCOME-PRETAX> 32,292
<INCOME-TAX> 11,900
<INCOME-CONTINUING> 20,392
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,392
<EPS-BASIC> 0.53
<EPS-DILUTED> 0.52
</TABLE>
