GENERAL
All comparisons between 2013 and 2012 refer to the 16-week ("quarter") periods ended January 20, 2013 and January 22, 2012, respectively, unless otherwise indicated.
For an understanding of the significant factors that influenced our performance during the quarterly periods ended January 20, 2013 and January 22, 2012, 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 September 30, 2012.
Our MD&A consists of the following sections:
• Overview - a general description of our business and fiscal 2013 highlights.

• Financial reporting - a discussion of changes in presentation.

• 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 the 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 20, 2013, we operated and franchised 2,255 Jack in the Box quick-service restaurants, primarily in the western and southern United States, and 636 Qdoba Mexican Grill ("Qdoba") fast-casual restaurants primarily throughout the United States and including one in Canada.
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 and franchise fees. Historically, we also generated revenue from distribution sales of food and packaging commodities to franchisees; however this function has been outsourced, and franchisees who previously utilized our distribution services now purchase product directly from our distribution service providers or other approved suppliers. In addition, we recognize gains from the sale of company-operated restaurants to franchisees. These gains 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 2013 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 20,      January 22,
                     2013             2012
Jack in the Box:
Company               2.1 %              5.3 %
Franchise             1.8 %              2.8 %
System                1.9 %              3.6 %
Qdoba:
Company               1.5 %              3.5 %
Franchise             0.5 %              4.0 %
System                1.0 %              3.8 %

• Commodity Costs - In the quarter, Jack in the Box commodity costs decreased approximately 0.3% compared to a year ago, while Qdoba commodity costs increased approximately 1.0%. We expect our overall commodity costs to increase approximately 2%-3% in fiscal 2013 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, nine Jack in the Box locations and 17 Qdoba locations were opened system-wide.

• Franchising Program - Qdoba and Jack in the Box franchisees opened a total of 20 restaurants year-to-date. Our Jack in the Box system was approximately 76% franchised at the end of the first quarter and we plan to ultimately increase franchise ownership to approximately 80%.

• Credit Facility - In November 2012, we entered into a new credit agreement consisting of a $400.0 million revolving credit facility and a $200.0 million term loan, both with a five-year maturity.

• Distribution Outsourcing - During the first quarter of 2013, we completed the outsourcing of our Jack in the Box distribution business. As a result, we recorded after-tax charges totaling $3.3 million, or $0.07 per diluted share, which is presented as discontinued operations.

• Share Repurchases - Pursuant to a share repurchase program authorized by our Board of Directors, we repurchased approximately 1.0 million shares of our common stock at an average price of $27.29 per share during the quarter, including the cost of brokerage fees.