1 unchanged sentence
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
−Removed: Based on an evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13(a)-15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the Company’s fiscal year ended September 27, 2020, the Company’s Chief Executive Officer and Controller (its principal executive officer and principal financial officer, respectively) have concluded that the Company’s disclosure controls and procedures were effective.
+Added: Based on an evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13(a)-15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the Company’s fiscal year ended October 3, 2021, the Company’s Chief Executive Officer and Chief Financial Officer (its principal executive officer and principal financial officer, respectively) have concluded that the Company’s disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
−Removed: Except for the changes in connection with our implementation of the remediation plan described below, there have been no significant changes in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended September 27, 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
+Added: There have been no significant changes in the Company’s internal control over financial reporting that occurred during the Company’s fiscal quarter ended October 3, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
1 unchanged sentence
The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the preparation and fair presentation of published financial statements in accordance with U.S.
−Removed: GAAP and includes those policies and procedures that:
−Removed: • Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions;
+Added: GAAP and includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions;
(2) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made in accordance with appropriate authorizations;
−Removed: • Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.
+Added: and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
−Removed: Management, under the oversight of our principal executive officer, principal financial officer, and Audit Committee, assessed the effectiveness of the Company’s internal control over financial reporting as of September 27, 2020.
+Added: Management, under the oversight of our principal executive officer, principal financial officer, and Audit Committee, assessed the effectiveness of the Company’s internal control over financial reporting as of October 3, 2021.
In making this assessment, management used the criteria set forth in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework.
−Removed: As previously described in Part II, Item 9A of our Annual Report on Form 10-K for the fiscal year ended September 29, 2019, during the fourth quarter of 2019, management concluded that the Company’s internal control over financial reporting was not effective because of the effect of the material weakness described below.
−Removed: A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement will not be prevented or detected on a timely basis.
−Removed: Management identified the following deficiencies in our internal control over financial reporting.
−Removed: • We did not maintain effective risk assessment, oversight and monitoring controls over changes in the Company’s information technology (“IT”) environment in connection with the restructuring and outsourcing of certain IT support functions to third party contractors.
−Removed: • We were overly dependent on the knowledge and actions of certain individuals with IT expertise without providing sufficient training and documentation to support other personnel with control responsibilities.
−Removed: • As a consequence, the Company did not maintain effective controls over IT change management for systems that support the Company’s financial reporting process to ensure that program and data changes were tested, approved and implemented appropriately.
−Removed: Automated process-level controls and manual controls dependent upon the accuracy and completeness of information derived from IT systems were also rendered ineffective.
−Removed: During 2020, we implemented our previously disclosed remediation plan that included:
−Removed: (i) developing enhanced risk assessment procedures and controls related to changes in IT systems;
−Removed: (ii) enhancing governance by management of significant and/or unusual changes to the IT environment;
−Removed: (iii) developing and conducting a mandatory annual program addressing IT general controls and policies, including educating control owners concerning the principles and requirements of each control, with a focus on those related to change-management over IT systems;
−Removed: (iv) implementing an annual requirement for IT personnel to review and acknowledge their understanding of change control policies and procedures.
−Removed: During the fourth quarter of 2020, we completed our testing of the operating effectiveness of the implemented controls and found them to be effective.
−Removed: As a result, we have concluded that the material weakness has been remediated as of September 27, 2020.
+Added: Management has concluded that, as of October 3, 2021, the Company’s internal control over financial reporting was effective, at a reasonable assurance level, based on these criteria.
+Added: The Company’s independent registered public accounting firm, KPMG LLP, has issued an audit report on the effectiveness of our internal control over financial reporting, which follows.
Report of Independent Registered Public Accounting Firm
3 unchanged sentences
We have audited Jack in the Box Inc.
−Removed: and subsidiaries’ (the Company) internal control over financial reporting as of September 27, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
−Removed: In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 27, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 27, 2020 and September 29, 2019, the related consolidated statements of earnings, comprehensive income, stockholders’ deficit, and cash flows for each of the fifty-two week periods ended September 27, 2020, September 29, 2019, and September 30, 2018, and the related notes (collectively, the consolidated financial statements), and our report dated November 18, 2020 expressed an unqualified opinion on those consolidated financial statements.
+Added: and subsidiaries’ (the Company) internal control over financial reporting as of October 3, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
+Added: In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October 3, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of October 3, 2021 and September 27, 2020, the related consolidated statements of earnings, comprehensive income, stockholders’ deficit, and cash flows for the fifty-three week period ended October 3, 2021, and for each of the fifty-two week periods ended September 27, 2020, and September 29, 2019, and the related notes (collectively, the consolidated financial statements), and our report dated November 23, 2021 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
18 unchanged sentences
OTHER INFORMATION
+Added: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
+Added: Not applicable.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
−Removed: That portion of our definitive Proxy Statement appearing under the captions “Election of Directors,” “Director Qualifications and Biographical Information,” “Committees of the Board,” and “Section 16(a) Beneficial Ownership Reporting Compliance” to be filed with the Commission pursuant to Regulation 14A within 120 days after September 27, 2020 and to be used in connection with our 2021 Annual Meeting of Stockholders is hereby incorporated by reference.
+Added: That portion of our definitive Proxy Statement appearing under the captions “Election of Directors,” “Director Qualifications and Biographical Information,” and “Committees of the Board” to be filed with the Commission pursuant to Regulation 14A within 120 days after October 3, 2021 and to be used in connection with our 2022 Annual Meeting of Stockholders is hereby incorporated by reference.
Information regarding our executive officers is set forth in Part I of this Report under the caption “Information about our Executive Officers.”
3 unchanged sentences
directors, officers, and employees, including the Chief Executive Officer, Chief Financial Officer, Controller, and all of the financial team.
−Removed: The Code of Ethics is posted on the Company’s corporate website, www.jackintheboxinc.com (under the “Investors — Corporate Governance — Code of Conduct” caption) and is available in print free of charge to any stockholder upon request.
+Added: The Code of Ethics is posted on the Company’s corporate website, www.jackintheboxinc.com (under the “Investors — Governance — Governance Documents — Code of Conduct” caption) and is available in print free of charge to any stockholder upon request.
We intend to satisfy the disclosure requirement regarding any amendment to, or waiver of, a provision of the Code of Ethics for the Chief Executive Officer, Chief Financial Officer, and Controller or persons performing similar functions, by posting such information on our corporate website.
5 unchanged sentences
EXECUTIVE COMPENSATION
−Removed: That portion of our definitive Proxy Statement appearing under the caption “Executive Compensation,” “Director Compensation,” “Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report” to be filed with the Commission pursuant to Regulation 14A within 120 days after September 27, 2020 and to be used in connection with our 2021 Annual Meeting of Stockholders is hereby incorporated by reference.
+Added: That portion of our definitive Proxy Statement appearing under the caption “Executive Compensation,” “Director Compensation and Stock Ownership Requirements,” “Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report” to be filed with the Commission pursuant to Regulation 14A within 120 days after October 3, 2021 and to be used in connection with our 2022 Annual Meeting of Stockholders is hereby incorporated by reference.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
−Removed: That portion of our definitive Proxy Statement appearing under the caption “Security Ownership of Certain Beneficial Owners and Management” to be filed with the Commission pursuant to Regulation 14A within 120 days after September 27, 2020 and to be used in connection with our 2021 Annual Meeting of Stockholders is hereby incorporated by reference.
−Removed: Information regarding equity compensation plans under which Company common stock may be issued as of September 27, 2020 is set forth in Item 5 of this Report.
+Added: That portion of our definitive Proxy Statement appearing under the caption “Security Ownership of Certain Beneficial Owners and Management” to be filed with the Commission pursuant to Regulation 14A within 120 days after October 3, 2021 and to be used in connection with our 2022 Annual Meeting of Stockholders is hereby incorporated by reference.
+Added: Information regarding equity compensation plans under which Company common stock may be issued as of October 3, 2021 is set forth in Item 5 of this Report.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
−Removed: That portion of our definitive Proxy Statement appearing under the caption “Certain Relationships and Related Transactions” and “Directors’ Independence,” if any, to be filed with the Commission pursuant to Regulation 14A within 120 days after September 27, 2020 and to be used in connection with our 2021 Annual Meeting of Stockholders is hereby incorporated by reference.
−Removed: PRINCIPAL ACCOUNTING FEES AND SERVICES
−Removed: That portion of our definitive Proxy Statement appearing under the caption “Independent Registered Public Accounting Fees and Services” to be filed with the Commission pursuant to Regulation 14A within 120 days after September 27, 2020 and to be used in connection with our 2021 Annual Meeting of Stockholders is hereby incorporated by reference.
+Added: That portion of our definitive Proxy Statement appearing under the caption “Certain Relationships and Related Transactions” and “Directors’ Independence,” if any, to be filed with the Commission pursuant to Regulation 14A within 120 days after October 3, 2021 and to be used in connection with our 2022 Annual Meeting of Stockholders is hereby incorporated by reference.
+Added: PRINCIPAL ACCOUNTANT FEES AND SERVICES
+Added: That portion of our definitive Proxy Statement appearing under the caption “Independent Registered Public Accountants Fees and Services” to be filed with the Commission pursuant to Regulation 14A within 120 days after October 3, 2021 and to be used in connection with our 2022 Annual Meeting of Stockholders is hereby incorporated by reference.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
8 unchanged sentences
10-Q 5/14/2020
−Removed: 3.2 Amended and Restated Bylaws dated August 2, 2019
−Removed: 10-Q 8/8/2019
3.3 Amended and Restated Bylaws, dated May 8, 2020
13 unchanged sentences
10.2.3* Form of Revised Compensation and Benefits Assurance Agreement for certain officers, dated June 15, 2020
−Removed: 10-K Filed herewith
−Removed: 10.2.11* Mark Blankenship Separation and Release Agreement, dated January 3, 2020
+Added: 10-K 11/18/2020
+Added: 10.2.19* Jennifer Kennedy Separation and Release Agreement, dated November 13, 2020
+Added: 10-K 11/18/2020
+Added: 10.2.20* Offer Letter by and between Tim Mullany and Jack in the Box Inc., dated December 11, 2020
+Added: 8-K 12/17/2020
+Added: 10.2.21* Offer Letter by and between Ryan Ostrom and Jack in the Box Inc., dated December 30, 2020
10-Q 2/17/2021
−Removed: 10.2.12* Paul Melancon Separation and Release Agreement, dated January 3, 2020
+Added: Number Description Form Filed with SEC
+Added: 10.2.22* Offer Letter by and between Steven Piano and Jack in the Box Inc., dated March 23, 2021
10-Q 5/12/2021
−Removed: 10.2.13* Vanessa Fox Separation and Release Agreement, dated January 17, 2020
+Added: 10.2.23* Offer Letter by and between Carlson Choi and Jack in the Box Inc., dated March 30, 2021
10-Q 5/12/2021
−Removed: Number Description Form Filed with SEC
−Removed: 10.2.14* Phillip Rudolph Separation and Release Agreement, dated March 2, 2020
+Added: 10.2.24* Melissa Corrigan Separation and Release Agreement, dated May 7, 2021
10-Q 5/12/2021
−Removed: 10.2.15* Jack in the Box Inc.
−Removed: Severance Plan for Executive Officers, dated March 9, 2020 (as amended)
−Removed: 10-K Filed herewith
−Removed: 10.2.16* Offer Letter by and between Darin Harris and Jack in the Box Inc., dated April 2, 2020
−Removed: 8-K 4/16/2020
−Removed: 10.2.17* Retention, Transition and Separation Agreement, by and between Leonard A.
−Removed: Comma and Jack in the Box Inc., dated April 16, 2020
−Removed: 8-K 4/16/2020
−Removed: 10.2.18* Lance Tucker Retention Agreement, dated May 5, 2020
+Added: 10.2.25* Andrew Martin Separation and Release Agreement, dated May 10, 2021
10-Q 5/12/2021
−Removed: 10.2.19* Jennifer Kennedy Separation and Release Agreement, dated November 13, 2020
+Added: 10.2.26* Offer Letter by and between Tony Darden and Jack in the Box Inc., dated May 11, 2021
+Added: 8-K 5/17/2021
+Added: 10.2.27* Adrienne Ingoldt Separation and Release Agreement, dated September 24, 2021
10-K Filed herewith
43 unchanged sentences
10.8.18* Jack in the Box Inc.
+Added: Performance Share Award Agreement under the 2004 Stock Incentive Plan
+Added: 10-K Filed herewith
+Added: 10.8.19* Jack in the Box Inc.
+Added: Time-Vesting Restricted Stock Unit Award Agreement under the 2004 Stock Incentive Plan
+Added: 10-K Filed herewith
+Added: 10.10.2* Jack in the Box Inc.
Performance Incentive Plan, Effective February 13, 2016
8 unchanged sentences
_____ Filed herewith
+Added: Number Description Form Filed with SEC
31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
3 unchanged sentences
_____ Filed herewith
−Removed: Number Description Form Filed with SEC
32.2 Certification of Principal Financial Officer pursuant to 18 U.S.C.
15 unchanged sentences
JACK IN THE BOX INC.
−Removed: /s/ DAWN HOOPER
−Removed: Vice President, Controller (principal financial officer)
+Added: /s/ TIM MULLANY
+Added: Executive Vice President and Chief Financial Officer (principal financial officer)
November 23, 2021
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
−Removed: Each person whose signature appears below constitutes and appoints Darin Harris and Dawn Hooper, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this report, and to file the same, with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof.
+Added: Each person whose signature appears below constitutes and appoints Darin Harris and Tim Mullany, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this report, and to file the same, with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes may do or cause to be done by virtue hereof.
Signature Title Date
/s/ DARIN HARRIS Chief Executive Officer and Director (principal executive officer) November 23, 2021
−Removed: /s/ DAWN HOOPER Vice President, Controller (principal financial officer) November 18, 2020
+Added: /s/ TIM MULLANY Executive Vice President and Chief Financial Officer (principal financial officer and principal accounting officer) November 23, 2021
GOEBEL Director and Chairman of the Board November 23, 2021
−Removed: BIRCH Director November 18, 2020
−Removed: GAINOR Director November 18, 2020
/s/ SHARON P.
23 unchanged sentences
We have audited the accompanying consolidated balance sheets of Jack in the Box Inc.
−Removed: and subsidiaries (the Company) as of September 27, 2020 and September 29, 2019, the related consolidated statements of earnings, comprehensive income, stockholders’ deficit, and cash flows for each of the fifty-two week periods ended September 27, 2020, September 29, 2019, and September 30, 2018, and the related notes (collectively, the consolidated financial statements).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 27, 2020 and September 29, 2019, and the results of its operations and its cash flows for each of the fifty-two week periods ended September 27, 2020, September 29, 2019, and September 30, 2018, in conformity with U.S.
+Added: and subsidiaries (the Company) as of October 3, 2021 and September 27, 2020, the related consolidated statements of earnings, comprehensive income, stockholders’ deficit, and cash flows for the fifty-three week period ended October 3, 2021, and for each of the fifty-two week periods ended September 27, 2020, and September 29, 2019 and the related notes (collectively, the consolidated financial statements).
+Added: In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of October 3, 2021 and September 27, 2020, and the results of its operations and its cash flows for the fifty-three week period ended October 3, 2021, and for each of the fifty-two week periods ended September 27, 2020, and September 29, 2019, in conformity with U.S.
generally accepted accounting principles.
−Removed: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of September 27, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated November 18, 2020 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
−Removed: Change in Accounting Principles
−Removed: As discussed in Note 1 to the consolidated financial statements, the Company changed its method of accounting for leases as of September 30, 2019 due to the adoption of Accounting Standards Codification Topic 842, Leases, and changed its method of accounting for revenue as of October 1, 2018 due to the adoption of Accounting Standards Codification Topic 606, Revenue from Contracts with Customers .
+Added: We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of October 3, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated November 23, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
15 unchanged sentences
As discussed in Note 1 to the consolidated financial statements, the Company establishes its undiscounted insurance liability and reserves using independent actuarial estimates of expected losses based on a statistical analysis of historical claims data.
−Removed: As of September 27, 2020, the Company has recorded an estimated self-insurance liability of $25.0 million.
+Added: As of October 3, 2021, the Company has recorded an estimated self-insurance liability of $20.8 million.
We identified the assessment of self-insurance liabilities related to workers’ compensation and general liability as a critical audit matter.
4 unchanged sentences
This included a control related to the review of the loss development factors and expected loss rates applied in the actuarial report and controls related to the completeness and accuracy of claims data.
−Removed: We tested the claims paid and claims reported (not paid) data used in the actuarial models for consistency with the actual claims paid and claims reported (not paid) records of the Company, which is used in the development of the loss development factors and expected loss rates.
+Added: We agreed the claims paid and claims reported (not paid) data used in the actuarial models with the actual claims paid and claims reported (not paid) records of the Company, which is used in the development of the loss development factors and expected loss rates.
We involved actuarial professionals with specialized skills and knowledge, who assisted in evaluating the Company’s actuarial estimates and assumptions related to the loss development factors and expected loss rates, by comparing them to generally accepted actuarial methodologies and the Company’s historical data.
7 unchanged sentences
2021 September 27,
−Removed: 2020 September 29,
Current assets:
65 unchanged sentences
Depreciation and amortization 46,500 52,798 55,181
−Removed: Impairment and other charges, net ( 6,493 ) 12,455 18,418
+Added: Impairment and other (gains) charges, net ( 3,382 ) ( 6,493 ) 12,455
Gains on the sale of company-operated restaurants ( 4,203 ) ( 3,261 ) ( 1,366 )
26 unchanged sentences
Net earnings $ 165,755 $ 89,764 $ 94,437
−Removed: Cash flow hedges:
−Removed: Net change in fair value of derivatives — ( 23,625 ) 18,769
−Removed: Net loss reclassified to earnings — 24,328 3,455
−Removed: Tax effect — ( 3,165 ) ( 5,725 )
−Removed: — ( 2,462 ) 16,499
Unrecognized periodic benefit costs:
4 unchanged sentences
36,351 29,401 ( 43,284 )
−Removed: Foreign currency translation adjustments — — 6
+Added: Cash flow hedges:
+Added: Net change in fair value of derivatives — — ( 23,625 )
+Added: Net loss reclassified to earnings — — 24,328
Tax effect — — ( 3,165 )
−Removed: Derecognition of foreign currency translation adjustments due to sale — — 76
+Added: — — ( 2,462 )
Other comprehensive income (loss), net of taxes 36,351 29,401 ( 45,746 )
12 unchanged sentences
Depreciation and amortization 46,500 52,798 55,181
−Removed: Franchise tenant improvement allowance amortization and other 3,028 1,983 862
+Added: Amortization of franchise tenant improvement allowances and incentives 3,450 3,028 1,983
Amortization of debt issuance costs 5,595 5,628 3,121
9 unchanged sentences
( 4,203 ) ( 3,261 ) ( 1,366 )
−Removed: (Gains) losses on the disposition of property and equipment ( 9,768 ) ( 6,244 ) 1,627
−Removed: Non-cash operating lease costs 490 — —
+Added: Gains on the disposition of property and equipment ( 6,888 ) ( 9,768 ) ( 6,244 )
Impairment charges and other 2,889 322 5,414
3 unchanged sentences
Prepaid expenses and other current assets ( 2,766 ) ( 2,780 ) 8,728
+Added: Operating lease right-of-use assets and lease liabilities ( 24,784 ) 490 —
Accounts payable ( 3,091 ) 2,018 6,537
1 unchanged sentence
Pension and postretirement contributions ( 6,084 ) ( 6,243 ) ( 6,194 )
−Removed: Franchise tenant improvement allowance disbursements ( 7,516 ) ( 10,593 ) ( 14,893 )
+Added: Franchise tenant improvement allowance and incentive disbursements ( 8,568 ) ( 10,239 ) ( 13,233 )
Other 500 ( 825 ) ( 9,355 )
7 unchanged sentences
Other 2,626 2,654 1,630
−Removed: Cash flows provided by (used in) investing activities 29,123 ( 13,819 ) 65,661
+Added: Cash flows (used in) provided by investing activities ( 20,929 ) 29,123 ( 13,819 )
Cash flows from financing activities:
9 unchanged sentences
Payroll tax payments for equity award issuances ( 4,166 ) ( 5,946 ) ( 2,883 )
−Removed: Change in book overdraft — — ( 2,150 )
Cash flows used in financing activities ( 343,545 ) ( 87,289 ) ( 5,730 )
−Removed: Cash flows provided by (used in) continuing operations 85,359 148,856 ( 275,813 )
−Removed: Net cash provided by operating activities of discontinued operations — — 4,823
−Removed: Net cash provided by investing activities of discontinued operations — — 266,125
−Removed: Net cash used in financing activities of discontinued operations — — ( 78 )
−Removed: Net cash provided by discontinued operations — — 270,870
−Removed: Effect of exchange rate changes on cash — — 6
+Added: Net (decrease) increase in cash and restricted cash ( 163,352 ) 85,359 148,856
Cash and restricted cash at beginning of year 236,920 151,561 2,705
10 unchanged sentences
Loss Treasury
−Removed: Balance at October 1, 2017 81,843,483 $ 818 $ 453,432 $ 1,485,820 $ ( 137,761 ) $ ( 2,190,439 ) $ ( 388,130 )
+Added: Balance at September 30, 2018 82,061,661 $ 821 $ 470,826 $ 1,561,353 $ ( 94,260 ) $ ( 2,530,439 ) $ ( 591,699 )
Shares issued under stock plans, including tax benefit 97,341 1 1,231 — — — 1,232
3 unchanged sentences
Net earnings — — — 94,437 — — 94,437
−Removed: Foreign currency translation adjustment — — — — 80 — 80
−Removed: Effect of interest rate swaps, net — — — — 16,499 — 16,499
−Removed: Effect of actuarial gains and prior service cost, net — — — — 26,922 — 26,922
−Removed: Other — — — ( 151 ) — — ( 151 )
+Added: Other comprehensive loss — — — — ( 45,746 ) — ( 45,746 )
+Added: Cumulative-effect from a change in accounting principle — — — ( 37,330 ) — — ( 37,330 )
Balance at September 29, 2019 82,159,002 822 480,322 1,577,034 ( 140,006 ) ( 2,655,756 ) ( 737,584 )
4 unchanged sentences
Net earnings — — — 89,764 — — 89,764
−Removed: Effect of interest rate swaps, net — — — — ( 2,462 ) — ( 2,462 )
−Removed: Effect of actuarial losses and prior service cost, net — — — — ( 43,284 ) — ( 43,284 )
+Added: Other comprehensive income — — — — 29,401 — 29,401
Cumulative-effect from a change in accounting principle — — — ( 2,870 ) — — ( 2,870 )
5 unchanged sentences
Net earnings — — — 165,755 — — 165,755
−Removed: Effect of actuarial gains and prior service cost, net — — — — 29,401 — 29,401
−Removed: Cumulative-effect from a change in accounting principle — — — ( 2,870 ) — — ( 2,870 )
−Removed: Balance at September 27, 2020 82,369,714 $ 824 $ 489,515 $ 1,636,211 $ ( 110,605 ) $ ( 2,809,306 ) $ ( 793,361 )
+Added: Other comprehensive income — — — — 36,351 — 36,351
+Added: Balance at October 3, 2021 82,536,059 $ 825 $ 500,441 $ 1,764,412 $ ( 74,254 ) $ ( 3,009,306 ) $ ( 817,882 )
See accompanying notes to consolidated financial statements.
15 unchanged sentences
GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”).
−Removed: On December 19, 2017, we entered into a definitive agreement to sell Qdoba Restaurant Corporation (“Qdoba”), a wholly owned subsidiary of the Company, to certain funds managed by affiliates of Apollo Global Management, LLC (the “Buyer”).
−Removed: The sale was completed on March 21, 2018, and operating results for Qdoba are included under the caption “Earnings from discontinued operations, net of income taxes” for all periods presented.
−Removed: Refer to Note 10, Discontinued Operations , for additional information.
+Added: Certain prior period information on the consolidated statement of cash flows has been reclassified to conform to the current year presentation.
Fiscal year — Our fiscal year is 52 or 53 weeks ending the Sunday closest to September 30.
−Removed: Comparisons throughout these notes to the consolidated financial statements refer to the 52 -week periods ended September 27, 2020, September 29, 2019 and September 30, 2018 for fiscal years 2020, 2019, and 2018, respectively .
+Added: Comparisons throughout these notes to the consolidated financial statements refer to the 53 -week period ended October 3, 2021 for the fiscal year 2021 and 52 -week periods ended September 27, 2020 and September 29, 2019 for fiscal years 2020 and 2019, respectively .
Principles of consolidation — The accompanying consolidated financial statements include the accounts of Jack in the Box Inc.
5 unchanged sentences
Actual amounts could differ materially from these estimates.
−Removed: Risks and uncertaintie s — In March 2020, the World Health Organization declared the novel coronavirus (“COVID-19”) outbreak to be a global pandemic, which continues to spread throughout the United States.
−Removed: The COVID-19 pandemic has disrupted and is expected to continue to disrupt our business.
−Removed: While sales have accelerated in the second half of fiscal 2020, we continue to see 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 have been mandated or encouraged by federal, state, and local governments.
−Removed: Substantially all of our restaurants have remained open, with dining rooms closed and locations operating in an off-premise capacity, which has historically represented close to 90 % of the Company’s business, including drive-thru, third-party delivery, and carry-out.
−Removed: The Company is closely monitoring the impact of the pandemic on all aspects of its business and is unable to predict the continued financial impact of the COVID-19 pandemic on our business due to numerous uncertainties.
−Removed: We cannot predict how or when the social impacts resulting from the pandemic may change, or how any such change will impact our business.
−Removed: Ongoing material adverse effects on our company-owned restaurants or the financial health of our franchisees could negatively affect our operating results, including reductions in revenue and cash flow and could impact the recoverability of our accounts receivable, long-lived assets, and/or goodwill.
−Removed: Restricted cash — In accordance with the terms of our securitized financing facility, certain cash balances are required to be held in trust and are restricted in their use.
−Removed: Such restricted cash primarily represents cash collections and cash reserves held by the trustee to be used for payments of interest and commitment fees for the Class A-1 and Class A-2 Notes due on a quarterly basis.
−Removed: With uncertainty surrounding COVID-19 events and as a cautionary measure, we have voluntarily elected to fund cash held in trust for quarterly interest and commitment fees due in February 2021.
−Removed: Accounts and other receivables, net, — Our accounts and other receivable, net is primarily comprised of receivables from franchisees, tenants, insurance receivables and credit card processors.
+Added: Restricted cash — In accordance with the terms of our securitized financing facility, certain cash balances are required to be held in trust.
+Added: Such restricted cash primarily represents cash collections and cash reserves held by the trustee to be used for payments of quarterly interest and commitment fees required for the Class A-1 and Class A-2 Notes.
+Added: Starting in the second quarter of 2020, with uncertainty surrounding COVID-19 events, we voluntarily elected to fund cash held in trust for one additional quarterly interest and commitment fee payment.
+Added: This voluntary election was discontinued in the second quarter of 2021.
+Added: As of October 3, 2021 and September 27, 2020, restricted cash balances were $ 18.2 million and $ 37.3 million, respectively.
+Added: Accounts and other receivables, net — Our accounts and other receivables, net is primarily comprised of receivables from franchisees, tenants, credit card processors, and insurance receivables.
Franchisee receivables primarily include rents, property taxes, royalties, marketing, sourcing and technology support fees associated with lease and franchise agreements, and notes from certain of our franchisees.
9 unchanged sentences
Maintenance and repairs are expensed as incurred.
−Removed: When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and gains or losses on the dispositions are included in “Impairment and other charges, net” in the accompanying consolidated statements of earnings.
+Added: When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and gains or losses on the dispositions are included in “Impairment and other (gains) charges, net” in the accompanying consolidated statements of earnings.
Buildings, equipment, and leasehold improvements are generally depreciated using the straight-line method based on the estimated useful lives of the assets, over the initial lease term for certain assets acquired in conjunction with the lease commencement for leased properties, or the remaining lease term for certain assets acquired after the commencement of the lease for leased properties.
4 unchanged sentences
Impairment of long-lived assets — We evaluate long-lived assets, such as property and equipment and operating lease right-of-use assets, for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable.
−Removed: Factors that we consider important individually or in combination trigger an impairment review include, but are not limited to, bankruptcy proceedings or other significant financial distress of a lessee, significant underperformance relative to historical or projected operating results, significant changes in our business and/or negative industry or economic trends, or our expectation to dispose of long-lived assets before the end of their estimated useful lives.
Long-lived assets are grouped for recognition and measurement of impairment at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets.
1 unchanged sentence
If the carrying amount of a long-lived asset group exceeds the sum of related undiscounted future cash flows, we recognize an impairment loss by the amount that the carrying value of the assets exceeds fair value.
−Removed: Refer to Note 9, Impairment and Other Charges, Net , for additional information.
+Added: Refer to Note 9, Impairment and Other (Gains) Charges, Net , for additional information.
Goodwill and intangible assets — Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired, if any.
10 unchanged sentences
Reacquired franchise rights are recorded in connection with our acquisition of franchised restaurants and are amortized over the remaining contractual period of the franchise contract in which the right was granted.
−Removed: As of September 27, 2020 and September 29, 2019, the carrying value of our intangible assets was $ 0.3 million and $ 0.4 million, respectively, and are included in “Intangible assets, net” in the accompanying consolidated balance sheets.
+Added: As of October 3, 2021 and September 27, 2020, the carrying value of our intangible assets was $ 0.5 million and $ 0.3 million, respectively, and are included in “Intangible assets, net” in the accompanying consolidated balance sheets.
Company-owned life insurance — We have purchased company-owned life insurance (“COLI”) policies to support our non-qualified benefit plans.
−Removed: The cash surrender values of these policies were $ 113.8 million and $ 112.8 million as of September 27, 2020 and September 29, 2019, respectively, and are included in “Other assets, net”, in the accompanying consolidated balance sheets.
+Added: The cash surrender values of these policies were $ 123.6 million and $ 113.8 million as of October 3, 2021 and September 27, 2020, respectively, and are included in “Other assets, net”, in the accompanying consolidated balance sheets.
Changes in cash surrender values are included in “Selling, general and administrative expenses” in the accompanying consolidated statements of earnings.
1 unchanged sentence
Leases — We evaluate the contracts entered into by the Company to determine whether such contracts contain leases.
−Removed: A contract contains a lease if the contract conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration.
+Added: A contract contains a lease if the contract conveys the right to control the use of identified property, plant, and equipment for a period of time in exchange for consideration.
At commencement, contracts containing a lease are further evaluated for classification as an operating or finance lease where the Company is a lessee, or as an operating, sales-type, or direct financing lease where the Company is a lessor, based on their terms.
The lease term and incremental borrowing rate for each lease requires judgement by management and can impact the classification of our leases as well as the value of our lease assets and liabilities.
−Removed: When determining the lease term, we consider option periods available, and include option periods in the measurement of the lease right-of-use (“ROU”) asset and lease liability where the exercise is reasonably certain to occur.
+Added: When determining the lease term, we consider option periods available, and include option periods in the measurement of the lease right-of-use (“ROU”) asset and lease
+Added: liability where the exercise is reasonably certain to occur.
As our leases do not provide an implicit discount rate, we have determined it is appropriate to use our estimated collateralized incremental borrowing rate, based on the yield curve for the respective lease terms, in calculating our lease liabilities.
18 unchanged sentences
Amounts recognized on unredeemed gift card balances were $ 0.6 million, $ 0.5 million, and $ 0.5 million in fiscal 2021, 2020, and 2019, respectively.
+Added: Pre-opening costs — Pre-opening costs associated with the opening of a new restaurant or the remodeling of an existing restaurant consist primarily of property rent and employee training costs.
+Added: Pre-opening costs associated with the opening of a restaurant that was closed upon acquisition consist of labor costs, maintenance and repair costs, and property rent.
+Added: Pre-opening costs are included in “Selling, general and administrative expenses” in the accompanying consolidated statements of earnings.
Self-insurance — We are self-insured for a portion of our workers’ compensation, general liability, employee medical and dental, and automotive claims.
1 unchanged sentence
We establish our insurance liability (undiscounted) and reserves using independent actuarial estimates of expected losses for determining reported claims and as the basis for estimating claims incurred, but not reported.
−Removed: As of September 27, 2020 and September 29, 2019, our estimated liability for general liability and workers’ compensation claims exceeded our self-insurance retention limits by $ 1.9 million and $ 3.6 million, respectively, which we expect our insurance providers to pay on our behalf in accordance with the contractual terms of our insurance policies.
+Added: As of October 3, 2021 and September 27, 2020, our estimated liability for general liability and workers’ compensation claims exceeded our self-insurance retention limits by $ 1.8 million and $ 1.9 million, respectively, which we expect our insurance providers to pay on our behalf in accordance with the contractual terms of our insurance policies.
Advertising costs — We administer a marketing fund that includes contractual contributions.
−Removed: In fiscal 2020, 2019 and 2018, the 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.
−Removed: 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 starting in October 2020.
+Added: In 2021, 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 2020 and April 2020 marketing fees.
+Added: In response to the economic burden associated with the COVID-19 pandemic, the Company reduced March 2020 marketing fees to 4.0 % and postponed the collection of these fees over the course of 24 months.
April 2020 marketing fees ranged from 2 % to 4 % based on annualized sales volumes, and these fees will be collected over three months beginning October 2020.
−Removed: As of September 27, 2020, postponed marketing fees which remain uncollected were $ 16.1 million, of which $ 12.6 million is included within “Accounts and other receivable, net” and $ 3.5 million is included within “Other assets, net” in our consolidated balance sheet.
+Added: As of October 3, 2021, postponed marketing fees which remain uncollected were $ 4.3 million which is included within “Accounts and other receivables, net” in our consolidated balance sheet.
Production costs of commercials, programming, and other marketing activities are charged to the marketing funds when the advertising is first used for its intended purpose, and the costs of advertising are charged to operations as incurred.
When contributions to the marketing fund exceed the related advertising expenses, advertising costs are accrued up to the amount of revenues on an annual basis since we are contractually obligated to spend these funds.
−Removed: As of September 27, 2020 and September 29, 2019, additional amounts accrued were $ 8.3 million and $ 0.3 million, respectively, for this requirement.
−Removed: There have been no incremental contributions to the marketing fund made in 2020.
−Removed: In fiscal 2019 and 2018, incremental contributions to the marketing fund were $ 2.0 million and $ 6.2 million, respectively.
+Added: As of October 3, 2021 and September 27, 2020, additional amounts accrued were $ 9.5 million and $ 8.3 million, respectively, for this requirement.
+Added: There have been no incremental contributions to the marketing fund made in 2021 or 2020.
+Added: In 2019, incremental contributions to the marketing fund were $ 2.0 million.
Total contributions made by the Company, including incremental contributions, are included in “Selling, general, and administrative expenses” in the accompanying consolidated statements of earnings.
In fiscal 2021, 2020, and 2019 advertising costs were $ 19.6 million, $ 17.1 million, and $ 19.0 million, respectively.
−Removed: Share-based compensation — We account for our share-based compensation under the FASB authoritative guidance on stock compensation , which generally requires, among other things, that all employee share-based compensation be measured using a fair value method and that the resulting compensation cost be recognized in the financial statements.
+Added: Share-based compensation — We account for our share-based compensation under the Financial Accounting Standards Board (“FASB”) authoritative guidance on stock compensation , which generally requires, among other things, that all employee share-based compensation be measured using a fair value method and that the resulting compensation cost be recognized in the financial statements.
Compensation expense for our share-based compensation awards is generally recognized on a straight-line basis over the shorter of the vesting period or the period from the date of grant to the date the employee becomes eligible to retire.
18 unchanged sentences
Refer to Note 16, Commitments and Contingencies , for additional information.
−Removed: 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.
−Removed: 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.
−Removed: The Company adopted the new guidance in the first quarter of 2020 using the alternative transition method;
−Removed: therefore, the comparative period has not been restated and continues to be reported under the previous lease guidance.
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: We did not elect the use-of-hindsight practical expedient, and therefore continued to utilize lease terms determined under the existing lease guidance.
−Removed: The adoption had a material impact on our consolidated balance sheet.
−Removed: 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.
−Removed: 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 consolidated balance sheet.
−Removed: 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.
−Removed: The effects of the changes made to the Company's consolidated balance sheet as of September 29, 2019 for the adoption of the new lease guidance were as follows (in thousands) :
−Removed: Balance at September 29, 2019 Adjustments due to ASC 842 adoption Balance at September 30, 2019
−Removed: Other assets:
−Removed: Operating lease ROU assets $ — $ 880,564 $ 880,564
−Removed: Intangible assets, net $ 425 $ ( 386 ) $ 39
−Removed: Deferred tax assets $ 85,564 $ 1,006 $ 86,570
−Removed: Liabilities and Stockholders’ Deficit
−Removed: Current liabilities:
−Removed: Current operating lease liabilities $ — $ 159,821 $ 159,821
−Removed: Accrued liabilities $ 120,083 $ ( 4,702 ) $ 115,381
−Removed: Long-term liabilities:
−Removed: Long-term operating lease liabilities, net of current portion $ — $ 770,818 $ 770,818
−Removed: Other long-term liabilities $ 263,770 $ ( 41,883 ) $ 221,887
−Removed: Stockholders’ deficit:
−Removed: Retained earnings $ 1,577,034 $ ( 2,870 ) $ 1,574,164
−Removed: 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.
−Removed: These costs are generally paid by the Company and reimbursed by the lessee.
−Removed: Historically, these costs have been recorded on a net basis in our consolidated statements of earnings but are now presented gross upon adoption of the new guidance.
−Removed: As a result, annual revenues and expenses reported in “Franchise rental revenues” and “Franchise occupancy expenses” increased by approximately $ 37.4 million in fiscal 2020.
−Removed: Refer to Note 8, Leases , for further information on our leases and the impact on the Company’s accounting policies.
−Removed: 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):
+Added: Effect of new accounting pronouncements adopted in fiscal 2021 — In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):
Measurement of Credit Losses on Financial Instruments , that requires measurement and recognition of expected versus incurred credit losses for financial assets held, including trade receivables.
−Removed: This standard is effective for the Company in our first quarter of fiscal 2021 and we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
+Added: The Company adopted the new guidance in the first quarter of 2021 using the modified retrospective method.
+Added: The adoption did not have a material impact to our consolidated financial statements.
+Added: The Company closely monitors the financial condition of our franchisees and estimates the allowance for credit losses based on the lifetime expected loss on receivables.
+Added: These estimates are based on historical collection experience with our franchisees as well as other factors, including current market conditions and events.
+Added: Credit quality is monitored through the timing of payments compared to predefined aging criteria and known facts regarding the financial condition of the franchisee or customer.
+Added: Account balances are charged off against the allowance after recovery efforts have ceased.
+Added: The Company’s allowance for receivables have not historically been material.
+Added: The following table summarizes the activity in our allowance for doubtful accounts ( in thousands ):
+Added: Balance as of September 27, 2020 $ ( 5,541 )
+Added: Provision for expected credit losses ( 770 )
+Added: Write-offs charged against the allowance 19
+Added: Balance as of October 3, 2021 $ ( 6,292 )
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.
−Removed: This standard is effective for the Company in our first quarter of fiscal 2021 and we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
−Removed: We reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our consolidated financial statements.
+Added: The Company adopted the standard in the first quarter of 2021.
+Added: The adoption of this standard did not have a material impact to our consolidated financial statements.
+Added: Effect of new accounting pronouncements to be adopted in future periods — We reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact on our consolidated financial statements.
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.
1 unchanged sentence
The agreement also requires franchisees to pay sourcing, technology support and other miscellaneous fees.
−Removed: Disaggregation of revenue — The following table disaggregates revenue by primary source for the fiscal years ended September 27, 2020 and September 29, 2019 (in thousands) :
+Added: Disaggregation of revenue — The following table disaggregates revenue by primary source for the fiscal years ended October 3, 2021, September 27, 2020, and September 29, 2019 (in thousands) :
+Added: 2021 2020 2019
Sources of revenue:
9 unchanged sentences
A summary of significant changes in our contract liabilities is presented below (in thousands) :
+Added: 2021 2020 2019
Deferred franchise fees at beginning of period $ 43,541 $ 46,273 $ 50,018
6 unchanged sentences
SUMMARY OF REFRANCHISINGS AND FRANCHISE ACQUISITIONS
−Removed: Refranchisings — The following table summarizes the number of restaurants sold to franchisees and gains recognized in each fiscal year ( dollars in thousands ):
−Removed: 2020 2019 2018
−Removed: Restaurants sold to franchisees — — 135
−Removed: Proceeds from the sale of company-operated restaurants:
−Removed: Cash (1) $ 3,395 $ 1,280 $ 26,486
−Removed: Notes receivable — — 70,461
−Removed: $ 3,395 $ 1,280 $ 96,947
−Removed: Net assets sold (primarily property and equipment) $ — $ — $ ( 21,329 )
−Removed: Goodwill related to the sale of company-operated restaurants — ( 2 ) ( 4,663 )
−Removed: Other (2) ( 134 ) 88 ( 24,791 )
−Removed: Gains on the sale of company-operated restaurants $ 3,261 $ 1,366 $ 46,164
−Removed: ________________________
−Removed: (1) Amounts in 2020, 2019, and 2018 include additional proceeds of $ 3.4 million, $ 1.3 million, and $ 1.4 million, respectively, related to the extension of the underlying franchise and lease agreements from the sale of restaurants in prior years.
−Removed: (2) Amounts in 2018 primarily represent $ 9.2 million of costs related to franchise remodel incentives, $ 8.7 million reduction of gains related to the modification of certain 2017 refranchising transactions, $ 2.3 million of maintenance and repair expenses and $ 3.7 million of other miscellaneous non-capital charges.
−Removed: Franchise acquisitions — During the second quarter of 2020, we acquired eight franchise restaurants as a result of a legal action filed in October 2019 against a franchisee in which we obtained a judgment in January 2020 granting us the possession of the restaurants.
−Removed: In 2019 and 2018 we did no t acquire any franchise restaurants.
+Added: Refranchisings — In 2021, 2020, and 2019, no company-operated restaurants were sold to franchisees.
+Added: Amounts included in “Gains on the sale of company-operated restaurants” in all periods related to resolutions of certain contingencies from the sale of restaurants in prior years.
+Added: Franchise acquisitions — In 2021 and 2020, we acquired 20 and 8 franchise restaurants, respectively.
+Added: In 2019 we did no t acquire any franchise restaurants.
+Added: Of the 20 restaurants acquired in 2021, we took over 16 restaurants as a result of an agreement with an underperforming franchisee who was in violation of franchise and lease agreements with the Company.
+Added: Under this agreement, the franchisee voluntarily agreed to turn over the restaurants.
+Added: The acquisition of the additional 4 restaurants in 2021 was the result of exercising our right of first refusal.
We account for the acquisition of franchised restaurants using the acquisition method of accounting for business combinations.
1 unchanged sentence
The goodwill recorded primarily relates to the sales growth potential of the market acquired and is expected to be deductible for income tax purposes.
−Removed: Total consideration on the fiscal 2020 acquisition was $ 0.9 million, comprised of receivables that were eliminated in acquisition accounting.
−Removed: The table below presents the allocation of the total purchase price to the fair value of assets acquired and liabilities assumed for the restaurants acquired ( in thousand s):
+Added: The following table provides detail of the combined acquisitions in 2021 and 2020 ( dollars in thousands ):
+Added: Restaurants acquired from franchisees 20 8
Inventory $ 258 $ 73
2 unchanged sentences
Other assets 10 6
+Added: Goodwill 613 414
+Added: Gains on the acquisition of franchise-operated restaurants ( 340 ) —
Liabilities assumed ( 277 ) ( 800 )
Total consideration $ 1,645 $ 859
+Added: Of the 2021 total consideration, $ 1.3 million is non-cash consideration and is comprised of $ 0.3 million receivables that were eliminated in acquisition accounting and $ 1.0 million of accounts payable that was recorded in acquisition accounting.
+Added: The accounts payable recorded is primarily related to estimated settlements with third parties to waive their liens and security interests on certain assets acquired and are subject to change based on final settlement amounts.
The changes in the carrying amount of goodwill during fiscal 2021 and 2020 were as follows ( in thousands ):
Balance at September 29, 2019 $ 46,747
−Removed: Sale of company-operated restaurants to franchisees ( 2 )
−Removed: Balance at September 29, 2019 46,747
Acquisition of franchise-operated restaurants 414
Balance at September 27, 2020 47,161
+Added: Acquisition of franchise-operated restaurants 613
+Added: Balance at October 3, 2021 $ 47,774
FAIR VALUE MEASUREMENTS
2 unchanged sentences
(Level 2) Significant
−Removed: Fair value measurements as of September 27, 2020:
+Added: Fair value measurements as of October 3, 2021:
Non-qualified deferred compensation plan (1) $ 18,555 $ 18,555 $ — $ —
8 unchanged sentences
(2) We did not have any transfers in or out of Level 1, 2, or 3 .
−Removed: The following table presents the carrying value and estimated fair value of our Class A-2 Notes as of September 27, 2020 and September 29, 2019 ( in thousands ):
−Removed: September 27,
+Added: The following table presents the carrying value and estimated fair value of our Class A-2 Notes as of October 3, 2021 and September 27, 2020 ( in thousands ):
2021 September 27,
2 unchanged sentences
The fair value of the Class A-2 Notes was estimated using Level 2 inputs based on quoted market prices in markets that are not considered active markets.
−Removed: The Company had $ 107.9 million of outstanding borrowings under its Variable Funding Notes as of September 27, 2020.
−Removed: The fair value of this loan approximates carrying value due to the variable rate nature of these borrowings.
Non-financial assets and liabilities — Our non-financial instruments, which primarily consist of property and equipment, operating lease right-of-use assets, goodwill, and intangible assets, are reported at carrying value and are not required to be measured at fair value on a recurring basis.
14 unchanged sentences
Location in Income 2019
−Removed: (Loss) gain recognized in OCI N/A $ ( 23,625 ) $ 18,769
+Added: Loss recognized in OCI N/A $ ( 23,625 )
Loss reclassified from accumulated OCI into net earnings Interest expense, net $ 24,328
Amounts reclassified from accumulated OCI into interest expense represent payments made to the counterparty for the effective portions of the interest rate swaps.
−Removed: During the fiscal years presented, our interest rate swaps had no hedge ineffectiveness.
+Added: During the fiscal year presented, our interest rate swaps had no hedge ineffectiveness.
The detail of our long-term debt at the end of each fiscal year is as follows ( in thousands ):
17 unchanged sentences
Exceeding the leverage ratio of 5.0 x does not violate any covenant related to the Class A-2 Notes.
−Removed: As of September 27, 2020, the Company’s actual leverage ratio was under 5.0 x, and as a result, quarterly principal payments are not required.
+Added: As of October 3, 2021, the Company’s actual leverage ratio was under 5.0 x, and as a result, quarterly principal payments are not required.
Accordingly, the entire outstanding balance of the Class A-2 Notes has been classified as long-term debt.
8 unchanged sentences
Following the anticipated repayment date (and any extensions thereof), additional interest will accrue equal to 5.00 % per annum.
−Removed: As of September 27, 2020 and September 29, 2019, $ 39.5 million and $ 45.6 million of letters of credit, respectively, were outstanding against the Variable Funding Notes, which relate primarily to interest reserves required under the Indenture.
+Added: As of October 3, 2021 and September 27, 2020, $ 39.5 million of letters of credit were outstanding against the Variable Funding Notes, which relate primarily to interest reserves required under the Indenture.
During the second quarter of 2020, to secure our liquidity position and provide financial flexibility given the uncertain market conditions, we borrowed $ 107.9 million under the Variable Funding Notes.
−Removed: As of September 27, 2020, unused borrowing capacity under our Variable Funding Notes was $ 2.7 million.
+Added: During the second quarter of 2021, the Company fully paid down its outstanding borrowings on its Variable Funding Notes.
+Added: As of October 3, 2021, unused borrowing capacity under our Variable Funding Notes was $ 110.5 million.
Guarantees and collateral — Pursuant to the Guarantee and Collateral Agreement, dated July 8, 2019 (the “Guarantee and Collateral Agreement”), among the Guarantors, in favor of the trustee, the Guarantors guarantee the obligations of the Master Issuer under the Indenture and related documents and secure the guarantee by granting a security interest in substantially all of their assets.
8 unchanged sentences
The costs related to our Variable Funding Notes are presented within “Other assets, net” and are being amortized over the Anticipated Repayment Date of August 2026 using the straight-line method.
−Removed: As of September 27, 2020, the effective interest rates, including the amortization of debt issuance costs, were 4.544 %, 4.800 %, and 5.197 % for the Class A-2-I Notes, Class A-2-II, Notes and Class A-2-III Notes, respectively.
−Removed: Maturities of long-term debt — Assuming repayment by the Anticipated Repayment Dates and based on the leverage ratio as of September 27, 2020, principal payments on our long-term debt outstanding at September 27, 2020 for each of the next five fiscal years and thereafter are as follows ( in thousands ):
+Added: As of October 3, 2021, the effective interest rates, including the amortization of debt issuance costs, were 4.545 %, 4.800 %, and 5.198 % for the Class A-2-I Notes, Class A-2-II Notes and Class A-2-III Notes, respectively.
+Added: Maturities of long-term debt — Assuming repayment by the Anticipated Repayment Dates and based on the leverage ratio as of October 3, 2021, principal payments on our long-term debt outstanding at October 3, 2021 for each of the next five fiscal years and thereafter are as follows ( in thousands ):
Thereafter 446,648
10 unchanged sentences
Revenues from leasing arrangements with our franchisees are presented in “Franchise rental revenues” in the accompanying consolidated statements of earnings, and the related expenses are presented in “Franchise occupancy expenses.”
−Removed: Rent concessions as lessee — In response to the pandemic, certain landlords have agreed to temporary rent concessions.
−Removed: These concessions generally relate to the deferral of certain rent payments for April, May, June, and July 2020 until future periods and total approximately $ 15.5 million.
−Removed: We considered the FASB’s recent guidance regarding rent concessions related to the effects of the COVID-19 pandemic and have elected to apply the temporary practical expedient to account for rent concessions as though enforceable rights and obligations for those concessions existed in the lease agreements.
−Removed: Therefore, we did not remeasure our lease ROU assets and liabilities, and we have not bifurcated our operating lease liabilities into the portion that remains subject to accretion of $ 947.8 million, and the portion that is related to the rent deferrals of $ 7.2 million as of September 27, 2020.
−Removed: Rent concessions as lessor — We postponed collection of approximately 40 % of April 2020 rents due from our franchisees totaling approximately $ 9.1 million, to be collected over three months beginning July 2020.
−Removed: Furthermore, we passed on to our franchisees approximately $ 5.6 million of the rent concessions secured from our landlords for April, May, June, and July 2020.
−Removed: As of September 27, 2020, all of the postponed April rent has been repaid and the franchisees have chosen to pay according to the original lease terms on approximately half of the rent concessions that we offered.
−Removed: As of September 27, 2020, rent concessions which remain uncollected were $ 2.6 million and are included within “Accounts and other receivable, net” in our consolidated balance sheets.
−Removed: Company as lessee — Leased assets and liabilities consisted of the following as of September 27, 2020 (in thousands) :
+Added: Company as lessee — Leased assets and liabilities consisted of the following as of October 3, 2021 and September 27, 2020 (in thousands) :
2021 September 27,
8 unchanged sentences
________________________
−Removed: (1) Included in “Property and equipment, net” on our consolidated balance sheet.
−Removed: (2) Included in “Current maturities of long-term debt” and “Long-term debt, net of current maturities” on our consolidated balance sheet.
−Removed: The following table presents the components of our lease costs in fiscal 2020 ( in thousands ):
+Added: (1) Included in “Property and equipment, net” on our consolidated balance sheets.
+Added: (2) Included in “Current maturities of long-term debt” and “Long-term debt, net of current maturities” on our consolidated balance sheets.
+Added: The following table presents the components of our lease costs in fiscal 2021 and 2020 ( in thousands ):
Finance lease cost:
5 unchanged sentences
$ 238,970 $ 232,311
+Added: ____________________________
(1) Included in “Depreciation and amortization” in our consolidated statement of earnings.
1 unchanged sentence
(3) Operating lease, short-term and variable lease costs associated with franchisees and company-operated restaurants are included in “Franchise occupancy expenses” and “Occupancy and other,” respectively, in our consolidated statement of earnings.
−Removed: For our closed restaurants, these costs are included in “Impairment and other, net” and all other costs are included in “Selling, general and administrative expenses.”
−Removed: (4) Includes $ 37.4 million of property taxes and common area maintenance costs which are reimbursed by sub-lessees.
−Removed: The following table summarizes the components of rent expense in fiscal 2019 and 2018, as accounted for under previous guidance ( in thousands ):
+Added: For our closed restaurants, these costs are included in “Impairment and other (gains) charges, net” and all other costs are included in “Selling, general and administrative expenses.”
+Added: (4) Includes $ 38.0 million and $ 37.4 million in 2021 and 2020, respectively, of property taxes and common area maintenance costs which are reimbursed by sub-lessees.
+Added: The following table summarizes the components of rent expense in fiscal 2019, as accounted for under previous guidance ( in thousands ):
Minimum rentals 184,587
9 unchanged sentences
Operating leases 4.1 % 4.2 %
−Removed: The following table presents as of September 27, 2020, the annual maturities of our lease liabilities ( in thousands ):
+Added: The following table presents as of October 3, 2021, the annual maturities of our lease liabilities ( in thousands ):
Finance Leases Operating Leases
11 unchanged sentences
________________________
−Removed: (1) The impact of rent concessions increased 2021 operating leases maturities by $ 7.2 million.
(1) Total future lease payments include non-cancellable commitments of $ 2.4 million for finance leases and $ 1,000.0 million for operating leases.
−Removed: The following table presents as of September 29, 2019, future minimum lease payments for non-cancellable leases ( in thousands ):
−Removed: Capital Leases Operating Leases
−Removed: 2020 $ 879 $ 193,313
−Removed: 2021 879 186,226
−Removed: 2022 879 145,794
−Removed: 2023 864 117,753
−Removed: 2024 396 87,420
−Removed: Thereafter 40 363,505
−Removed: Total minimum lease payments $ 3,937 $ 1,094,011
−Removed: imputed interest ( 343 )
−Removed: Present value of lease liability $ 3,594
−Removed: Less current portion ( 774 )
−Removed: Long-term lease obligations $ 2,820
Assets recorded under finance leases are included in property and equipment, and consisted of the following at each fiscal year-end ( in thousands ):
7 unchanged sentences
Financing cash flows from financing leases $ 829 $ 785
−Removed: Right-of-use assets obtained in exchange for lease obligations:
−Removed: Operating leases $ 181,532
−Removed: Financing leases $ 132
−Removed: Sale leaseback transactions — In fiscal 2020, we completed two sale-leaseback transactions of our restaurant properties with one occurring during the first quarter of 2020 and the other occurring during the third quarter of 2020.
+Added: Supplemental noncash information on lease liabilities arising from obtaining right-of-use assets:
+Added: Right-of-use assets obtained in exchange for new operating lease obligations $ 186,621 $ 181,532
+Added: Right-of-use assets obtained in exchange for new financing lease obligations $ 184 $ 132
+Added: Sale and leaseback transactions — In fiscal 2021, we sold two restaurant properties in sale and leaseback transactions for net proceeds of $ 3.9 million and recorded total gains of less than $ 0.1 million.
+Added: The leases have been accounted for as operating leases and contain an initial term of 20 years.
+Added: In fiscal 2020, we completed two sale and leaseback transactions of our restaurant properties with one occurring during the first quarter of 2020 and the other occurring during the third quarter of 2020.
In the first quarter of 2020, we completed a sale leaseback transaction of a multi-tenant commercial property in Los Angeles, California and leased back the parcel on which a company-operated restaurant is located.
2 unchanged sentences
Under the other arrangement, we received net proceeds of $ 2.4 million on a restaurant property sold and recognized a loss of less than $ 0.1 million on the sale.
−Removed: The initial term of the lease is 17 years and the lease has been accounted for as an operating lease.
−Removed: In fiscal 2020, we also completed the sale of one of our corporate office buildings as we move forward with our previously announced consolidation of our headquarters.
+Added: The initial term of the lease is 17 years and has been accounted for as an operating lease.
+Added: In fiscal 2020, we also completed the sale of one of our corporate office buildings as we moved forward with our previously announced consolidation of our headquarters.
We entered into a lease with the buyer to leaseback the property for up to 18 months with an option to terminate earlier without penalty, upon providing a 90 -day notice.
The net proceeds received on the sale were $ 20.6 million and the lease has been accounted for as an operating lease.
−Removed: A gain on the sale of $ 10.8 million was recognized, and is presented within “Impairment and other charges, net” in our consolidated statement of earnings.
+Added: A gain on the sale of $ 10.8 million was recognized and is presented within “Impairment and other (gains) charges, net” in our consolidated statement of earnings.
Company as lessor — The following table presents rental income ( in thousands ):
−Removed: Owned Properties Leased Properties Total
+Added: Owned Properties Leased Properties Total Owned Properties Leased Properties Total
Operating lease income - franchise $ 20,132 $ 218,028 $ 238,160 $ 19,785 $ 216,015 $ 235,800
3 unchanged sentences
________________________
−Removed: (1) Primarily relates to closed restaurant properties included in “Impairment and other, net” in our consolidated statement of earnings.
−Removed: The following table summarizes rents received in fiscal 2019 and 2018, as accounted for under previous guidance ( in thousands ):
−Removed: Total rental income (1) $ 277,623 $ 264,432
−Removed: Contingent rentals $ 38,506 $ 35,148
−Removed: ________________________
−Removed: (1) Includes contingent rentals.
−Removed: The following table presents as of September 27, 2020, future minimum rental receipts for non-cancellable leases and subleases ( in thousands ):
−Removed: September 27,
−Removed: 2021 (1) $ 261,388
−Removed: Thereafter 1,067,624
−Removed: Total minimum rental receipts $ 2,205,489
−Removed: ________________________
−Removed: (1) The impact of rent concessions passed on to franchisees increased 2021 by $ 2.6 million.
−Removed: The following table presents as of September 29, 2019, future minimum rental receipts for non-cancellable leases and subleases ( in thousands ):
−Removed: September 29,
+Added: (1) Primarily relates to closed restaurant properties included in “Impairment and other (gains) charges, net” in our consolidated statement of earnings.
+Added: The following table presents as of October 3, 2021, future minimum rental receipts for non-cancellable leases and subleases ( in thousands ):
2022 $ 238,021
3 unchanged sentences
2021 September 27,
−Removed: 2020 September 29,
Land $ 89,791 $ 88,187
4 unchanged sentences
$ 215,434 $ 239,694
−Removed: IMPAIRMENT AND OTHER CHARGES, NET
−Removed: Impairment and other charges, net, in the accompanying consolidated statements of earnings is comprised of the following in each fiscal year ( in thousands ):
+Added: IMPAIRMENT AND OTHER (GAINS) CHARGES, NET
+Added: Impairment and other (gains) charges, net, in the accompanying consolidated statements of earnings is comprised of the following in each fiscal year ( in thousands ):
2021 2020 2019
−Removed: Restructuring costs $ 1,168 $ 8,455 $ 10,647
+Added: Gains on disposition of property and equipment, net (1) ( 6,888 ) ( 9,768 ) ( 6,244 )
Costs of closed restaurants and other (2) 1,907 1,872 8,628
−Removed: (Gains) losses on disposition of property and equipment, net (1) ( 9,768 ) ( 6,244 ) 1,627
Accelerated depreciation (3) 1,592 235 1,616
−Removed: Operating restaurant impairment charges — — 211
−Removed: $ ( 6,493 ) $ 12,455 $ 18,418
−Removed: ________________________
−Removed: (1) In 2020, includes a $ 10.8 million gain related to the sale of one of our corporate office buildings.
−Removed: In 2019, includes a $ 5.7 million gain related to the sale of property.
−Removed: Restructuring costs — Restructuring costs in fiscal 2020, 2019, and 2018 include charges resulting from a plan that management initiated to reduce our general and administrative costs, which was completed in the third quarter of 2020.
−Removed: In fiscal 2019, charges also include costs resulting from the exploration of strategic alternatives (the “Strategic Alternatives Evaluation”), which was concluded in the third quarter of 2019.
−Removed: In fiscal 2018, charges also include costs related to the evaluation of potential alternatives with respect to the Qdoba brand (the “Qdoba Evaluation”), which resulted in the sale of Qdoba.
−Removed: The following is a summary of the costs incurred in connection with these activities during each fiscal year ( in thousands ):
−Removed: 2020 2019 2018
−Removed: Employee severance and related costs $ 1,168 $ 7,169 $ 7,845
−Removed: Strategic Alternatives Evaluation (1) — 1,286 —
−Removed: Qdoba Evaluation (2) — — 2,211
−Removed: Other — — 591
+Added: Restructuring costs (4) 7 1,168 8,455
$ ( 3,382 ) $ ( 6,493 ) $ 12,455
________________________
−Removed: (1) Strategic Alternatives Evaluation costs are primarily related to third party advisory services.
−Removed: (2) Qdoba Evaluation costs are primarily related to third party advisory services and retention compensation.
−Removed: Total accrued severance costs related to our restructuring activities are included in “Accrued liabilities” and changed as follows during fiscal 2020 (in thousands) :
−Removed: Balance as of September 29, 2019 $ 2,100
−Removed: Costs incurred 1,168
−Removed: Cash payments ( 3,268 )
−Removed: Balance as of September 27, 2020 $ —
−Removed: Costs of closed restaurants and other — Costs of closed restaurants include impairment charges as a result of our decision to close restaurants, ongoing costs associated with closed restaurants, and canceled project costs.
−Removed: During 2019, the Company recorded a charge of $ 3.5 million related to the write-off of software development costs as a result of management’s decision to discontinue a technology project.
+Added: (1) In 2021, 2020 and 2019 gains on disposition of property and equipment primarily related to the sales of restaurant properties, in addition to the sale of one of our corporate office buildings in 2020.
+Added: (2) In 2021, 2020 and 2019 costs of closed restaurants primarily include lease termination and impairment charges on future lease commitments and expected ancillary cost, net of anticipated sublease rentals, as a result of our decision to close restaurants, ongoing costs associated with closed restaurants, and canceled project costs.
+Added: (3) In 2021, 2020, and 2019 accelerated depreciation primarily related to facility improvements, restaurant remodels, and information technology assets.
+Added: (4) In 2020 and 2019 restructuring costs include charges resulting from a plan that management initiated to reduce our general and administrative costs, which was completed in the third quarter of 2020.
+Added: In fiscal 2019, charges also include costs resulting from the exploration of strategic alternatives, which was concluded in the third quarter of 2019.
DISCONTINUED OPERATIONS
Qdoba — In December 2017, we entered into a stock purchase agreement (the “Qdoba Purchase Agreement”) with the Buyer to sell all issued and outstanding shares of Qdoba.
−Removed: The Buyer completed the acquisition of Qdoba on March 21, 2018 (the “Qdoba Sale”) for an aggregate purchase price of approximately $ 298.5 million.
+Added: The Buyer completed the acquisition of Qdoba on March 21, 2018 (the “Qdoba Sale”).
We also entered into a Transition Services Agreement with the Buyer pursuant to which the Buyer received certain services (the “Services”) to enable it to operate the Qdoba business after the closing of the Qdoba Sale.
2 unchanged sentences
As of September 21, 2019, we are no longer providing transition services to Qdoba.
−Removed: In fiscal 2019 and 2018 we recorded $ 7.0 million and $ 7.9 million, respectively, related to the Services as a reduction of “Selling, general, and administrative expenses” in the consolidated statements of earnings.
−Removed: Further, in 2018, we entered into an Employee Agreement with the Buyer pursuant to which we continued to employ all Qdoba employees who work for the Buyer (the “Qdoba Employees”) from the date of closing of the Qdoba Sale through December 31, 2018.
−Removed: During the term of the Employee Agreement, we paid all wages and benefits of the Qdoba Employees and received reimbursement of these costs from the Buyer.
−Removed: From October 1, 2018 to December 31, 2018, we paid $ 35.4 million of Qdoba wages and benefits pursuant to the Employee Agreement.
−Removed: As the Qdoba Sale represented a strategic shift that had a major effect on our operations and financial results, in accordance with the provisions of FASB authoritative guidance on the presentation of financial statements, Qdoba results are classified as discontinued operations in our consolidated statements of earnings and our consolidated statements of cash flows for all periods presented.
−Removed: The following table summarizes results of operations in periods that have included discontinued operations ( in thousands, except per share data ):
−Removed: 2020 2019 2018
−Removed: Company restaurant sales $ — $ — $ 192,620
−Removed: Franchise revenues — — 9,337
−Removed: Company restaurant costs (excluding depreciation and amortization) — — ( 166,122 )
−Removed: Franchise costs (excluding depreciation and amortization) — — ( 2,338 )
−Removed: Selling, general and administrative expenses (1) 244 174 ( 19,286 )
−Removed: Depreciation and amortization — — ( 5,012 )
−Removed: Impairment and other charges, net (1) 270 ( 262 ) ( 2,305 )
−Removed: Interest expense, net (2) — — ( 4,787 )
−Removed: Operating earnings (loss) from discontinued operations before income taxes 514 ( 88 ) 2,107
−Removed: (Loss) gain on Qdoba Sale — ( 85 ) 30,717
−Removed: Earnings (loss) from discontinued operations before income taxes 514 ( 173 ) 32,824
+Added: In 2019, we recorded $ 7.0 million in income related to the Services as a reduction of “Selling, general, and administrative expenses” in the consolidated statements of earnings.
+Added: The following table presents results of operations in periods which have been included in discontinued operations (in thousands):
+Added: Total revenues $ — $ —
+Added: Total cost and (income) expense (1) ( 514 ) 173
+Added: Earnings (losses) before income taxes 514 ( 173 )
Income tax expense (benefit) (2) 144 ( 2,863 )
Earnings from discontinued operations, net of income taxes $ 370 $ 2,690
−Removed: Net earnings per share from discontinued operations:
−Removed: Basic $ 0.02 $ 0.10 $ 0.60
−Removed: Diluted $ 0.02 $ 0.10 $ 0.59
________________________
−Removed: (1) In fiscal 2018, selling, general and administrative expenses include corporate costs directly in support of Qdoba operations.
−Removed: All other corporate costs were classified in continuing operations.
(1) Amounts in 2020 and 2019 include resolutions of certain contingencies that existed at the date of sale which were insignificant in nature.
−Removed: (2) Our credit facility required us to make a mandatory prepayment (“Qdoba Prepayment”) on our term loan upon the closing of the Qdoba Sale, which was $ 260.0 million.
−Removed: Interest expense associated with our credit facility was allocated to discontinued operations based on our estimate of the mandatory prepayment that was made upon closing of the Qdoba Sale.
(2) In fiscal 2019, the Company entered into a bilateral California election with Quidditch Acquisition, Inc.
1 unchanged sentence
This election reduced the Company’s fiscal year 2018 California tax liability on the divestment by $ 2.8 million.
−Removed: Lease guarantees — While all operating leases held in the name of Qdoba were part of the Qdoba Sale, some of the leases remain guaranteed by the Company pursuant to one or more written guarantees (the “Guarantees”).
−Removed: In the event Qdoba fails to meet its payment and performance obligations under such guaranteed leases, we may be required to make rent and other payments to the landlord under the requirements of the Guarantees.
−Removed: Should we, as guarantor of the lease obligations, be required to make any lease payments due for the remaining term of the subject leases, the maximum amount we may be required to pay is approximately $ 29.8 million as of September 27, 2020.
−Removed: The lease terms extend for a maximum of approximately 15 more years as of September 27, 2020, and we would remain a guarantor of the leases in the event the leases are extended for any established renewal periods.
−Removed: In the event that we are obligated to make payments under the Guarantees, we believe the exposure is limited due to contractual protections and recourse available in the lease agreements, as well as the Qdoba Purchase Agreement, including a requirement of the landlord to mitigate damages by re-letting the properties in default, and indemnity from the Buyer.
−Removed: As of September 27, 2020, no amounts have been accrued relating to these guarantees as we do not believe any losses are probable.
Income taxes consist of the following in each fiscal year ( in thousands ):
12 unchanged sentences
State income taxes, net of federal tax benefit 5.1 % 5.3 % 5.3 %
−Removed: One-time, non-cash impact of the Tax Cuts and Jobs Act — % — % 17.5 %
Stock compensation excess tax benefit ( 0.5 ) % ( 0.4 ) % ( 0.1 ) %
14 unchanged sentences
Accrued insurance 5,389 6,500
−Removed: Tax loss and tax credit carryforwards 4,273 5,327
+Added: Other reserves and allowances 4,050 2,440
Share-based compensation 4,039 4,143
Accrued incentive compensation 3,455 2,585
−Removed: Other reserves and allowances 2,440 2,965
+Added: Tax loss and tax credit carryforwards 3,129 4,273
Accrued compensation expense 710 672
−Removed: Lease commitments related to closed or refranchised locations — 3,786
−Removed: Deferred interest deduction — 3,188
Other, net 3,424 2,364
9 unchanged sentences
Net deferred tax assets $ 51,517 $ 72,322
−Removed: Deferred tax assets as of September 27, 2020 include state net operating loss carry-forwards of approximately $ 20.1 million expiring at various times between 2021 and 2038.
−Removed: At September 27, 2020, we recorded a valuation allowance of $ 2.1 million related to losses and state tax credits, which decreased from the $ 2.5 million at September 29, 2019 primarily due to the release of the valuation allowance on California Enterprise Zone Credits.
−Removed: We believe it is more likely than not that these net operating loss and credit carry-forwards will not be realized and that all other deferred tax assets will be realized through future taxable income or alternative tax strategies.
+Added: Deferred tax assets as of October 3, 2021 include state net operating loss carryforwards of approximately $ 16.6 million, of which $ 12.1 million has an indefinite carryforward.
+Added: The remainder will expire at various times between 2022 and 2038.
+Added: At October 3, 2021, we recorded a valuation allowance of $ 1.3 million related to state tax credits, which decreased from the $ 2.1 million at September 27, 2020 due to the release of the valuation allowance on California Enterprise Zone Credits and state net operating loss carryforwards.
+Added: We believe it is more likely than not that these credit carryforwards will not be realized and that all other deferred tax assets will be realized through future taxable income or alternative tax strategies.
The major jurisdictions in which the Company files income tax returns include the United States and states in which we operate that impose an income tax.
13 unchanged sentences
This plan allows participants to defer up to 50 % of their salary and 85 % of their bonus, on a pre-tax basis.
−Removed: In addition, to compensate executives who were hired or promoted into an eligible position prior to May 7, 2015 and who may no longer participate in our supplemental defined benefit pension plan, we also contribute a supplemental amount equal to 4 % of an eligible employee’s salary and bonus for a period of 10 years in such eligible position.
−Removed: Our contributions under the non-qualified deferred compensation plan were $ 0.3 million in fiscal 2020, $ 0.2 million and $ 0.2 million in fiscal 2019 and 2018, respectively.
+Added: Our contributions under the non-qualified deferred compensation plan were less than $ 0.1 million in fiscal 2021, $ 0.3 million and $ 0.2 million in fiscal 2020 and 2019, respectively.
Defined benefit pension plans — We sponsor two defined benefit pension plans, a “Qualified Plan” covering substantially all full-time employees hired prior to January 1, 2011, and an unfunded supplemental executive retirement plan (“SERP”) which provides certain employees additional pension benefits and was closed to new participants effective January 1, 2007.
14 unchanged sentences
Obligation at beginning of year $ 412,573 $ 521,931 $ 78,971 $ 79,893 $ 20,965 $ 25,632
−Removed: Service cost — — — — — —
Interest cost 12,558 13,377 2,169 2,499 563 807
Participant contributions — — — — 112 106
−Removed: Actuarial loss (gain) 14,498 61,029 1,739 8,771 ( 4,391 ) 2,343
+Added: Actuarial (gain) loss ( 785 ) 14,498 ( 672 ) 1,739 ( 3,525 ) ( 4,391 )
Benefits paid ( 14,293 ) ( 12,980 ) ( 5,243 ) ( 5,160 ) ( 1,044 ) ( 1,246 )
21 unchanged sentences
Other changes in plan assets and benefit obligations recognized in OCI:
−Removed: Net actuarial loss (gain) $ 7,527 $ 51,263 $ 1,739 $ 8,771 $ ( 4,391 ) $ 2,343
+Added: Net actuarial (gain) loss $ ( 39,936 ) $ 7,527 $ ( 672 ) $ 1,739 $ ( 3,526 ) $ ( 4,391 )
Pension settlement costs — ( 39,218 ) — — — —
2 unchanged sentences
Total recognized in OCI ( 43,446 ) ( 35,335 ) ( 2,434 ) 2 ( 3,185 ) ( 4,409 )
−Removed: Net periodic benefit cost (credit) and other losses 36,661 ( 3,755 ) 4,236 4,402 825 838
+Added: Net periodic benefit (credit) cost and other losses ( 3,272 ) 36,661 3,931 4,236 222 825
Total recognized in comprehensive income $ ( 46,718 ) $ 1,326 $ 1,497 $ 4,238 $ ( 2,963 ) $ ( 3,584 )
7 unchanged sentences
The funded status is measured as the difference between the fair value of a plan’s assets and its PBO.
−Removed: As of September 27, 2020 and September 29, 2019, the Qualified Plan’s ABO exceeded the fair value of its plan assets.
−Removed: The SERP is an unfunded plan and, as such, had no plan assets as of September 27, 2020 and September 29, 2019.
+Added: As of October 3, 2021 and September 27, 2020, the Qualified Plan’s ABO exceeded the fair value of its plan assets.
+Added: The SERP is an unfunded plan and, as such, had no plan assets as of October 3, 2021 and September 27, 2020.
The following sets forth the PBO, ABO, and fair value of plan assets of our pension plans as of the measurement date in each fiscal year ( in thousands ):
13 unchanged sentences
Actuarial loss 3,510 3,644 2,754
−Removed: Net periodic benefit cost (credit) $ 36,661 $ ( 3,755 ) $ ( 3,673 )
−Removed: Service cost $ — $ — $ 490
+Added: Net periodic benefit (credit) cost $ ( 3,272 ) $ 36,661 $ ( 3,755 )
Interest cost $ 2,169 $ 2,499 $ 3,080
4 unchanged sentences
Interest cost $ 563 $ 807 $ 997
−Removed: Actuarial loss (gain) 18 ( 159 ) ( 27 )
+Added: Actuarial (gain) loss ( 341 ) 18 ( 159 )
Net periodic benefit cost $ 222 $ 825 $ 838
4 unchanged sentences
Assumptions — We determine our actuarial assumptions on an annual basis.
−Removed: In determining the present values of our benefit obligations and net periodic benefit costs as of and for the fiscal years ended September 27, 2020, September 29, 2019, and September 30, 2018, we used the following weighted-average assumptions:
+Added: In determining the present values of our benefit obligations and net periodic benefit costs as of and for the fiscal years ended October 3, 2021, September 27, 2020, and September 29, 2019, we used the following weighted-average assumptions:
2021 2020 2019
3 unchanged sentences
Discount rate 2.99 % 2.84 % 3.24 %
−Removed: Rate of future pay increases (2) N/A 3.50 % 3.50 %
+Added: Rate of future pay increases (2) N/A N/A 3.50 %
Postretirement health plans:
5 unchanged sentences
Discount rate 2.84 % 3.24 % 4.37 %
−Removed: Rate of future pay increases 3.50 % 3.50 % 3.50 %
+Added: Rate of future pay increases (2) N/A 3.50 % 3.50 %
Postretirement health plans:
2 unchanged sentences
(1) Determined as of end of year.
−Removed: (2) Rate is not applicable as there are no active employees as of fiscal year end 2020.
+Added: (2) Rate is not applicable as there are no active employees as of fiscal year end 2020 and 2021.
(3) Determined as of beginning of year.
6 unchanged sentences
The assumed discount rate and expected long-term rate of return on assets have a significant effect on amounts reported for our pension and postretirement plans.
−Removed: If the discount rate and long-term rate of return used were decreased by a quarter percentage point, fiscal 2020 earnings before income taxes would have increased by less than $ 0.1 million and decreased by $ 1.0 million, respectively.
+Added: If the discount rate and long-term rate of return used were decreased by a quarter percentage point, fiscal 2021 earnings before income taxes would have decreased by less than $ 0.1 million and increased by $ 0.9 million, respectively.
The assumed average rate of compensation increase is the average annual compensation increase expected over the remaining employment periods for the participating employees.
42 unchanged sentences
Cash and cash equivalents (1) $ 1,969 $ — $ 1,969 $ —
−Removed: U.S (2) 83,676 83,676 — —
+Added: (2) 66,921 66,921 — —
International (3),(4) 63,087 31,128 — —
8 unchanged sentences
Cash and cash equivalents (1) $ 3,665 $ — $ 3,665 $ —
−Removed: U.S (2) 99,124 99,124 — —
+Added: (2) 83,676 83,676 — —
International (3),(4) 81,228 40,319 — —
10 unchanged sentences
These investments are valued by the trustee at closing prices from national exchanges on the valuation date.
−Removed: (3) International equity securities are comprised of investments in common stock of companies located outside of the U.S for total return purposes.
+Added: (3) International equity securities are comprised of investments in common stock of companies located outside of the U.S.
+Added: for total return purposes.
These investments are valued by the trustee at closing prices from national exchanges on the valuation date, or the values are adjusted as a result of market movements following the close of local trading using inputs to models that are observable either directly or indirectly.
2 unchanged sentences
The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.
−Removed: (5) Investment grade fixed income consists of debt obligations either issued by the US government or have a rating of BBB- / Baa or higher assigned by a major credit rating agency.
+Added: (5) Investment grade fixed income consists of debt obligations either issued by the U.S.
+Added: government or have a rating of BBB- / Baa or higher assigned by a major credit rating agency.
These investments are valued based on unadjusted quoted market prices (Level 1), or based on quoted prices in inactive markets, or whose values are based on models, but the inputs to those models are observable either directly or indirectly (Level 2).
21 unchanged sentences
We will continue to evaluate contributions to our Qualified Plan based on changes in pension assets as a result of asset performance in the current market and economic environment.
−Removed: Expected benefit payments are based on the same assumptions used to measure our benefit obligations at September 27, 2020 and include estimated future employee service, if applicable.
+Added: Expected benefit payments are based on the same assumptions used to measure our benefit obligations at October 3, 2021 and include estimated future employee service, if applicable.
SHARE-BASED EMPLOYEE COMPENSATION
4 unchanged sentences
Our Amended and Restated 2004 Stock Incentive Plan authorizes the issuance of up to 11,600,000 common shares in connection with the granting of stock options, stock appreciation rights, restricted stock purchase rights, restricted stock bonuses, restricted stock units, or performance units to our employees and directors.
−Removed: There were 1,764,132 shares of common stock available for future issuance under this plan as of September 27, 2020.
+Added: There were 1,755,983 shares of common stock available for future issuance under this plan as of October 3, 2021.
We also maintain a deferred compensation plan for non-management directors under which those who are eligible to receive fees or retainers may choose to defer receipt of their compensation.
2 unchanged sentences
This plan provides for the issuance of up to 350,000 shares of common stock in connection with the crediting of stock equivalents.
−Removed: There were 142,918 shares of common stock available for future issuance under this plan as of September 27, 2020.
+Added: There were 142,918 shares of common stock available for future issuance under this plan as of October 3, 2021.
Compensation expense — The components of share-based compensation expense, included within “Selling, general, and administrative expenses” in our consolidated statement of earnings, in each fiscal year are as follows ( in thousands ):
3 unchanged sentences
Performance share awards 830 254 1,417
−Removed: Nonvested restricted stock awards — — 33
Non-management directors’ deferred compensation 224 263 263
Total share-based compensation expense $ 4,048 $ 4,394 $ 8,074
−Removed: Nonvested restricted stock units — Nonvested restricted stock units (“RSUs”) are generally issued to executives, non-management directors and certain other members of management and employees.
−Removed: Prior to fiscal 2011, RSUs were granted to certain Executive and Senior Vice Presidents pursuant to our share ownership guidelines.
−Removed: These awards vest upon retirement or termination based on years of service.
−Removed: There were 34,700 of such RSUs outstanding as of September 27, 2020.
−Removed: Beginning fiscal 2011, we eliminated ownership share grants to executive officers and implemented a stock holding requirement on grants of time-vesting RSUs that vest ratably over four years, and require executives to hold until termination of service 50 % of after-tax net shares resulting from the vesting of RSUs.
−Removed: There were 46,351 of such RSUs outstanding as of September 27, 2020.
−Removed: RSUs issued to non-management directors vest 12 months from the date of grant, or upon termination of board service if the director elects to defer receipt and totaled 64,836 units outstanding as of September 27, 2020.
−Removed: RSUs issued to certain other employees either cliff vest or vest ratably over three years and totaled 29,254 units outstanding as of September 27, 2020.
+Added: Nonvested restricted stock units — Nonvested restricted stock units (“RSUs”) are generally issued to employees and non-employee directors.
+Added: Grants to executive officers of time-vesting RSUs vest ratably over four years and are subject to a stock holding requirement of 50 % of after-tax net shares resulting from the vesting of RSUs and must be held until termination of service.
+Added: There were 38,650 of such RSUs outstanding as of October 3, 2021.
+Added: RSUs issued to non-management directors vest 12 months from the date of grant, or upon termination of board service, including RSUs for which the director elected to defer receipt until termination of board service, and totaled 66,250 units outstanding as of October 3, 2021.
+Added: RSUs issued to certain other employees either cliff vest or vest ratably over three years and totaled 36,297 units outstanding as of October 3, 2021.
These awards are amortized to compensation expense over the estimated vesting period based upon the fair value of our common stock on the award date discounted by the present value of the expected dividend stream over the vesting period.
6 unchanged sentences
Forfeited ( 18,787 ) $ 87.70
−Removed: RSUs outstanding at September 27, 2020 175,141 $ 59.65
−Removed: As of September 27, 2020, there was approximately $ 2.6 million of total unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted-average period of 1.4 years.
+Added: RSUs outstanding at October 3, 2021 141,197 $ 76.84
+Added: As of October 3, 2021, there was approximately $ 4.4 million of total unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted-average period of 2.3 years.
The weighted-average grant date fair value of awards granted was $ 95.44 , $ 73.94 , and $ 86.08 in fiscal years 2021, 2020, and 2019, respectively.
12 unchanged sentences
Options outstanding at September 27, 2020 207,463 $ 91.85
−Removed: Granted 129,173 $ 75.23
+Added: Granted — N/A
Exercised ( 75,028 ) $ 88.60
1 unchanged sentence
Expired ( 84,218 ) $ 97.31
−Removed: Options outstanding at September 27, 2020 207,463 $ 91.85 2.48 $ 252
−Removed: Options exercisable at September 27, 2020 174,104 $ 94.67 1.81 $ 107
−Removed: The aggregate intrinsic value in the table above is the amount by which the current market price of our stock on September 27, 2020 exceeds the weighted-average exercise price.
+Added: Options outstanding at October 3, 2021 33,117 $ 92.44 3.27 $ 315
+Added: Options exercisable at October 3, 2021 27,109 $ 96.26 2.84 $ 169
+Added: The aggregate intrinsic value in the table above is the amount by which the current market price of our stock on October 3, 2021 exceeds the weighted-average exercise price.
We use a valuation model to determine the fair value of options granted that requires the input of highly subjective assumptions, including the expected volatility of the stock price.
1 unchanged sentence
2020 2019 (1)
−Removed: Risk-free interest rate 1.7 % N/A 2.4 %
−Removed: Expected dividends yield 2.1 % N/A 1.8 %
−Removed: Expected stock price volatility 28.1 % N/A 28.8 %
−Removed: Expected life of options (in years) 3.47 N/A 3.40
−Removed: Weighted-average grant date fair value $ 13.97 N/A $ 18.49
+Added: Risk-free interest rate N/A 1.7 % N/A
+Added: Expected dividends yield N/A 2.1 % N/A
+Added: Expected stock price volatility N/A 28.1 % N/A
+Added: Expected life of options (in years) N/A 3.47 N/A
+Added: Weighted-average grant date fair value N/A $ 13.97 N/A
+Added: ________________________
+Added: (1) No stock option awards were granted in fiscal 2021 or fiscal 2019.
The risk-free interest rate was determined by a yield curve of risk-free rates based on published U.S.
3 unchanged sentences
The expected life of the options represents the period of time the options are expected to be outstanding and is based on historical trends.
−Removed: As of September 27, 2020, there was approximately $ 0.3 million of total unrecognized compensation cost related to stock options grants that is expected to be recognized over a weighted-average period of 2 years.
+Added: As of October 3, 2021, there was less than $ 0.1 million of total unrecognized compensation cost related to stock options grants that is expected to be recognized over a weighted-average period of 1.2 years.
The total intrinsic value of stock options exercised was $ 1.6 million, $ 0.7 million, and $ 0.5 million in fiscal years 2021, 2020, and 2019, respectively.
1 unchanged sentence
Performance share awards issued to executives vest at the end of a three-year period and vested amounts may range from 0 % to a maximum of 150 % of targeted amounts depending on the achievement of performance measures at the end of a three-year period.
−Removed: If the awardee ceases to be employed by the Company prior to the last day of the performance period due to retirement, disability, or death, the performance share awards become vested pro-rata based on the number of full accounting periods the awardee was continuously employed by the Company.
+Added: If the awardee ceases to be employed by the Company prior to the last day of the performance period due to retirement, disability, or death, the performance share awards become vested pro-rata based on the number of full accounting periods the awardee was continuously employed by the Company during the performance period.
The expected cost of the shares is based on the fair value of our stock on the date of grant and is reflected over the vesting period with a reduction for estimated forfeitures.
9 unchanged sentences
Performance adjustments 1,632 $ 82.80
−Removed: Performance share awards outstanding at September 27, 2020 25,042 $ 63.59
−Removed: As of September 27, 2020, there was approximately $ 0.5 million of total unrecognized compensation cost related to performance share awards, which is expected to be recognized over a weighted-average period of 1.6 years.
+Added: Performance share awards outstanding at October 3, 2021 35,097 $ 79.92
+Added: As of October 3, 2021, there was approximately $ 1.4 million of total unrecognized compensation cost related to performance share awards, which is expected to be recognized over a weighted-average period of 2.0 years.
The weighted-average grant date fair value of awards granted was $ 88.88 , $ 81.02 , and $ 84.60 in fiscal years 2021, 2020, and 2019, respectively.
The total fair value of awards that became fully vested during fiscal years 2021, 2020, and 2019 was $ 0.6 million, $ 0.5 million, and $ 2.1 million, respectively.
−Removed: Nonvested stock awards — We previously issued nonvested stock awards (“RSAs”) to certain executives under our share ownership guidelines.
−Removed: Effective fiscal 2009, we no longer issue RSA awards and replaced them with grants of RSUs.
−Removed: The RSAs vest, subject to the discretion of our Board of Directors in certain circumstances, upon retirement or termination based upon years of service.
−Removed: These awards are amortized to compensation expense over the estimated vesting period based upon the fair value of our common stock on the award date.
−Removed: During fiscal 2020, 33,243 RSAs were released with a weighted-average grant date fair value of $ 26.47 per share.
−Removed: Compensation cost related to RSAs was fully recognized by the end of 2018.
−Removed: As of September 27, 2020, there were no RSAs outstanding.
Non-management directors’ deferred compensation — All awards outstanding under our directors’ deferred compensation plan are accounted for as equity-based awards and deferred amounts are converted into stock equivalents based on a per share price equal to the average of the closing price of our common stock for the 10 trading days immediately preceding the date the deferred compensation is credited to the director’s account.
+Added: During fiscal 2021 and 2019, no shares of common stock were issued in connection with director retirements.
During fiscal 2020, 204 shares of common stock were issued in connection with director retirements with a fair value of less than $ 0.1 million.
−Removed: During fiscal years 2019 and 2018 no common stock was issued in connection with director retirements.
The following is a summary of the stock equivalent activity for fiscal 2021:
4 unchanged sentences
Dividend equivalents 2,253 $ 102.80
−Removed: Stock distribution ( 204 ) $ 86.74
−Removed: Stock equivalents outstanding at September 27, 2020 105,876 $ 40.96
+Added: Stock equivalents outstanding at October 3, 2021 109,463 $ 43.06
STOCKHOLDERS’ DEFICIT
−Removed: Repurchases of common stock — The Company purchased 1.9 million shares of its common stock in the first quarter of fiscal 2020 at an average price of $ 81.41 per shares for an aggregate cost of $ 153.5 million.
−Removed: There were no other repurchases of common stock in fiscal 2020.
−Removed: As of September 27, 2020, there was approximately $ 122.2 million remaining under share repurchase programs authorized by the Board of Directors, consisting of $ 22.2 million that expires in November 2020 and $ 100.0 million that expires in November 2021.
−Removed: Repurchases of common stock included in our consolidated statement of cash flows for fiscal 2020 include $ 2.0 million related to repurchase transactions traded in fiscal 2019 but settled in fiscal 2020.
−Removed: Dividends — In fiscal 2020, the Board of Directors declared three cash dividends of $ 0.40 per share totaling $ 27.7 million.
+Added: Repurchases of common stock — In fiscal 2021, the Company purchased 1.9 million shares of its common stock for an aggregate cost of $ 200.0 million.
+Added: As of October 3, 2021, there was no remaining amount under share repurchase programs authorized by the Board of Directors.
+Added: Dividends — In fiscal 2021, the Board of Directors declared four cash dividends of $ 0.40 , $ 0.40 , $ 0.44 , and $ 0.44 , respectively, totaling $ 37.6 million.
Future dividends are subject to approval by our Board of Directors.
19 unchanged sentences
These agreements require minimum purchases of fountain beverage syrup, by the Company and its franchisees at agreed upon prices until the total volume commitments have been reached.
−Removed: The volume commitments are not subject to any time limit and as of September 27, 2020, we estimate that it will take approximately 5 years for both of these commitments to be completed.
−Removed: The Company estimates future annual purchases under these agreements to be approximately $ 62.1 million as of September 27, 2020 based on the expected ratio of usage at company-operated to franchise restaurants.
+Added: The volume commitments are not subject to any time limit.
+Added: As of October 3, 2021, we estimate that it will take approximately four years to complete the Coca-Cola purchase commitment and approximately five years to complete the Dr.
+Added: Pepper purchase commitment.
+Added: The Company estimates future annual purchases under these agreements to be approximately $ 51.3 million as of October 3, 2021 based on the expected ratio of usage at company-operated to franchise restaurants.
We also have entered into various arrangements with vendors providing information technology services with no early termination fees.
−Removed: The Company’s unconditional purchase obligations on these contracts total approximately $ 11.3 million over the next three years .
+Added: The Company’s unconditional purchase obligations on these contracts total approximately $ 7.3 million over the next two years .
Legal matters — We assess contingencies, including litigation contingencies, to determine the degree of probability and range of possible loss for potential accrual in our financial statements.
5 unchanged sentences
The ultimate amount of loss may differ from these estimates.
−Removed: As of September 27, 2020 and September 29, 2019, the Company had recorded aggregate liabilities of $ 3.8 million and $ 10.0 million, respectively, within “Accrued liabilities” on our consolidated balance sheets for all matters including those described below, that were probable and reasonably estimable.
−Removed: While we believe that additional losses beyond these accruals are reasonably possible, we cannot estimate a possible loss contingency or range of reasonably possible loss contingencies beyond these accruals.
+Added: As of October 3, 2021 and September 27, 2020, the Company had recorded aggregate liabilities of $ 7.5 million and $ 3.8 million, respectively, within “Accrued liabilities” on our consolidated balance sheets for all matters including those described below, that were probable and reasonably estimable.
+Added: We believe that the ultimate determination of liability in connection with legal claims pending against us, if any, in excess of amounts already provided for such matters in the consolidated financial statements, will not have a material adverse effect on our business, our annual results of operations, liquidity or financial position.
Jack in the Box Inc.
3 unchanged sentences
In June 2017, the court granted class certification with respect to state law claims of improper deductions and late payment of final wages.
−Removed: In November 2019, the court issued a ruling on various dispositive motions, disallowing a portion of plaintiffs’ claimed damages.
The parties participated in a voluntary mediation on March 16, 2020, but the matter did not settle.
−Removed: The plaintiffs recently filed a motion for reconsideration of the court’s prior denial of class certification regarding meal and rest break claims which was denied by the court.
−Removed: The plaintiffs have now filed a motion requesting permission to appeal this ruling.
−Removed: The Company has opposed the motion and the parties are currently awaiting a decision from the 9th Circuit as to whether or not it will allow the appeal.
−Removed: The Company continues to dispute liability and the plaintiffs’ damage calculations and will continue to vigorously defend against the lawsuit.
+Added: The plaintiffs recently filed a motion for reconsideration of the court’s prior denial of class certification regarding meal and rest break claims, which remains pending before the court.
+Added: The Company continues to dispute liability and the plaintiffs’ damages calculations and will continue to vigorously defend against the lawsuit.
Other legal matters — In addition to the matter described above, we are subject to normal and routine litigation brought by former or current employees, customers, franchisees, vendors, landlords, shareholders, or others.
2 unchanged sentences
We record receivables from third party insurers when recovery has been determined to be probable.
−Removed: We believe that the ultimate determination of liability in connection with legal claims pending against us, if any, in excess of amounts already provided for such matters in the consolidated financial statements, will not have a material adverse effect on our business, our annual results of operations, liquidity or financial position;
−Removed: however, it is possible that our business, results of operations, liquidity, or financial condition could be materially affected in a particular future reporting period by the unfavorable resolution of one or more matters or contingencies during such period.
+Added: Lease guarantees — We remain contingently liable for certain leases relating to our former Qdoba business which we sold in fiscal 2018.
+Added: Under the Qdoba Purchase Agreement, the buyer has indemnified the Company of all claims related to these guarantees.
+Added: As of October 3, 2021, the maximum potential liability of future undiscounted payments under these leases is approximately $ 26.7 million.
+Added: The lease terms extend for a maximum of approximately 16 more years and we would remain a guarantor of the leases in the event the leases are extended for any established renewal periods.
+Added: In the event of default, we believe the exposure is limited due to contractual protections and recourse available in the lease agreements, as well as the Qdoba Purchase Agreement, including a requirement of the landlord to mitigate damages by re-letting the properties in default, and indemnity from the Buyer.
+Added: The Company has not recorded a liability for these guarantees as we believe the likelihood of making any future payments is remote.
SUPPLEMENTAL CONSOLIDATED CASH FLOW INFORMATION ( in thousands )
4 unchanged sentences
Non-cash investing and financing transactions:
−Removed: Increase in notes receivable from the sale of company-operated restaurants $ — $ — $ 70,461
Increase in dividends accrued or converted to common stock equivalents $ 232 $ 117 $ 247
−Removed: Decrease in equipment capital lease obligations from the sale of company-operated restaurants, closure of stores, and termination of equipment leases $ — $ — $ 3,617
−Removed: Decrease in finance lease obligations from the termination of building leases $ 24 $ 41 $ 271
−Removed: Equipment finance lease obligations incurred $ 132 $ 20 $ 98
Consideration for franchise acquisitions $ 1,305 $ 859 $ —
−Removed: (Decrease) increase in obligations for purchases of property and equipment $ ( 2,696 ) $ ( 2,117 ) $ 822
−Removed: (Decrease) increase in obligations for treasury stock repurchases $ ( 2,025 ) $ ( 12,337 ) $ 14,362
+Added: Increase (decrease) in obligations for purchases of property and equipment $ 1,755 $ ( 2,696 ) $ ( 2,117 )
+Added: Decrease in obligations for treasury stock repurchases $ — $ ( 2,025 ) $ ( 12,337 )
SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENT INFORMATION ( in thousands )
2021 September 27,
−Removed: 2020 September 29,
Accounts and other receivables, net:
Trade $ 75,273 $ 77,082
−Removed: Notes receivable 1,193 278
+Added: Notes receivable, current portion 1,467 1,193
Income tax receivable 1,157 1,591
6 unchanged sentences
Franchise tenant improvement allowances 34,124 29,437
+Added: Notes receivable, less current portion 4,544 1,851
Other 15,970 16,964
1 unchanged sentence
Accrued liabilities:
−Removed: Insurance $ 25,310 $ 27,888
Payroll and related taxes $ 34,649 $ 34,475
Sales and property taxes 23,174 22,038
−Removed: Gift card liability 2,195 2,036
+Added: Insurance 21,218 25,310
+Added: Deferred rent income 17,892 1,687
+Added: Advertising 13,097 9,861
Deferred franchise fees 4,824 4,934
4 unchanged sentences
Deferred franchise fees 35,608 38,607
−Removed: Straight-line rent accrual — 29,537
Other 50,380 47,076
$ 156,342 $ 206,494
−Removed: UNAUDITED QUARTERLY RESULTS OF OPERATIONS ( in thousands, except per share data )
−Removed: Ended 12 Weeks Ended
−Removed: Fiscal Year 2020 January 19,
−Removed: 2020 April 12,
−Removed: 2020 September 27,
−Removed: Revenues $ 307,673 $ 216,157 $ 242,275 $ 255,401
−Removed: Earnings from operations $ 69,950 $ 32,842 $ 61,790 $ 66,002
−Removed: Net earnings $ 7,897 $ 11,463 $ 32,555 $ 37,849
−Removed: Net earnings per share:
−Removed: Basic $ 0.33 $ 0.50 $ 1.42 $ 1.65
−Removed: Diluted $ 0.33 $ 0.50 $ 1.42 $ 1.64
−Removed: Ended 12 Weeks Ended
−Removed: Fiscal Year 2019 January 20,
−Removed: 2019 April 14,
−Removed: 2019 September 29,
−Removed: Revenues $ 290,786 $ 215,727 $ 222,359 $ 221,235
−Removed: Earnings from operations $ 58,324 $ 47,123 $ 48,261 $ 48,515
−Removed: Net earnings $ 34,098 $ 25,089 $ 13,189 $ 22,061
−Removed: Net earnings per share:
−Removed: Basic $ 1.32 $ 0.97 $ 0.51 $ 0.86
−Removed: Diluted $ 1.31 $ 0.96 $ 0.50 $ 0.85
SUBSEQUENT EVENTS
3 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.