Jack In The Box 2012 Annual Report Download - page 15

Risks of Market Volatility. Many factors affect the trading price of our stock, including factors over which we have no control, such as reports on the
economy or the price of commodities, as well as negative or positive announcements by competitors, regardless of whether the report relates directly to our
business. In addition to investor expectations about our prospects, trading activity in our stock can reflect the portfolio strategies and investment allocation
changes of institutional holders and non-operating initiatives such as a share repurchase program. Any failure to meet market expectations whether for sales,
growth rates, refranchising goals, earnings per share or other metrics could cause our share price to drop.
Risks of Changes in Accounting Policies and Assumptions . Changes in accounting standards, policies or related interpretations by accountants or
regulatory entities may negatively impact our results. Many accounting standards require management to make subjective assumptions and estimates, such as
those required for stock compensation, tax matters, pension costs, litigation, insurance accruals and asset impairment calculations. Changes in those
underlying assumptions and estimates could significantly change our results.
Litigation.We are subject to complaints or litigation brought by former, current or prospective employees, customers, franchisees, vendors, landlords,
shareholders or others. We assess contingencies to determine the degree of probability and range of possible loss for potential accrual in our financial
statements. An estimated loss contingency is accrued if it is probable that a liability has been incurred and the amount of loss can be reasonably estimated.
Because lawsuits are inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly subjective and requires judgments
about future events. We regularly review contingencies to determine the adequacy of the accruals and related disclosures. However, the amount of ultimate loss
may differ from these estimates. A judgment that is not covered by insurance or that is significantly in excess of our insurance coverage for any claims could
materially adversely affect our financial condition or results of operations. In addition, regardless of whether any claims against us are valid or whether we are
found to be liable, claims may be expensive to defend, and may divert management's attention away from operations and hurt our performance. Further,
adverse publicity resulting from claims may harm our business or that of our franchisees.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
The following table sets forth information regarding our operating Jack in the Box and Qdoba restaurant properties as of September 30, 2012:




Company-owned restaurant buildings:
On company-owned land
52
184
236
On leased land
164
474
638
Subtotal
216
658
874
Company-leased restaurant buildings on leased land
647
861
1,508
Franchise directly-owned or directly-leased restaurant buildings
—
495
495
Total restaurant buildings
863
2,014
2,877
Our restaurant leases generally provide for fixed rental payments (with cost-of-living index adjustments) plus real estate taxes, insurance and other expenses.
In addition, approximately 15% of our leases provide for contingent rental payments between 1% and 15% of the restaurant’s gross sales once certain
thresholds are met. We have generally been able to renew our restaurant leases as they expire at then-current market rates. The remaining terms of ground leases
range from approximately one year to 56 years, including optional renewal periods. The remaining lease terms of our other leases range from approximately
one year to 45 years, including optional renewal periods. At September 30, 2012, our restaurant leases had initial terms expiring as follows:







2013 – 2017
168
576
2018 – 2022
240
685
2023 – 2027
164
136
2028 and later
66
111
Our principal executive offices are located in San Diego, California in an owned facility of approximately 150,000 square feet. We also own our 70,000
square foot Jack in the Box Innovation Center and approximately four acres of undeveloped land directly
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