SAN DIEGO--(BUSINESS WIRE)--May 13, 2020--Jack in the Box Inc. (NASDAQ: JACK) today reported financial results for the second quarter ended April 12, 2020.

Increase/(Decrease) in same-store sales:
		12 Weeks Ended					28 Weeks Ended
		April 12, 2020		April 14, 2019			April 12, 2020		April 14, 2019
Company		(4.1)%		0.6%			(0.1)%		0.5%
Franchise		(4.2)%		0.1%			(0.9)%		0.0%
System		(4.2)%		0.2%			(0.8)%		0.0%

Jack in the Box^® system same-store sales decreased 4.2 percent for the quarter. Company same-store sales decreased 4.1 percent in the second quarter driven by average check growth of 6.4 percent while transactions decreased 10.5 percent. As previously disclosed, system same-store sales increased 5.2 percent in the seven weeks ended March 8, 2020, prior to any impacts from the COVID-19 pandemic.

Lenny Comma, chairman and chief executive officer, said, "Our same-store sales growth during the first seven weeks of the quarter exemplified our strategy of combining compelling bundles at competitive price points with innovation, including the menu addition of Tiny Tacos. Tiny Tacos helped to re-establish our equity in Tacos while delivering a craveable product at a great price.

"As we navigate the COVID-19 pandemic, I am proud of the way our teams in the restaurant, our employees, our franchisees and partners have responded nimbly to the changing occasions of our consumers. We remain committed to operating our restaurants with integrity, providing great guest service, and most importantly, protecting the health and safety of our employees and guests. We are dedicated to remaining open to serve guests during this time of uncertainty.

"Given this uncertainty, we are prioritizing actions to bolster liquidity in the event we encounter greater volatility to our business. Because of this, we have temporarily suspended both share repurchases and the quarterly dividend typically paid next month with the intent to re-evaluate these decisions each quarter as we gain greater clarity on any further negative impact to our business trends."

Results for the second quarter reflect the significant and unprecedented impacts of the COVID-19 pandemic, which primarily impacted the five weeks ended April 12, 2020.

Earnings from continuing operations were $11.5 million, or $0.50 per diluted share, for the second quarter of fiscal 2020 compared with $25.1 million, or $0.96 per diluted share, for the second quarter of fiscal 2019.

Operating Earnings Per Share ⁽¹⁾, a non-GAAP measure, were $0.50 in the second quarter of fiscal 2020 compared with $0.99 in the prior year quarter. A reconciliation of non-GAAP Operating Earnings Per Share to GAAP results is provided below, with additional information included in the attachment to this release.

		12 Weeks Ended							28 Weeks Ended
		April 12, 2020				April 14, 2019			April 12, 2020				April 14, 2019
Diluted earnings per share from continuing operations – GAAP		$	0.50			$	0.96		$	0.82			$	2.15
Restructuring charges		—				0.03			0.03				0.20
Gains on the sale of company-operated restaurants		—				—			(0.05		)		(0.01		)
Gain on sale of corporate office building		—				—			(0.32		)		—
Pension settlement charges		0.01				—			1.14				—
Excess tax benefits from share-based compensation arrangements		(0.01		)		—			—				—
Operating Earnings Per Share – non-GAAP		$	0.50			$	0.99		$	1.62			$	2.34

Adjusted EBITDA⁽²⁾, a non-GAAP measure, was $46.3 million in the second quarter of fiscal 2020 compared with $61.2 million for the prior year quarter.

Restaurant-Level Margin⁽³⁾, a non-GAAP measure, decreased by 700 basis points to 20.6 percent of company restaurant sales in the second quarter of fiscal 2020 from 27.6 percent a year ago. The decrease was due primarily to sales deleverage during COVID-19 impacted weeks and wage and commodity inflation. Food and packaging costs, as a percentage of company restaurant sales, increased 160 basis points in the quarter driven by higher ingredient costs, which were partially offset by menu price increases. Commodity costs increased 4.4 percent in the quarter as compared with the prior year.

Franchise-Level Margin⁽³⁾, a non-GAAP measure, decreased by $2.7 million in the second quarter, primarily driven by lower royalties and rental revenues as a result of the decline in franchise same-store sales. As previously disclosed, the company provided relief to franchisees within the quarter by postponing collection of April rent payments and reducing and postponing March marketing fees, which are typically collected in April. In addition to previously announced relief, the company also reduced April marketing fees, to a range of 2 to 4 percent of gross restaurant sales based on sales volume, and postponed these fees, which are typically collected in May, to be collected over three months beginning October 2020. This relief did not have any impact on Franchise-Level Margin⁽³⁾.

Franchise-Level Margin⁽³⁾, as a percentage of total franchise revenues, was 38.6 percent in the second quarter of fiscal 2020. The company adopted the new lease accounting standard, ASC 842, in fiscal 2020, which resulted in grossing up both franchise rental revenues and franchise occupancy expenses by approximately $9.5 million in the second quarter. Without these adjustments, Franchise-Level Margin⁽³⁾ would have been 41.4 percent of total franchise revenues. This compares with 41.3 percent in the prior year.

As a percentage of system-wide sales, G&A was 2.7 percent in the second quarter of fiscal 2020 compared with 1.7 percent in the prior year quarter. The $7.0 million increase in G&A, which excludes advertising, was primarily driven by:

• mark-to-market adjustments on investments supporting the company's non-qualified retirement plans resulting in a $7.2 million year-over-year increase in G&A; and
• an increase of $1.9 million related to litigation settlements.
• These increases were partially offset by a $2.4 million reduction in incentive compensation.

Advertising costs, which are included in SG&A, decreased $0.4 million in the second quarter due primarily to the reduction in marketing fees for March and April. In the second quarter of fiscal 2020, SG&A expenses increased by $6.6 million and were 11.2 percent of revenues compared with 8.2 percent in the prior year quarter.

Impairment and other charges, net, decreased $0.4 million in the second quarter. Restructuring charges, which are included in Impairment and other charges, net, in the accompanying condensed consolidated statements of earnings, decreased $0.8 million in the quarter.

Interest expense, net, increased by $2.1 million in the second quarter driven by higher debt balances.

The effective tax rate for the second quarter of fiscal 2020 was 32.3 percent and was elevated primarily due to the decrease in operating earnings before income tax and an increase in losses from the mark-to-market adjustments associated with investments supporting the company's non-qualified retirement plans. Excluding non-recurring impacts of share-based compensation, pension settlements, and restructuring, the effective tax rate in the second quarter was 33.9 percent.

Capital Allocation and Liquidity Position

The company did not repurchase any shares in the second quarter of fiscal 2020, and as announced on April 15, 2020, temporarily suspended its share repurchase program. This leaves approximately $122 million remaining under share repurchase programs authorized by its Board of Directors, consisting of $22 million remaining that expire in November 2020 and approximately $100 million remaining that expire in November 2021.

In the context of an unprecedented global pandemic, the company believes it is prudent to maintain maximum financial flexibility by preserving its capital and maintaining its healthy liquidity position. In addition to temporarily suspending its share repurchase program, the company announced today that on May 8, 2020, its Board of Directors approved the company’s voluntary election to temporarily suspend quarterly dividend payments. The company will continue to monitor and revisit its capital allocation policies throughout the third quarter with the goal of reinstating dividends and share repurchases once it has more clarity around the scope and duration of the disruption caused by COVID-19.

As of the end of the second quarter, the company had approximately $169 million in cash, of which $132 million was unrestricted cash.

Withdrawing Long-Term Guidance

Due to the unprecedented adverse impact of the COVID-19 pandemic on business results, the company is withdrawing its long-term guidance. The company will provide an update when it can reasonably estimate the impacts of the COVID-19 pandemic on business results. As previously announced, the company also withdrew its guidance for the fiscal year ending September 27, 2020.

Conference Call

The company will host a conference call for financial analysts and investors on Thursday, May 14, 2020, beginning at 8:30 a.m. PT (11:30 a.m. ET). The conference call will be broadcast live over the Internet via the Jack in the Box Inc. corporate website. To access the live call through the Internet, log onto the Investors section of the Jack in the Box Inc. website at http://investors.jackinthebox.com at least 15 minutes prior to the event in order to download and install any necessary audio software. A replay of the call will be available through the Jack in the Box Inc. corporate website for 21 days, beginning at approximately 11:30 a.m. PT on May 14, 2020.

About Jack in the Box Inc.

Jack in the Box Inc. (NASDAQ: JACK), based in San Diego, is a restaurant company that operates and franchises Jack in the Box^® restaurants, one of the nation’s largest hamburger chains, with more than 2,200 restaurants in 21 states and Guam. For more information on Jack in the Box, including franchising opportunities, visit www.jackinthebox.com.

_____________________________

(1) Operating Earnings Per Share represents diluted earnings per share from continuing operations on a GAAP basis excluding gains or losses on the sale of company-operated restaurants, restructuring charges, gain on sale of corporate office building, pension settlement charges, and the excess tax benefits from share-based compensation arrangements. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

(2) Adjusted EBITDA represents net earnings on a GAAP basis excluding earnings or losses from discontinued operations, income taxes, interest expense, net, gains or losses on the sale of company-operated restaurants, impairment and other charges, net, depreciation and amortization, the amortization of franchise tenant improvement allowances and pension settlement charges. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

(3) Restaurant-Level Margin and Franchise-Level Margin are non-GAAP measures. These non-GAAP measures are reconciled to earnings from operations, the most comparable GAAP measure, in the attachment to this release. See "Reconciliation of Non-GAAP Measurements to GAAP Results."

Safe Harbor Statement

This press release contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements may be identified by words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “goals,” “guidance,” “intend,” “plan,” “project,” “may,” “will,” “would” and similar expressions. These statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate. These estimates and assumptions involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. Factors that may cause our actual results to differ materially from any forward-looking statements include, but are not limited to: the potential impacts to our business and operations resulting from the coronavirus COVID-19 pandemic, the success of new products, marketing initiatives and restaurant remodels and drive-thru enhancements; the impact of competition, unemployment, trends in consumer spending patterns and commodity costs; the company's ability to reduce G&A and operate efficiently; the company’s ability to achieve and manage its planned growth, which is affected by the availability of a sufficient number of suitable new restaurant sites, the performance of new restaurants, risks relating to expansion into new markets and successful franchise development; the ability to attract, train and retain top-performing personnel, litigation risks; risks associated with disagreements with franchisees; supply chain disruption; food-safety incidents or negative publicity impacting the reputation of the company's brand; increased regulatory and legal complexities, including federal, state and local policies regarding mitigation strategies for controlling the coronavirus COVID-19 pandemic, risks associated with the amount and terms of the securitized debt issued by certain of our wholly owned subsidiaries; adverse investor response to the company's temporary suspension of dividends and its stock repurchase program; and stock market volatility. These and other factors are discussed in the company’s annual report on Form 10-K and its periodic reports on Form 10-Q filed with the Securities and Exchange Commission, which are available online at http://investors.jackinthebox.com or in hard copy upon request. The company undertakes no obligation to update or revise any forward-looking statement, whether as the result of new information or otherwise.

JACK IN THE BOX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (In thousands, except per share data) (Unaudited)
		12 Weeks Ended							28 Weeks Ended
		April 12, 2020			April 14, 2019				April 12, 2020				April 14, 2019
Revenues:
Company restaurant sales		$	74,380		$	76,682			$	179,744			$	179,514
Franchise rental revenues		69,885			61,646				165,969				145,536
Franchise royalties and other		37,764			38,410				90,230				90,660
Franchise contributions for advertising and other services		34,128			38,989				87,887				90,803
		216,157			215,727				523,830				506,513
Operating costs and expenses, net:
Company restaurant costs (excluding depreciation and amortization):
Food and packaging		22,237			21,676				53,585				51,292
Payroll and employee benefits		24,261			22,768				56,151				53,042
Occupancy and other		12,570			11,100				28,528				27,113
Total company restaurant costs		59,068			55,544				138,264				131,447
Franchise occupancy expenses		48,341			38,618				112,858				89,331
Franchise support and other costs		2,971			2,797				7,647				5,642
Franchise advertising and other services expenses		35,734			40,245				90,958				94,515
Selling, general and administrative expenses		24,203			17,585				52,451				41,668
Depreciation and amortization		12,282			12,690				29,010				29,859
Impairment and other charges, net		716			1,125				(8,575		)		8,823
Gains on the sale of company-operated restaurants		—			—				(1,575		)		(219		)
		183,315			168,604				421,038				401,066
Earnings from operations		32,842			47,123				102,792				105,447
Other pension and post-retirement expenses, net		512			343				39,490				799
Interest expense, net		15,409			13,276				35,351				30,650
Earnings from continuing operations and before income taxes		16,921			33,504				27,951				73,998
Income taxes		5,458			8,374				8,591				17,747
Earnings from continuing operations		11,463			25,130				19,360				56,251
Earnings (losses) from discontinued operations, net of taxes		—			(41		)		—				2,936
Net earnings		$	11,463		$	25,089			$	19,360			$	59,187
Net earnings per share - basic:
Earnings from continuing operations		$	0.50		$	0.97			$	0.83			$	2.17
Earnings from discontinued operations		—			—				—				0.11
Net earnings per share (1)		$	0.50		$	0.97			$	0.83			$	2.28
Net earnings per share - diluted:
Earnings from continuing operations		$	0.50		$	0.96			$	0.82			$	2.15
Earnings from discontinued operations		—			—				—				0.11
Net earnings per share (1)		$	0.50		$	0.96			$	0.82			$	2.26
Weighted-average shares outstanding:
Basic		22,803			25,943				23,339				25,922
Diluted		22,895			26,145				23,490				26,137
Dividends declared per common share		$	0.40		$	0.40			$	0.80			$	0.80

(1)		Earnings per share may not add due to rounding.

JACK IN THE BOX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) (Unaudited)
		April 12, 2020				September 29, 2019
ASSETS
Current assets:
Cash		$	132,161			$	125,536
Restricted cash		37,023				26,025
Accounts and other receivables, net		66,331				45,235
Inventories		1,821				1,776
Prepaid expenses		18,460				9,015
Current assets held for sale		6,186				16,823
Other current assets		3,970				2,718
Total current assets		265,952				227,128
Property and equipment:
Property and equipment, at cost		1,149,656				1,176,241
Less accumulated depreciation and amortization		(793,435		)		(784,307		)
Property and equipment, net		356,221				391,934
Other assets:
Operating lease right-of-use asset		903,010				—
Intangible assets, net		294				425
Goodwill		47,161				46,747
Deferred tax assets		77,410				85,564
Other assets, net		211,205				206,685
Total other assets		1,239,080				339,421
		$	1,861,253			$	958,483
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Current maturities of long-term debt		$	13,819			$	774
Current operating lease liabilities		163,077				—
Accounts payable		47,867				37,066
Accrued liabilities		120,949				120,083
Total current liabilities		345,712				157,923
Long-term liabilities:
Long-term debt, net of current maturities		1,368,446				1,274,374
Long-term operating lease liabilities, net of current portion		781,653				—
Other long-term liabilities		242,368				263,770
Total long-term liabilities		2,392,467				1,538,144
Stockholders’ deficit:
Preferred stock $0.01 par value, 15,000,000 shares authorized, none issued		—				—
Common stock $0.01 par value, 175,000,000 shares authorized, 82,318,622 and 82,159,002 issued, respectively		823				822
Capital in excess of par value		489,847				480,322
Retained earnings		1,574,930				1,577,034
Accumulated other comprehensive loss		(133,220		)		(140,006		)
Treasury stock, at cost, 59,646,773 and 57,760,573 shares, respectively		(2,809,306		)		(2,655,756		)
Total stockholders’ deficit		(876,926		)		(737,584		)
		$	1,861,253			$	958,483

JACK IN THE BOX INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
		28 Weeks Ended
		April 12, 2020				April 14, 2019
Cash flows from operating activities:
Net earnings		$	19,360			$	59,187
Earnings from discontinued operations		—				2,936
Earnings from continuing operations		19,360				56,251
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		29,010				29,859
Amortization of franchise tenant improvement allowances and other		1,765				1,137
Deferred finance cost amortization		3,046				1,224
Excess tax benefits from share-based compensation arrangements		(77		)		(47		)
Deferred income taxes		6,783				3,955
Share-based compensation expense		5,865				4,708
Pension and postretirement expense		39,490				799
Losses (gains) on cash surrender value of company-owned life insurance		3,150				(1,336		)
Gains on the sale of company-operated restaurants		(1,575		)		(219		)
Gains on the disposition of property and equipment, net		(10,170		)		(138		)
Non-cash operating lease costs		(13,118		)		—
Impairment charges and other		133				896
Changes in assets and liabilities, excluding acquisitions:
Accounts and other receivables		(22,858		)		(11,658		)
Inventories		28				(91		)
Prepaid expenses and other current assets		(10,350		)		3,701
Accounts payable		20,660				(3,904		)
Accrued liabilities		1,400				(6,532		)
Pension and postretirement contributions		(3,582		)		(3,671		)
Franchise tenant improvement allowance distributions		(5,811		)		(6,697		)
Other		(4,222		)		(7,421		)
Cash flows provided by operating activities		58,927				60,816
Cash flows from investing activities:
Purchases of property and equipment		(12,777		)		(18,191		)
Proceeds from the sale of property and equipment		22,394				1,479
Proceeds from the sale and leaseback of assets		17,373				1,944
Proceeds from the sale of company-operated restaurants		1,575				133
Collections on notes receivable		—				6,491
Other		1,036				—
Cash flows provided by (used in) investing activities		29,601				(8,144		)
Cash flows from financing activities:
Borrowings on revolving credit facilities		111,376				189,736
Repayments of borrowings on revolving credit facilities		(3,500		)		(180,800		)
Principal repayments on debt		(3,640		)		(21,757		)
Debt issuance costs		(216		)		(3,615		)
Dividends paid on common stock		(18,466		)		(20,615		)
Proceeds from issuance of common stock		3,559				243
Repurchases of common stock		(155,576		)		(14,362		)
Payroll tax payments for equity award issuances		(4,442		)		(2,617		)
Cash flows used in financing activities		(70,905		)		(53,787		)
Net increase (decrease) in cash and restricted cash		17,623				(1,115		)
Cash and restricted cash at beginning of period		151,561				2,705
Cash and restricted cash at end of period		$	169,184			$	1,590

JACK IN THE BOX INC. AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION

The following table presents certain income and expense items included in our condensed consolidated statements of earnings as a percentage of total revenues, unless otherwise indicated. Percentages may not add due to rounding.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS DATA (Unaudited)
		12 Weeks Ended						28 Weeks Ended
		April 12, 2020			April 14, 2019			April 12, 2020			April 14, 2019
Revenues:
Company restaurant sales		34.4	%		35.5	%		34.3	%		35.4	%
Franchise rental revenues		32.3	%		28.6	%		31.7	%		28.7	%
Franchise royalties and other		17.5	%		17.8	%		17.2	%		17.9	%
Franchise contributions for advertising and other services		15.8	%		18.1	%		16.8	%		17.9	%
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%
Operating costs and expenses, net:
Company restaurant costs:
Food and packaging (1)		29.9	%		28.3	%		29.8	%		28.6	%
Payroll and employee benefits (1)		32.6	%		29.7	%		31.2	%		29.5	%
Occupancy and other (1)		16.9	%		14.5	%		15.9	%		15.1	%
Total company restaurant costs (1)		79.4	%		72.4	%		76.9	%		73.2	%
Franchise occupancy expenses (2)		69.2	%		62.6	%		68.0	%		61.4	%
Franchise support and other costs (3)		7.9	%		7.3	%		8.5	%		6.2	%
Franchise advertising and other services expenses (4)		104.7	%		103.2	%		103.5	%		104.1	%
Selling, general and administrative expenses		11.2	%		8.2	%		10.0	%		8.2	%
Depreciation and amortization		5.7	%		5.9	%		5.5	%		5.9	%
Impairment and other charges, net		0.3	%		0.5	%		(1.6)	%		1.7	%
Gains on the sale of company-operated restaurants		—	%		—	%		(0.3)	%		—	%
Earnings from operations		15.2	%		21.8	%		19.6	%		20.8	%
Income tax rate (5)		32.3	%		25.0	%		30.7	%		24.0	%

(1)		As a percentage of company restaurant sales.
(2)		As a percentage of franchise rental revenues.
(3)		As a percentage of franchise royalties and other.
(4)		As a percentage of franchise contributions for advertising and other services.
(5)		As a percentage of earnings from continuing operations and before income taxes.

Jack in the Box system sales (dollars in thousands):
			12 Weeks Ended								28 Weeks Ended
			April 12, 2020				April 14, 2019				April 12, 2020				April 14, 2019
	Company-owned restaurant sales		$	74,380			$	76,682			$	179,744			$	179,514
	Franchised restaurant sales (1)		695,926				721,350				1,675,271				1,681,310
	System sales (1)		$	770,306			$	798,032			$	1,855,015			$	1,860,824

(1)		Franchised restaurant sales represent sales at franchised restaurants and are revenues of our franchisees. System sales include company and franchised restaurant sales. We do not record franchised sales as revenues; however, our royalty revenues, marketing fees and percentage rent revenues are calculated based on a percentage of franchised sales. We believe franchised and system restaurant sales information is useful to investors as they have a direct effect on the company's profitability.

The following table summarizes the year-to-date changes in the number and mix of Jack in the Box company and franchise restaurants:

SUPPLEMENTAL RESTAURANT ACTIVITY INFORMATION (Unaudited)
		2020										2019
		Company			Franchise			Total				Company			Franchise			Total
Beginning of year		137			2,106			2,243				137			2,100			2,237
New		—			16			16				—			11			11
Acquired from franchisees		8			(8	)		—				—			—			—
Closed		(1	)		(12	)		(13	)			—			(8	)		(8	)
End of period		144			2,102			2,246				137			2,103			2,240
% of system		6	%		94	%		100	%			6	%		94	%		100	%

JACK IN THE BOX INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP MEASUREMENTS TO GAAP RESULTS
(Unaudited)

To supplement the consolidated financial statements, which are presented in accordance with GAAP, the company uses the following non-GAAP measures: Operating Earnings Per Share, Adjusted EBITDA, Restaurant-Level Margin and Franchise-Level Margin. Management believes that these measurements, when viewed with the company's results of operations in accordance with GAAP and the accompanying reconciliations in the tables below, provide useful information about operating performance and period-over-period changes, and provide additional information that is useful for evaluating the operating performance of the company's core business without regard to potential distortions.

Operating Earnings Per Share

Operating Earnings Per Share represents diluted earnings per share from continuing operations on a GAAP basis excluding gains or losses on the sale of company-operated restaurants, restructuring charges, the gain on sale of corporate office building, pension settlement charges, and the excess tax benefits from share-based compensation arrangements which are now recorded as a component of income tax expense versus equity prior to fiscal year 2019. Operating Earnings Per Share should be considered as a supplement to, not as a substitute for, analysis of results as reported under U.S. GAAP or other similarly titled measures of other companies. Management believes Operating Earnings Per Share provides investors with a meaningful supplement of the company’s operating performance and period-over-period changes without regard to potential distortions.

Below is a reconciliation of non-GAAP Operating Earnings Per Share to the most directly comparable GAAP measure, diluted earnings per share from continuing operations. Figures may not add due to rounding.

		12 Weeks Ended							28 Weeks Ended
		April 12, 2020				April 14, 2019			April 12, 2020				April 14, 2019
Diluted earnings per share from continuing operations – GAAP		$	0.50			$	0.96		$	0.82			$	2.15
Restructuring charges		—				0.03			0.03				0.20
Gains on the sale of company-operated restaurants		—				—			(0.05		)		(0.01		)
Gain on sale of corporate office building		—				—			(0.32		)		—
Pension settlement charges		0.01				—			1.14				—
Excess tax benefits from share-based compensation arrangements		(0.01		)		—			—				—
Operating earnings per share - non-GAAP		$	0.50			$	0.99		$	1.62			$	2.34

Adjusted EBITDA

Adjusted EBITDA represents net earnings on a GAAP basis excluding earnings or losses from discontinued operations, income taxes, interest expense, net, pension settlement charges, gains or losses on the sale of company-operated restaurants, impairment and other charges, net, depreciation and amortization, and the amortization of franchise tenant improvement allowances and other. Adjusted EBITDA should be considered as a supplement to, not as a substitute for, analysis of results as reported under U.S. GAAP or other similarly titled measures of other companies. Management believes Adjusted EBITDA is useful to investors to gain an understanding of the factors and trends affecting the company's ongoing cash earnings, from which capital investments are made and debt is serviced.

Below is a reconciliation of non-GAAP Adjusted EBITDA to the most directly comparable GAAP measure, net earnings (in thousands).

		12 Weeks Ended						28 Weeks Ended
		April 12, 2020			April 14, 2019			April 12, 2020				April 14, 2019
Net earnings - GAAP		$	11,463		$	25,089		$	19,360			$	59,187
Losses (earnings) from discontinued operations, net of taxes		—			41			—				(2,936		)
Income taxes		5,458			8,374			8,591				17,747
Interest expense, net		15,409			13,276			35,351				30,650
Pension settlement charges		321			—			38,927				—
Gains on the sale of company-operated restaurants		—			—			(1,575		)		(219		)
Impairment and other charges, net		716			1,125			(8,575		)		8,823
Depreciation and amortization		12,282			12,690			29,010				29,859
Amortization of franchise tenant improvement allowances and other		614			607			1,765				1,137
Adjusted EBITDA – non-GAAP		$	46,263		$	61,202		$	122,854			$	144,248

Restaurant-Level Margin

Restaurant-Level Margin is defined as company restaurant sales less restaurant operating costs (food and packaging, labor, and occupancy costs) and is neither required by, nor presented in accordance with GAAP. Restaurant-Level Margin excludes revenues and expenses of our franchise operations and certain costs, such as selling, general, and administrative expenses, depreciation and amortization, impairment and other charges, net, gains or losses on the sale of company-operated restaurants, and other costs that are considered normal operating costs. As such, Restaurant-Level Margin is not indicative of the overall results of the company and does not accrue directly to the benefit of shareholders because of the exclusion of corporate-level expenses. Restaurant-Level Margin should be considered as a supplement to, not as a substitute for, analysis of results as reported under GAAP or other similarly titled measures of other companies. The company is presenting Restaurant-Level Margin because it believes that it provides a meaningful supplement to net earnings of the company's core business operating results, as well as a comparison to those of other similar companies. Management utilizes Restaurant-Level Margin as a key performance indicator to evaluate the profitability of company-owned restaurants.

Below is a reconciliation of non-GAAP Restaurant-Level Margin to the most directly comparable GAAP measure, earnings from operations (in thousands):

		12 Weeks Ended										28 Weeks Ended
		April 12, 2020					April 14, 2019					April 12, 2020					April 14, 2019
Earnings from operations - GAAP		$	32,842				$	47,123				$	102,792				$	105,447
Franchise rental revenues		(69,885		)			(61,646		)			(165,969		)			(145,536		)
Franchise royalties and other		(37,764		)			(38,410		)			(90,230		)			(90,660		)
Franchise contributions for advertising and other services		(34,128		)			(38,989		)			(87,887		)			(90,803		)
Franchise occupancy expenses		48,341					38,618					112,858					89,331
Franchise support and other costs		2,971					2,797					7,647					5,642
Franchise advertising and other services expenses		35,734					40,245					90,958					94,515
Selling, general and administrative expenses		24,203					17,585					52,451					41,668
Impairment and other charges, net		716					1,125					(8,575		)			8,823
Gains on the sale of company-operated restaurants		—					—					(1,575		)			(219		)
Depreciation and amortization		12,282					12,690					29,010					29,859
Restaurant-Level Margin- Non-GAAP		$	15,312				$	21,138				$	41,480				$	48,067
Company restaurant sales		$	74,380				$	76,682				$	179,744				$	179,514
Restaurant-Level Margin % - Non-GAAP		20.6			%		27.6			%		23.1			%		26.8			%

Franchise-Level Margin

Franchise-Level Margin is defined as franchise revenues less franchise operating costs (occupancy expenses, advertising contributions, and franchise support and other costs) and is neither required by, nor presented in accordance with GAAP. Franchise-Level Margin excludes revenue and expenses of our company-operated restaurants and certain costs, such as selling, general, and administrative expenses, depreciation and amortization, impairment and other charges, net, and other costs that are considered normal operating costs. As such, Franchise-Level Margin is not indicative of the overall results of the company and does not accrue directly to the benefit of shareholders because of the exclusion of corporate-level expenses. Franchise-Level Margin should be considered as a supplement to, not as a substitute for, analysis of results as reported under GAAP or other similarly titled measures of other companies. The company is presenting Franchise-Level Margin because it believes that it provides a meaningful supplement to net earnings of the company's core business operating results, as well as a comparison to those of other similar companies. Management utilizes Franchise-Level Margin as a key performance indicator to evaluate the profitability of our franchise operations.

Below is a reconciliation of non-GAAP Franchise-Level Margin to the most directly comparable GAAP measure, earnings from operations (in thousands):

		12 Weeks Ended										28 Weeks Ended
		April 12, 2020					April 14, 2019 (1)					April 12, 2020					April 14, 2019 (1)
Earnings from operations - GAAP		$	32,842				$	47,123				$	102,792				$	105,447
Company restaurant sales		(74,380		)			(76,682		)			(179,744		)			(179,514		)
Food and packaging		22,237					21,676					53,585					51,292
Payroll and employee benefits		24,261					22,768					56,151					53,042
Occupancy and other		12,570					11,100					28,528					27,113
Selling, general and administrative expenses		24,203					17,585					52,451					41,668
Impairment and other charges, net		716					1,125					(8,575		)			8,823
Gains on the sale of company-operated restaurants		—					—					(1,575		)			(219		)
Depreciation and amortization		12,282					12,690					29,010					29,859
Franchise-Level Margin - Non-GAAP		$	54,731				$	57,385				$	132,623				$	137,511
Franchise rental revenues		$	69,885				$	61,646				$	165,969				$	145,536
Franchise royalties and other		37,764					38,410					90,230					90,660
Franchise contributions for advertising and other services		34,128					38,989					87,887					90,803
Total franchise revenues		$	141,777				$	139,045				$	344,086				$	326,999
Franchise-Level Margin % - Non-GAAP		38.6			%		41.3			%		38.5			%		42.1			%

(1)

During the first quarter of 2020, the Company changed its presentation of Non-GAAP Franchise-Level Margin to include "amortization of franchise tenant improvement allowances and other" in its definition thereof. The prior period has been recast to conform to current year presentation.