Company Quick10K Filing
Jack In The Box
Price90.13 EPS4
Shares26 P/E25
MCap2,350 P/FCF14
Net Debt1,152 EBIT118
TEV3,502 TEV/EBIT30
TTM 2019-09-29, in MM, except price, ratios
10-Q 2020-04-12 Filed 2020-05-14
10-Q 2020-01-19 Filed 2020-02-20
10-K 2019-09-29 Filed 2019-11-21
10-Q 2019-07-07 Filed 2019-08-08
10-Q 2019-04-14 Filed 2019-05-16
10-Q 2019-01-20 Filed 2019-02-21
10-K 2018-09-30 Filed 2018-11-21
10-Q 2018-07-08 Filed 2018-08-09
10-Q 2018-04-15 Filed 2018-05-17
10-Q 2018-01-21 Filed 2018-02-23
10-K 2017-10-01 Filed 2017-11-30
10-Q 2017-07-09 Filed 2017-08-10
10-Q 2017-04-16 Filed 2017-05-17
10-Q 2017-01-22 Filed 2017-02-23
10-K 2016-10-02 Filed 2016-11-22
10-Q 2016-07-03 Filed 2016-08-04
10-Q 2016-04-10 Filed 2016-05-12
10-Q 2016-01-17 Filed 2016-02-18
10-K 2015-09-27 Filed 2015-11-19
10-Q 2015-07-05 Filed 2015-08-06
10-Q 2015-04-12 Filed 2015-05-14
10-Q 2015-01-18 Filed 2015-02-19
10-K 2014-09-28 Filed 2014-11-21
10-Q 2014-07-06 Filed 2014-08-07
10-Q 2014-04-13 Filed 2014-05-15
10-Q 2014-01-19 Filed 2014-02-20
10-K 2013-09-29 Filed 2013-11-22
10-Q 2013-07-07 Filed 2013-08-08
10-Q 2013-04-14 Filed 2013-05-16
10-Q 2013-01-20 Filed 2013-02-21
10-K 2012-09-30 Filed 2012-11-21
10-Q 2012-07-08 Filed 2012-08-10
10-Q 2012-04-15 Filed 2012-05-17
10-Q 2012-01-22 Filed 2012-02-23
10-K 2011-10-02 Filed 2011-11-23
10-Q 2011-07-10 Filed 2011-08-11
10-Q 2011-04-17 Filed 2011-05-19
10-Q 2011-01-23 Filed 2011-02-24
10-K 2010-10-03 Filed 2010-11-24
10-Q 2010-07-04 Filed 2010-08-05
10-Q 2010-04-11 Filed 2010-05-13
10-Q 2010-01-17 Filed 2010-02-18
8-K 2020-07-29 Regulation FD, Exhibits
8-K 2020-07-26 Officers, Exhibits
8-K 2020-06-10
8-K 2020-05-13
8-K 2020-05-06
8-K 2020-04-15
8-K 2020-04-15
8-K 2020-03-19
8-K 2020-02-28
8-K 2020-02-27
8-K 2020-02-19
8-K 2020-02-12
8-K 2019-12-11
8-K 2019-11-27
8-K 2019-11-20
8-K 2019-11-13
8-K 2019-09-26
8-K 2019-08-07
8-K 2019-07-31
8-K 2019-07-08
8-K 2019-06-28
8-K 2019-06-17
8-K 2019-06-11
8-K 2019-05-27
8-K 2019-05-15
8-K 2019-05-15
8-K 2019-05-08
8-K 2019-05-01
8-K 2019-04-25
8-K 2019-03-06
8-K 2019-03-01
8-K 2019-02-20
8-K 2019-02-13
8-K 2019-01-04
8-K 2018-12-17
8-K 2018-11-19
8-K 2018-11-08
8-K 2018-10-29
8-K 2018-10-25
8-K 2018-08-08
8-K 2018-08-01
8-K 2018-05-30
8-K 2018-05-16
8-K 2018-05-09
8-K 2018-03-21
8-K 2018-03-21
8-K 2018-03-01
8-K 2018-02-27
8-K 2018-02-21
8-K 2018-02-14
8-K 2018-01-23
8-K 2018-01-16
8-K 2018-01-02

JACK 10Q Quarterly Report

Part I. Financial Information
Item 1. Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults of Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-3.1 exfy20q231.htm
EX-3.2 exfy20q232.htm
EX-10.2.14 exfy20q210214.htm
EX-31.1 exfy20q2311.htm
EX-31.2 exfy20q2312.htm
EX-32.1 exfy20q2321.htm
EX-32.2 exfy20q2322.htm

Jack In The Box Earnings 2020-04-12

Balance SheetIncome StatementCash Flow
1.51.00.60.1-0.3-0.82012201420172020
Assets, Equity
0.50.40.30.10.0-0.12012201420172020
Rev, G Profit, Net Income
0.20.10.0-0.1-0.2-0.32012201420172020
Ops, Inv, Fin

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UNITED STATES
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 April 12, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from ________to________.
Commission File Number: 1-9390
jack-20200412_g1.jpg
____________________________________________________
JACK IN THE BOX INC.
(Exact name of registrant as specified in its charter)
 _______________________________________________________________________________________
Delaware95-2698708
(State of Incorporation)(I.R.S. Employer Identification No.)
9330 Balboa Avenue
San Diego, California 92123
(Address of principal executive offices)
Registrant’s telephone number, including area code (858571-2121
_______________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common StockJACKNASDAQ Global Select Market
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  þ    No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes  þ    No   ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerþSmaller reporting company
Accelerated filerEmerging growth company
Non-accelerated filer
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes      No  þ
As of the close of business May 8, 2020, 22,671,849 shares of the registrant’s common stock were outstanding.



JACK IN THE BOX INC. AND SUBSIDIARIES
INDEX
 
  Page
 PART I – FINANCIAL INFORMATION 
Item 1.
Condensed Consolidated Statements of Earnings
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Item 4.
PART II – OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.Defaults of Senior Securities
Item 4.
Item 5.
Item 6.

1


PART I. FINANCIAL INFORMATION
 
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
April 12,
2020
September 29,
2019
ASSETS
Current assets:
Cash$132,161  $125,536  
Restricted cash37,023  26,025  
Accounts and other receivables, net66,331  45,235  
Inventories1,821  1,776  
Prepaid expenses18,460  9,015  
Current assets held for sale6,186  16,823  
Other current assets3,970  2,718  
Total current assets265,952  227,128  
Property and equipment:
Property and equipment, at cost1,149,656  1,176,241  
Less accumulated depreciation and amortization(793,435) (784,307) 
Property and equipment, net356,221  391,934  
Other assets:
Operating lease right-of-use assets903,010  —  
Intangible assets, net294  425  
Goodwill47,161  46,747  
Deferred tax assets77,410  85,564  
Other assets, net211,205  206,685  
Total other assets1,239,080  339,421  
$1,861,253  $958,483  
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current maturities of long-term debt$13,819  $774  
Current operating lease liabilities163,077  —  
Accounts payable47,867  37,066  
Accrued liabilities120,949  120,083  
Total current liabilities345,712  157,923  
Long-term liabilities:
Long-term debt, net of current maturities1,368,446  1,274,374  
Long-term operating lease liabilities, net of current portion781,653  —  
Other long-term liabilities242,368  263,770  
Total long-term liabilities2,392,467  1,538,144  
Stockholders’ deficit:
Preferred stock $0.01 par value, 15,000,000 shares authorized, none issued
    
Common stock $0.01 par value, 175,000,000 shares authorized, 82,318,622 and 82,159,002 issued, respectively
823  822  
Capital in excess of par value489,847  480,322  
Retained earnings1,574,930  1,577,034  
Accumulated other comprehensive loss(133,220) (140,006) 
Treasury stock, at cost, 59,646,773 and 57,760,573 shares, respectively
(2,809,306) (2,655,756) 
Total stockholders’ deficit(876,926) (737,584) 
$1,861,253  $958,483  
See accompanying notes to condensed consolidated financial statements.
2


JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
(Unaudited)
 QuarterYear-to-date
April 12,
2020
April 14,
2019
April 12,
2020
April 14,
2019
Revenues:
Company restaurant sales$74,380  $76,682  $179,744  $179,514  
Franchise rental revenues69,885  61,646  165,969  145,536  
Franchise royalties and other37,764  38,410  90,230  90,660  
Franchise contributions for advertising and other services34,128  38,989  87,887  90,803  
216,157  215,727  523,830  506,513  
Operating costs and expenses, net:
Company restaurant costs (excluding depreciation and amortization):
Food and packaging22,237  21,676  53,585  51,292  
Payroll and employee benefits24,261  22,768  56,151  53,042  
Occupancy and other12,570  11,100  28,528  27,113  
Total company restaurant costs59,068  55,544  138,264  131,447  
Franchise occupancy expenses (excluding depreciation and amortization)48,341  38,618  112,858  89,331  
Franchise support and other costs2,971  2,797  7,647  5,642  
Franchise advertising and other services expenses35,734  40,245  90,958  94,515  
Selling, general and administrative expenses 24,203  17,585  52,451  41,668  
Depreciation and amortization12,282  12,690  29,010  29,859  
Impairment and other charges, net 716  1,125  (8,575) 8,823  
Gains on the sale of company-operated restaurants    (1,575) (219) 
183,315  168,604  421,038  401,066  
Earnings from operations32,842  47,123  102,792  105,447  
Other pension and post-retirement expenses, net512  343  39,490  799  
Interest expense, net15,409  13,276  35,351  30,650  
Earnings from continuing operations and before income taxes16,921  33,504  27,951  73,998  
Income tax expense5,458  8,374  8,591  17,747  
Earnings from continuing operations11,463  25,130  19,360  56,251  
(Losses) earnings from discontinued operations, net of income taxes  (41)   2,936  
Net earnings $11,463  $25,089  $19,360  $59,187  
Net earnings per share - basic:
Earnings from continuing operations$0.50  $0.97  $0.83  $2.17  
Earnings from discontinued operations      0.11  
Net earnings per share (1)$0.50  $0.97  $0.83  $2.28  
Net earnings per share - diluted:
Earnings from continuing operations$0.50  $0.96  $0.82  $2.15  
Earnings from discontinued operations      0.11  
Net earnings per share (1)$0.50  $0.96  $0.82  $2.26  
Cash dividends declared per common share
$0.40  $0.40  $0.80  $0.80  
____________________________
(1)Earnings per share may not add due to rounding.
See accompanying notes to condensed consolidated financial statements.
3


JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(In thousands)
(Unaudited)
 QuarterYear-to-date
April 12,
2020
April 14,
2019
April 12,
2020
April 14,
2019
Net earnings$11,463  $25,089  $19,360  $59,187  
Cash flow hedges:
Net change in fair value of derivatives  (4,959)   (12,126) 
Net loss reclassified to earnings  134    613  
  (4,825)   (11,513) 
Tax effect  1,244    2,967  
  (3,581)   (8,546) 
Unrecognized periodic benefit costs:
Actuarial losses arising during the period(61,090)   (32,507)   
Actuarial losses and prior service costs reclassified to earnings1,362  904  41,672  2,109  
(59,728) 904  9,165  2,109  
Tax effect15,503  (234) (2,379) (545) 
(44,225) 670  6,786  1,564  
Other comprehensive (loss) income, net of taxes(44,225) (2,911) 6,786  (6,982) 
Comprehensive (loss) income $(32,762) $22,178  $26,146  $52,205  
See accompanying notes to condensed consolidated financial statements.

4


JACK IN THE BOX INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Year-to-date
April 12,
2020
April 14,
2019
Cash flows from operating activities:
Net earnings$19,360  $59,187  
Earnings from discontinued operations  2,936  
Earnings from continuing operations19,360  56,251  
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization29,010  29,859  
Amortization of franchise tenant improvement allowances and other1,765  1,137  
Deferred finance cost amortization3,046  1,224  
Excess tax benefits from share-based compensation arrangements(77) (47) 
Deferred income taxes6,783  3,955  
Share-based compensation expense5,865  4,708  
Pension and postretirement expense39,490  799  
Losses (gains) on cash surrender value of company-owned life insurance3,150  (1,336) 
Gains on the sale of company-operated restaurants(1,575) (219) 
Gains on the disposition of property and equipment, net(10,170) (138) 
Non-cash operating lease costs(13,118) —  
Impairment charges and other133  896  
Changes in assets and liabilities, excluding acquisitions:
Accounts and other receivables(22,858) (11,658) 
Inventories28  (91) 
Prepaid expenses and other current assets(10,350) 3,701  
Accounts payable20,660  (3,904) 
Accrued liabilities1,400  (6,532) 
Pension and postretirement contributions(3,582) (3,671) 
Franchise tenant improvement allowance distributions(5,811) (6,697) 
Other(4,222) (7,421) 
Cash flows provided by operating activities58,927  60,816  
Cash flows from investing activities:
Purchases of property and equipment(12,777) (18,191) 
Proceeds from the sale of property and equipment22,394  1,479  
Proceeds from the sale and leaseback of assets17,373  1,944  
Proceeds from the sale of company-operated restaurants1,575  133  
Collections on notes receivable  6,491  
Other1,036    
Cash flows provided by (used in) investing activities29,601  (8,144) 
Cash flows from financing activities:
Borrowings on revolving credit facilities111,376  189,736  
Repayments of borrowings on revolving credit facilities(3,500) (180,800) 
Principal repayments on debt(3,640) (21,757) 
Debt issuance costs(216) (3,615) 
Dividends paid on common stock(18,466) (20,615) 
Proceeds from issuance of common stock3,559  243  
Repurchases of common stock(155,576) (14,362) 
Payroll tax payments for equity award issuances(4,442) (2,617) 
Cash flows used in financing activities(70,905) (53,787) 
Net increase (decrease) in cash and restricted cash 17,623  (1,115) 
Cash and restricted cash at beginning of period151,561  2,705  
Cash and restricted cash at end of period$169,184  $1,590  

See accompanying notes to condensed consolidated financial statements.
5

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

1.BASIS OF PRESENTATION
Nature of operations — Founded in 1951, Jack in the Box Inc. (the “Company”) operates and franchises Jack in the Box® quick-service restaurants. The following table summarizes the number of restaurants as of the end of each period:
April 12,
2020
April 14,
2019
Company-operated144  137  
Franchise2,102  2,103  
Total system2,246  2,240  
References to the Company throughout these notes to condensed consolidated financial statements are made using the first person notations of “we,” “us” and “our.”
Basis of presentation — The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”).
These financial statements should be read in conjunction with the consolidated financial statements and related notes contained in our Annual Report on Form 10-K for the fiscal year ended September 29, 2019 (“2019 Form 10-K”). The accounting policies used in preparing these condensed consolidated financial statements are the same as those described in our 2019 Form 10-K with the exception of the new lease accounting standard adopted in fiscal 2020, which is described below.
In our opinion, all adjustments considered necessary for a fair presentation of financial condition and results of operations for these interim periods have been included. Operating results for one interim period are not necessarily indicative of the results for any other interim period or for the full year.
Segment reporting — The Company is comprised of one operating segment.
Fiscal year — Our fiscal year is 52 or 53 weeks ending the Sunday closest to September 30. Fiscal years 2020 and 2019 include 52 weeks. Our first quarter includes 16-weeks and all other quarters include 12-weeks. All comparisons between 2020 and 2019 refer to the 12-weeks (“quarter”) and 28-weeks (“year-to-date”) ended April 12, 2020 and April 14, 2019, respectively, unless otherwise indicated.
Use of estimates — In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make certain assumptions and estimates that affect reported amounts of assets, liabilities, revenues, expenses and the disclosure of contingencies. In making these assumptions and estimates, management may from time to time seek advice and consider information provided by actuaries and other experts in a particular area. Actual amounts could differ materially from these estimates.
Risks and uncertainties — The Company is subject to risks and uncertainties as a result of the rapidly spreading outbreak of a novel strain of coronavirus (“COVID-19”). The extent of the impact of the COVID-19 pandemic on our business is highly uncertain and difficult to predict, as the response to the pandemic varies by state and municipalities within states. In the last five weeks of the quarter we experienced a significant reduction in guest traffic at our restaurants due to changes in consumer behavior as social distancing practices, dining room closures and other restrictions as have been mandated or encouraged by federal, state and local governments. During the COVID-19 impacted weeks, substantially all of our restaurants remained open, with dining rooms closed and all locations operating in an off-premise capacity, which represents close to 90% of the Company’s business historically, including drive-thru, third-party delivery, and carry-out.
Our operating results substantially depend upon our franchisees’ sales volumes, restaurant profitability, and financial stability. The financial impact of COVID-19 has had, and is expected to continue to have, an adverse effect on our franchisees’ liquidity and we are working closely with our franchisees to monitor and assist them with access to appropriate sources of liquidity in order to sustain their businesses throughout this crisis.
We cannot currently estimate the duration or future negative financial impact of the COVID-19 pandemic on our business. Ongoing material adverse effects of the COVID-19 pandemic on company-owned and franchised restaurants for an extended period could negatively affect our operating results, including reductions in revenue and cash flow and could impact our impairment assessments of accounts receivable, long-lived assets, operating lease assets, and/or goodwill.

6

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Advertising costs — We administer a marketing fund which includes contractual contributions. In 2020 and 2019, marketing fund contributions from franchise and company-operated restaurants were approximately 5.0% of gross revenues with the exception of our March and April 2020 marketing fees. In response to the economic burden associated with the COVID-19 pandemic, the Company reduced March marketing fees to 4.0% and postponed the collection of these fees over the course of 24 months. April marketing fees will range from 2% to 4% based on annualized sales volumes, and these fees will be collected over three months beginning October 2020.
In 2019, incremental contributions made by the Company were $2.0 million. There have been no incremental contributions made in 2020. Total contributions made by the Company, including incremental contributions, are included in “Selling, general, and administrative expenses” in the accompanying condensed consolidated statements of earnings and for the quarter and year-to-date totaled $3.5 million and $8.9 million, respectively, in 2020 and $3.9 million and $11.1 million, respectively, in 2019.
Restricted cash In accordance with the terms of our securitized financing facility, certain cash balances are required to be held in trust. Such restricted cash primarily represents cash collections and cash reserves held by the trustee to be used for payments of principal, interest and commitments fees required for the Class A-2 Notes. As of April 12, 2020 and September 29, 2019, restricted cash balances were $37.0 million and $26.0 million, respectively. During the second quarter, with uncertainty surrounding COVID-19 events, and as a cautionary measure, we voluntarily elected to reserve quarterly interest and principal payments due in August 2020.
Effect of new accounting pronouncements adopted in fiscal 2020 — We adopted ASU 2016-02, Leases (Topic 842) (“ASC 842”) in the first quarter of 2020. The new guidance requires the recognition of lease liabilities, representing future minimum lease payments on a discounted basis, and corresponding right-of-use (“ROU”) assets on the balance sheet for most leases. The Company adopted the new guidance in the first quarter of 2020 using the alternative transition method; therefore, the comparative period has not been restated and continues to reported under the previous lease guidance.
We elected the transition package of three practical expedients, which, among other items, permitted us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. We also elected the short-term lease recognition exemption for all leases that qualify, permitting us to not apply the recognition requirements of this standard to leases with a term of 12 months or less, and an accounting policy to not separate lease and non-lease components for underlying assets subject to real estate leases. As lessor, we elected for all classes of underlying leased assets to account for lease and non-lease components, primarily property taxes and maintenance, as a single lease component. We did not elect the use-of-hindsight practical expedient, and therefore continued to utilize lease terms determined under the existing lease guidance.
The adoption had a material impact on our consolidated balance sheet. As a result of the adoption, we recognized operating lease assets and liabilities of $880.6 million and $931.0 million, respectively, at the date of adoption. The ROU assets were adjusted for certain lease-related assets and liabilities at adoption, primarily comprised of straight-line rent accruals of $29.0 million, incentives and unfavorable lease liabilities of $2.1 million, sublease loss and exit-related lease liabilities of $19.4 million, which were previously reported in “Accrued liabilities” and “Other long-term liabilities”, as well as favorable lease assets of $0.4 million, which were previously reported in “Intangible assets, net” in our condensed consolidated balance sheet. We also recorded a cumulative adjustment to opening retained earnings of $2.9 million, net of tax, as a result of the impairment of certain newly recognized ROU assets and derecognition of deferred gains and losses on sale-leaseback transactions upon transition to the new guidance.

7

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The effects of the changes made to the Company's condensed consolidated balance sheet as of September 29, 2019 for the adoption of the new lease guidance were as follows (in thousands):
Balance at September 29, 2019Adjustments due to ASC 842 adoptionBalance at September 30, 2019
Assets
Other assets:
Operating lease ROU assets$—  $880,564  $880,564  
Intangible assets, net$425  $(386) $39  
Deferred income taxes$85,564  $1,006  $86,570  
Liabilities and Stockholders’ Deficit
Current liabilities:
Current operating lease liabilities$—  $159,821  $159,821  
Accrued liabilities $120,083  $(4,702) $115,381  
Long-term liabilities:
Long-term operating lease liabilities, net of current portion$—  $770,818  $770,818  
Other long-term liabilities$263,770  $(41,883) $221,887  
Stockholders’ deficit:
Retained earnings $1,577,034  $(2,870) $1,574,164  
The accounting guidance for lessors remains largely unchanged from previous guidance, except for the presentation of certain lease costs that the Company passes through to lessees, including but not limited to, property taxes and maintenance. These costs are generally paid by the Company and reimbursed by the lessee. Historically, these costs have been recorded on a net basis in our condensed consolidated statements of earnings but are now presented gross upon adoption of the new guidance. As a result, we expect annual revenues and expenses reported in “Franchise rental revenues” and “Franchise occupancy expenses” to increase by approximately $37 million in fiscal 2020. Refer to Note 4, Leases, for further information on our leases and the impact on the Company’s accounting policies.
Effect of new accounting pronouncements to be adopted in future periods — In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which will replace the incurred loss methodology of recognizing credit losses on financial instruments that is currently required with a methodology that estimates the expected credit loss on financial instruments and reflects the net amount expected to be collected on the financial instrument. Application of the new guidance may result in the earlier recognition of credit losses as the new methodology will require entities to consider forward-looking information in addition to historical and current information used in assessing incurred losses. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, with early adoption permitted. The Company will be required to adopt the new guidance on a modified retrospective basis. We are currently in the process of evaluating the effects of this pronouncement on our consolidated financial statements and do not expect there to be a material impact upon adoption.
In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs in cloud computing arrangements with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted. Companies can choose to adopt the new guidance prospectively or retrospectively. We are currently in the process of evaluating the effects of this pronouncement on our consolidated financial statements and do not expect there to be a material impact upon adoption.

8

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

2.REVENUE
Nature of products and services — We derive revenue from retail sales at Jack in the Box company-operated restaurants and rental revenue, royalties, advertising, and franchise and other fees from franchise-operated restaurants.
Our franchise arrangements generally provide for an initial franchise fee of $50,000 per restaurant and generally require that franchisees pay royalty and marketing fees at 5% of gross sales. The agreement also requires franchisees to pay sourcing, technology and other miscellaneous fees.
Disaggregation of revenue — The following table disaggregates revenue by primary source (in thousands):
QuarterYear-to-date
April 12,
2020
April 14,
2019
April 12,
2020
April 14,
2019
Sources of revenue:
Company restaurant sales$74,380  $76,682  $179,744  $179,514  
Franchise rental revenues69,885  61,646  165,969  145,536  
Franchise royalties36,049  37,148  86,292  86,655  
Marketing fees30,550  35,947  79,385  83,810  
Technology and sourcing fees3,578  3,042  8,502  6,993  
Franchise fees and other services1,715  1,262  3,938  4,005  
Total revenue
$216,157  $215,727  $523,830  $506,513  
Contract liabilities — Our contract liabilities consist of deferred revenue resulting from initial fees received from franchisees for new restaurant openings or new franchise terms, which are generally recognized over the franchise term. We classify these contract liabilities as “Accrued liabilities” and “Other long-term liabilities” in our condensed consolidated balance sheets.
A summary of significant changes in our contract liabilities is presented below (in thousands):
Year-to-date
April 12,
2020
April 14,
2019
Deferred franchise fees at beginning of period$46,272  $50,018  
Revenue recognized (3,061) (2,745) 
Additions 1,488  680  
Deferred franchise fees at end of period$44,699  $47,953  
The following table reflects the estimated franchise fees to be recognized in the future related to performance obligations that are unsatisfied as of April 12, 2020 (in thousands):
Remainder of 2020$2,267  
20214,926  
20224,724  
20234,572  
20244,379  
Thereafter23,831  
$44,699  
We have applied the optional exemption, as provided for under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, which allows us to not disclose the transaction price allocated to unsatisfied performance obligations when the transaction price is a sales-based royalty.

9

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
3.SUMMARY OF REFRANCHISINGS AND FRANCHISEE DEVELOPMENT
Refranchisings and franchisee development — Through the second quarter in 2020 and 2019, no company-operated restaurants were sold to franchisees. In 2020 and 2019, amounts presented in “Gains on the sale of company-operated restaurants” of $1.6 million and $0.2 million, respectively, pertain to meeting certain contingent consideration provisions included in the sale of restaurants in previous years. The following table summarizes the number of restaurants developed and closed by franchisees.
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Quarter