Jack In The Box Inc. Reports Operating Results (10-Q)
Jack In The Box Inc. has a market cap of $1.24 billion; its shares were traded at around $21.7 with a P/E ratio of 9.5 and P/S ratio of 0.5. GuruFocus rated Jack In The Box Inc. the business predictability rank of 2.5-star.JACK is in the portfolios of John Buckingham of Al Frank Asset Management, Inc., Kenneth Fisher of Fisher Asset Management, LLC, Robert Olstein of Olstein Financial Alert Fund, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Bruce Kovner of Caxton Associates.
Highlight of Business Operations: Distribution sales to Jack in the Box and Qdoba franchisees grew $13.1 million from a year ago to $104.6 million, primarily reflecting an increase in the number of franchised restaurants serviced by our distribution centers, partially offset by lower per-store-average unit volumes and lower commodity prices.
Franchised restaurant costs, principally rents and depreciation on properties leased to Jack in the Box franchisees, increased $7.3 million to $29.4 million in 2010 from $22.1 million in 2009. As a percentage of franchised restaurant revenues, franchised restaurant costs increased to 45.5% in the quarter from 39.2% a year ago due primarily to the sales and revenue deleverage against fixed rental expense at franchised restaurants.
Gains on the sale of company-operated restaurants to franchisees, net were $9.4 million and $18.4 million, respectively, from the sale of 23 Jack in the Box restaurants in 2010 and 29 restaurants in 2009. The change in gains relates to the number of restaurants sold and the specific sales and cash flows of those restaurants.
Cash and cash equivalents decreased $40.5 million to $12.5 million at the end of the quarter from $53.0 million at the beginning of the fiscal year. This decrease is primarily due to repurchases of common stock, property and equipment expenditures and net repayments under our revolving credit facility. These uses of cash were offset in part by proceeds from the sale of restaurants to franchisees, cash flows provided by operating activities and collections of notes receivable. We generally reinvest available cash flows from operations to develop new restaurants or enhance existing restaurants, to reduce debt and to repurchase shares of our common stock.
Sale of Company-Operated Restaurants. We have continued our strategy of selling Jack in the Box company-operated restaurants to franchisees. In 2010, we generated cash proceeds and notes receivable of $14.3 million from the sale of 23 restaurants compared with $23.9 million in 2009 from the sale of 29 restaurants. Financing related to certain transactions of $2.7 million and $5.3 million were included in the sales proceeds in 2010 and 2009, respectively. In fiscal year 2010, we expect total proceeds of $85-$95 million from the sale of approximately 150-170 company-operated restaurants to franchisees.
Financing. Our credit facility is comprised of (i) a $150.0 million revolving credit facility maturing on December 15, 2011 and (ii) a term loan maturing on December 15, 2012, both bearing interest at London Interbank Offered Rate (LIBOR) plus 1.125%. As part of the credit agreement, we may request the issuance of up to $75.0 million in letters of credit, the outstanding amount of which reduces the net borrowing capacity under the agreement. The credit facility requires the payment of an annual commitment fee based on the unused portion of the credit facility. The credit facilitys interest rates and the annual commitment rate are based on a financial leverage ratio, as defined in the credit agreement. Our obligations under the credit facility are secu
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