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JACK > SEC Filings for JACK > Form 10-Q on 23-Feb-2012All Recent SEC Filings

Show all filings for JACK IN THE BOX INC /NEW/

Form 10-Q for JACK IN THE BOX INC /NEW/


23-Feb-2012

Quarterly Report


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

All comparisons between 2012 and 2011 refer to the 16-week ("quarter") periods ended January 22, 2012 and January 23, 2011, respectively, unless otherwise indicated.

For an understanding of the significant factors that influenced our performance during the quarterly periods ended January 22, 2012 and January 23, 2011, our Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the Condensed Consolidated Financial Statements and related Notes included in this Quarterly Report and our Annual Report on Form 10-K for the fiscal year ended October 2, 2011.

Our MD&A consists of the following sections:

Overview - a general description of our business and fiscal 2012 highlights.

Results of operations - an analysis of our consolidated statements of earnings for the periods presented in our condensed consolidated financial statements.

Liquidity and capital resources - an analysis of our cash flows including capital expenditures, share repurchase activity, known trends that may impact liquidity and the impact of inflation.

Discussion of critical accounting estimates - a discussion of accounting policies that require critical judgments and estimates.

New accounting pronouncements - a discussion of new accounting pronouncements, dates of implementation and impact on our consolidated financial position or results of operations, if any.

Cautionary statements regarding forward-looking statements - a discussion of the risks and uncertainties that may cause our actual results to differ materially from any forward-looking statements made by management.

OVERVIEW

As of January 22, 2012, we operated and franchised 2,236 Jack in the Box quick-service restaurants ("QSR"), primarily in the western and southern United States, and 597 Qdoba Mexican Grill ("Qdoba") fast-casual restaurants throughout the United States.

Our primary source of revenue is from retail sales at Jack in the Box and Qdoba company-operated restaurants. We also derive revenue from Jack in the Box and Qdoba franchise restaurants, including royalties (based upon a percent of sales), rents, franchise fees and distribution sales of food and packaging commodities. In addition, we recognize gains from the sale of company-operated restaurants to franchisees, which are presented as a reduction of operating costs and expenses, net in the accompanying condensed consolidated statements of earnings.

The following summarizes the most significant events occurring in fiscal 2012 and certain trends compared to a year ago:

Restaurant Sales - Sales at restaurants open more than one year ("same-store sales") increased as follows:

                                          Sixteen Weeks Ended
                                   January 22,           January 23,
                                      2012                  2011
               Jack in the Box:
               Company                      5.3 %                 1.5 %
               Franchise                    2.8 %                 0.9 %
               System                       3.6 %                 1.1 %
               Qdoba:
               Company                      3.5 %                 5.8 %
               Franchise                    4.0 %                 6.6 %
               System                       3.8 %                 6.4 %



Commodity Costs - Pressures from higher commodity costs continue to impact our business. Overall commodity costs at our Jack in the Box and Qdoba restaurants increased approximately 7.0% and 13.2%, respectively, in the quarter compared to a year ago.

New Unit Development - We continued to grow our brands with the opening of new company-operated and franchise-operated restaurants. During the quarter, we opened 16 Jack in the Box locations and 15 Qdoba locations system-wide.

Franchising Program - Qdoba and Jack in the Box franchisees opened a total of 20 restaurants during the quarter. Our Jack in the Box system was approximately 72% franchised at the end of the first quarter and we plan to further increase franchise ownership to approximately 80% over the next couple of years.

RESULTS OF OPERATIONS

The following table presents certain income and expense items included in our condensed consolidated statements of earnings as a percentage of total revenues, unless otherwise indicated. Percentages may not add due to rounding.

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