030515 Jack in the Box Second Quarter Earnings

San Diego, CA - Jack in the Box Inc., operator and franchiser of Jack in the Box and Qdoba Mexican Grill restaurants, announced net earnings of $16.3 million, or 44 cents per diluted share, for the second quarter ended April 13 compared with $18.2 million, or 45 cents per share, for the same quarter last year. Year-to-date, earnings per share totaled $1.00 versus $1.12 in 2002. The company, which met its second- quarter earnings forecast, also reaffirmed its earnings-per-share estimate for fiscal 2003 of approximately $1.97 to $2.01.

Weak economic conditions in certain key markets, along with continued competitive discounting, poor weather and soft sales in markets impacted by the war, contributed to a 4.3% decrease in Jack in the Box same-store sales compared with a 0.3% decrease for last year's second quarter. Year-to-date, same-store sales were down 3.3% compared with a 0.3% increase for the first half of fiscal 2002.

Qdoba produced a systemwide double-digit increase in same-store sales for the second quarter on top of a double-digit increase in 2002. This is Qdoba's first reporting quarter since Jack in the Box Inc. acquired the fast-casual chain in January 2003. Jack in the Box Inc. also achieved a double-digit increase in same- store sales, excluding fuel sales, at its Quick Stuff convenience stores for the second quarter, and same- store sales at the Jack in the Box restaurants adjacent to Quick Stuff stores were above system average. Qdoba and Quick Stuff operations are not material components of Jack in the Box Inc. consolidated financial results and projections.

Consolidated company restaurant sales were $418 million for the quarter, the same as a year ago, and were $978 million year-to-date versus $971 million last year. Other revenues were $10.3 million compared with $4.3 million in last year's second quarter, primarily related to a higher average price on the sale of five company restaurants to franchisees compared with six last year. Other revenues were $18.6 million year-to- date versus $8.2 million for the same period in fiscal 2002, primarily related to the sale of 14 company restaurants to franchisees compared with nine last year. Total revenues in the quarter were $463 million compared with $448 million last year, and were $1.08 billion year-to-date versus $1.04 billion in 2002.

"We anticipated that competitor discounting and weak economic conditions, particularly in our western markets, would continue to impact sales for the near term, but unusually high fuel costs and the war in Iraq adversely affected sales as well," said Chairman and CEO Robert J. Nugent. "Despite these factors, Jack in the Box remains focused on the major elements of its strategic plan, including the development of higher- quality products that are unique to the quick-serve hamburger category."

At the beginning of the third quarter, Jack in the Box introduced three new premium salads: Asian Chicken, Southwest Chicken and Chicken Club, marketed collectively as Jack's Ultimate Salads(TM). The initial consumer response has been very positive. Late in the third quarter, the company will launch a new premium sandwich.

In April, the company commenced construction on a 70,000-square-foot innovation center near its corporate offices in San Diego. When completed next summer, the innovation center will unite the company's marketing group with key technical teams in a state-of-the-art facility to expedite the development of new products as well as new equipment and processes to deliver those products.

During the second quarter, the company opened 20 new Jack in the Box restaurants, bringing to 1,527 the total number of company-operated restaurants. Total Jack in the Box units at April 13 were 1,897 compared with 1,817 units at quarter-end last year. The company also operated 12 Quick Stuff® convenience stores at quarter-end compared with 11 a year ago. Qdoba opened one new company restaurant and six franchised restaurants during the second quarter, bringing to 92 the total number of units operating at quarter-end versus 76 in 2002.

Gross profit rate in the second quarter was 18.1% of revenues, as forecast, versus 18.7% in 2002, primarily as a result of higher occupancy, insurance and POS-system rollout costs, as well as reduced leverage on fixed costs from lower same-store sales. Restaurant operating margin was 16.4% of sales versus 18.1% in last year's second quarter for the same reasons.

SG&A expense rate for the second quarter was 11.2% of revenues, as forecast, which is slightly higher than last year, primarily due to higher pension costs and reduced leverage from lower same-store sales.

In the second quarter, the company completed the remaining $14 million of its $90 million share- repurchase authorization. Average shares outstanding are now estimated to be approximately 37 million for the full year.

Third-Quarter Guidance

The company currently expects to earn approximately 49 cents per share in the third quarter compared with 60 cents per share reported in 2002, or 57 cents per share when normalizing the annual income tax rate to 38% and eliminating the amortization of indefinite life intangible assets of approximately $1 million related to this year's adoption of FAS 142. The primary assumptions supporting this earnings-per-share estimate are as follows, in approximate amounts:

* 19 new Jack in the Box restaurants open.

* 2.5% decrease in Jack in the Box same-store sales due to continued economic weakness and competitive promotional activity, partially offset by new product introductions. For the full year, the company continues to estimate a same-store sales decrease of approximately 2.5%.

* 14 Jack in the Box conversions to franchises versus five last year, producing approximately $6.5 million in other revenues versus $4.7 million in 2002. For the full year, the company now expects to convert approximately 35 restaurants to franchises and produce approximately $31 million in other revenues compared with $20 million from the conversion of 22 restaurants last year. These conversions represent only 2% of all company-operated restaurants.

* $479 million in total revenues versus $461 million in 2002.

* Gross profit rate of 18.4% compared with 20% last year due to higher costs for food, packaging, insurance, utilities, new point-of-sale (POS) system and de-leveraging on certain fixed costs from lower sales.

* SG&A expense rate of 11.2% compared with 11.1% last year, primarily due to higher pension costs and the absorption of Qdoba, partially offset by continued savings from the company's Profit Improvement Program.

* Income tax rate of 38% versus 32.7% last year.

* Weighted average shares outstanding of 36.8 million versus 40.5 million in 2002.

* Capital expenditures of approximately $45 million versus $37.2 million last year. Operating income plus depreciation/amortization of approximately $51 million versus $57.3 million a year ago.

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