JACK IN THE BOX INC
For the period ended Jul 5, 2026. Filed Aug 12, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 5, 2026 · Filed Aug 12, 2026
JACK$14.09-1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-04-12; filed 2026-05-13.
0000807882-26-000067
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-07-05; filed 2026-08-12.
0000807882-26-000091
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 124 previous paragraphs and 127 current paragraphs.
81 unchanged; 32 reworded; 14 added; 9 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Franchise royalties and other decreased $1.5 million, or 3.4% in the quarter and $9.0 million, or 5.8% year-to-date compared to the prior year. A decrease in the number of restaurants and sales, drove net royalties lower by $0.8 million and $0.5 million, respectively, in the quarter and $2.6 million and $6.3 million, respectively, year-to-date. Franchise fees and other decreased $0.3 million in the quarter and $1.3 million year-to-date, primarily due to a decrease in early termination fees.
Current report
Share-based compensation decreased by $1.9 million in the quarter and increased $1.0 million year-to-date, compared to the prior year, primarily due to the timing of forfeitures.
Current report
Insurance decreased $0.7 million in the quarter and $1.3 million year-to-date, compared to the prior year primarily due to lower costs for group insurance.
Current report
Incentive compensation increased by $2.3 million in the quarter and $1.6 million year-to-date, as compared to the prior year, primarily due to higher achievement levels compared to the prior year for the Company’s annual incentive plan.
Current report
Other Operating (Income) Expense, Net
Current report
For the quarter, other operating (income) expense, net, decreased $7.6 million as compared to the prior year. The decrease was primarily due a $9.6 million increase in gains from the sale of real estate, partially offset by $2.5 million for restructuring related severance and other consulting fees.
Current report
Interest expense, net, increased less than $0.1 million in the quarter and decreased $2.1 million year-to-date compared to the prior year. Interest expense in the current year includes $1.3 million loss on extinguishment of debt as a result of our refinancing transaction in the third quarter which was offset in the quarter and more than offset year-to-date by a decrease in interest expense from lower average borrowings.
Current report
The $16.2 million change in purchases of property and equipment is primarily a result of lower spending for restaurant information technology due to the prior year rollout of a new POS system, and lower new restaurant costs as a result of our commitment to remaining asset-light by prioritizing new restaurant growth from franchisees.
Current report
On January 9, 2026, the Company prepaid $105.0 million of its Series 2019-1 Class A-2-II Notes using proceeds from the Del Taco Sale. On June 10, 2026, the Company prepaid an additional $110.0 million of its existing Series 2019-1 Class A-2-II Notes using proceeds from the withdrawal of excess COLI funding as well as cash on hand.
Current report
Securitization refinancing transaction —On June 23, 2026, Jack in the Box Funding, LLC (the “Master Issuer”), a limited-purpose, bankruptcy-remote, wholly owned indirect subsidiary of the Company, completed its financing transaction and issued $500.0 million of its Series 2026-1 7.624% Fixed Rate Senior Secured Notes, Class A-2 (the “2026 Class A-2 Notes”). In connection with the issuance of the 2026 Class A-2 Notes, the Master Issuer also entered into a revolving financing facility of Series 2026-1 Variable Funding Senior Secured Notes, Class A-1 (the “Variable Funding Notes”), which allows for the drawing of up to $150.0 million under the Variable Funding Notes, which include certain instruments, including a letter of credit facility. The 2026 Class A-2 Notes and the Variable Funding Notes are referred to collectively as the “2026 Notes.” The 2026 Notes were issued in a privately placed securitization transaction and are secured on substantially the same basis as the Company's existing securitized notes.
Current report
Net proceeds from the sale of the 2026 Class A-2 Notes were used to repay in full the remaining $46.1 million in aggregate outstanding principal amount of the Company’s Series 2019-1 Class A-2-II Notes, together with unpaid interest. The Company also paid $479.9 million of its Series 2022-1 Class A-2-I Notes, and a portion of its unpaid interest. As a result of the refinancing transaction, the Company recorded a loss on the early extinguishment of debt of $1.3 million during the quarter, which was comprised of the write-off of certain deferred financing costs, and is presented in “Interest expense, net” in the condensed consolidated statement of earnings (loss).
Current report
In connection with the 2026 Class A-2 Notes, the Company capitalized $11.7 million of debt issuance costs, which are being amortized as interest expense utilizing the effective interest rate method through the May 2031 Anticipated Repayment Date. There were also $1.4 million of debt issuance costs related to our Variable Funding Notes, which are presented within “Other assets, net,” and are being amortized using the straight-line method through May 2031.
Current report
The Company may also be required to make additional prepayments of principal on the 2026 Class A-2 Notes when the Senior ABS Leverage Ratio, as defined in the Indenture, is greater than 5.25x. As of July 5, 2026, the Senior ABS Leverage Ratio is greater than 5.25x and as a result, cash sweeping prepayments of $23.3 million are included in “Current maturities of long-term debt” in our condensed consolidated balance sheets.
Current report
Variable Funding Notes — In connection with the issuance of the Variable Funding Notes and its entry into the Variable Funding Note Purchase Agreement, the Master Issuer terminated the commitments with respect to its existing $150 million Series 2022-1 Variable Funding Notes. As of July 5, 2026, $56.4 million of letters of credit were outstanding against the Variable Funding Notes, which relate primarily to interest reserves required under the Indenture. During the third quarter of 2026, we borrowed $39.0 million under the Variable Funding Notes. As of July 5, 2026, unused borrowing capacity under our Variable Funding Notes was $54.6 million.
Removed paragraphs (9)
Previous report
Franchise royalties and other decreased $2.7 million, or 5.9% in the quarter and $7.5 million, or 6.8% year-to-date compared to the prior year primarily due to lower royalty income of $0.7 million and $4.2 million, respectively, driven by lower sales, and a decrease in royalties of $0.8 million and $1.8 million, respectively, due to a decrease in the number of franchise restaurants.
Previous report
Share-based compensation increased by $2.4 million in the quarter and $2.9 million year-to-date compared to the prior year, primarily due to lower forfeitures in the current year.
Previous report
Insurance increased $0.1 million in the quarter and decreased $0.6 million on a year-to-date basis, compared to the prior year. The year-to-date decrease was primarily due to group insurance reimbursements received in the current year.
Previous report
Other Operating Expenses, Net
Previous report
Other operating expenses, net increased $1.2 million on a quarter-to-date basis and $6.7 million on a year-to-date basis, as compared to the prior year. For the quarter, the increase was primarily due to $2.7 million for proxy contest fees and other consulting fees for strategic initiatives, partially offset by $1.9 million of higher gains in the current year related to the sale of real estate.
Previous report
Interest expense, net, decreased $1.5 million in the quarter and $2.2 million year-to-date compared to the prior year primarily due to lower average borrowings.
Previous report
The Company uses corporate owned life insurance (“COLI”) policies to fund our Supplemental Executive Retirement Plan (“SERP”) and Executive Deferred Compensation Plan (“EDCP”) benefit obligations. The funding of these plans was well in excess of the related obligations at April 12, 2026. As such, following the second quarter of 2026, the Company is in the process of withdrawing excess funding of approximately $71.0 million, from its COLI policies, which is expected to be used along with cash on hand to prepay approximately $99.0 million of the 2019-1 Class A-2-II Notes in the third quarter of 2026.
Previous report
On January 9, 2026, the Company prepaid $105.0 million of its existing Series 2019-1 Class A-2-II Notes. The repayment was made using funds from the Del Taco Sale and is in connection with the Company’s ongoing prioritization of debt reduction as part of its “JACK on Track” plan.
Previous report
The Company also has a revolving financing facility of Series 2022-1 Variable Funding Senior Secured Notes (the “Variable Funding Notes”), which permits borrowings up to a maximum of $150.0 million, subject to certain borrowing conditions, a portion of which may be used to issue letters of credit. As of April 12, 2026, we did not have any outstanding borrowings and had available borrowing capacity of $95.3 million under our Variable Funding Notes, net of letters of credits issued of $54.7 million.
Reworded paragraphs (32)
Previous wording
The Company’s fiscal year is 52 or 53 weeks ending the Sunday closest to September 30. Fiscal years 2026 and 2025 each include 52 weeks. Our first quarter includes 16 weeks and all other quarters include 12 weeks. All comparisons between 2026 and 2025 refer to the 12 weeks (“quarter”) and 28 weeks (“year-to-date”) ended April 12, 2026 and April 13, 2025, respectively, unless otherwise indicated.
Current wording
The Company’s fiscal year is 52 or 53 weeks ending the Sunday closest to September 30. Fiscal years 2026 and 2025 each include 52 weeks. Our first quarter includes 16 weeks and all other quarters include 12 weeks. All comparisons between 2026 and 2025 refer to the 12 weeks (“quarter”) and 40 weeks (“year-to-date”) ended July 5, 2026 and July 6, 2025, respectively, unless otherwise indicated.
Previous wording
Founded in 1951, Jack in the Box Inc. (the “Company”) operates and franchises Jack in the Box® quick-service restaurants. As of April 12, 2026, we operated and franchised 2,128 restaurants, primarily in the western and southern United States, including restaurants in Guam and in Mexico.
Current wording
Founded in 1951, Jack in the Box Inc. (the “Company”) operates and franchises Jack in the Box® quick-service restaurants. As of July 5, 2026, we operated and franchised 2,115 restaurants, primarily in the western and southern United States, including restaurants in Guam and in Mexico.
Previous wording
Company restaurant sales decreased $0.4 million, or 0.4% in the quarter and $2.2 million, or 1.0% year-to-date compared to the prior year. The following table presents the approximate impact of changes in AUVs and the number of restaurants on company restaurant sales (in millions):
Current wording
Company restaurant sales increased $2.2 million, or 2.3% in the quarter and decreased $0.1 million, or less than 0.1%, year-to-date compared to the prior year. The following table presents the approximate impact of changes in AUVs and the number of restaurants on company restaurant sales (in millions):
Previous wording
Same-store sales at company-operated restaurants decreased 2.8% in the quarter and 3.9% year-to-date compared to a year ago. The following table summarizes the change versus a year ago:
Current wording
Same-store sales at company-operated restaurants decreased 0.9% in the quarter and 3.0% year-to-date compared to a year ago. The following table summarizes the change versus a year ago:
Previous wording
(1)Includes price increases of approximately 2.6% in the quarter and 2.8% year-to-date.
Current wording
(1)Includes price increases of approximately 3.5% in the quarter and 3.0% year-to-date.
Previous wording
Food and packaging costs, as a percentage of company restaurant sales, increased 1.1% in the quarter and 2.7% year-to-date compared to the prior year, due mainly to commodity inflation, and unfavorable menu item mix, offset by menu price increases. The year-to-date increase was also due to a non-recurring benefit from a new supply chain contract in the prior year. Commodity inflation was 5.0% in the quarter and 6.3% year-to-date, with the greatest impacts in beef, tacos, produce and beverages.
Current wording
Food and packaging costs, as a percentage of company restaurant sales, increased 0.7% in the quarter and 2.1% year-to-date compared to the prior year, due mainly to commodity inflation, offset by menu price increases. The year-to-date increase was also due to a non-recurring benefit in the prior year from a new supply chain contract with retroactive funding. Commodity inflation was 5.4% in the quarter and 6.0% year-to-date, with the greatest impacts in beef, tacos, produce and beverages.
Previous wording
Payroll and employee benefit costs, as a percentage of company restaurant sales, increased 1.8% in the quarter and 1.9% year-to-date compared to the prior year, primarily due to a change in the mix of restaurants. Labor inflation was approximately 1.5% in the quarter and 0.7% year-to-date for the current year.
Current wording
Payroll and employee benefit costs, as a percentage of company restaurant sales, decreased 0.8% in the quarter and increased 1.1% year-to-date compared to the prior year. The decrease in the quarter was due primarily to the rollover of additional FUTA taxes in California in the prior year, partially offset by the impact of the mix of restaurants and labor inflation of 1.8% in the quarter. Year-to date, the increase was due to the impact of the mix of restaurants and labor inflation of 1.0%.
Previous wording
Occupancy and other costs, as a percentage of company restaurant sales, increased 0.4% in the quarter and 0.8% year-to-date compared to the prior year. For the quarter and year-to-date periods, these increases were primarily due to sales deleverage and higher rent.
Current wording
Occupancy and other costs, as a percentage of company restaurant sales, increased 0.3% in the quarter and 0.8% year-to-date compared to the prior year. For the quarter and year-to-date periods, these increases were primarily due to sales deleverage and higher rent. Occupancy and other costs also increased in the quarter due to higher delivery sales driving higher third party fees.
Previous wording
Franchise rental revenues decreased $5.8 million, or 7.5% in the quarter and $14.2 million, or 7.7% year-to-date, compared to the prior year primarily due to lower percentage rent of $2.4 million and $8.4 million, respectively, driven by lower franchise restaurant sales, and a decrease in rent revenue of $1.7 million and $3.9 million, respectively, due to fewer franchise restaurants. Lower lease termination fees of $2.9 million in the quarter and year-to-date also contributed to the decrease.
Current wording
Franchise rental revenues decreased $3.5 million, or 4.6% in the quarter and $17.7 million, or 6.8% year-to-date, compared to the prior year primarily due to lower percentage rent of $1.2 million and $9.6 million, respectively, driven by lower franchise AUVs, and a decrease in rent revenue of $1.7 million and $5.4 million, respectively, due to fewer franchise restaurants. Lower lease termination fees of $0.6 million in the quarter and $3.5 million year-to-date, also contributed to the decrease.
Previous wording
Franchise contributions for advertising and other services revenues decreased $2.5 million, or 5.4% in the quarter and $9.1 million, or 7.9% year-to-date compared to the prior year mainly due to lower sales and a decrease in the number of restaurants, driving marketing contributions lower by $1.0 million and $0.8 million, respectively, for the quarter, and $4.7 million and $2.0 million, respectively, year-to-date.
Current wording
Franchise contributions for advertising and other services revenues decreased $1.9 million, or 3.9% in the quarter and $11.0 million, or 6.8% year-to-date compared to the prior year. For the quarter and year-to-date periods, a decrease in the number of restaurants, resulted in lower marketing contributions of $0.9 million and $2.9 million, respectively. Additionally, for the year-to-date period, lower sales drove marketing contributions lower by $4.5 million, and a change in technology providers resulted in a decrease of $2.2 million versus a year ago.
Previous wording
Franchise occupancy expenses, primarily rent, decreased $1.1 million, or 2.2% in the quarter and $2.7 million, or 2.3% year-to-date compared to the prior year. The decrease was primarily driven by lower operating lease costs of $1.3 million in the quarter and $3.1 million year-to-date, due to the decrease in the number of franchise restaurants.
Current wording
Franchise occupancy expenses, primarily rent, decreased $1.1 million, or 2.2% in the quarter and $3.9 million, or 2.3% year-to-date compared to the prior year primarily driven by lower operating lease costs of $1.3 million in the quarter and $4.4 million year-to-date, due to the decrease in the number of franchise restaurants.
Previous wording
Franchise support and other costs increased $0.2 million, or 7.0% in the quarter, and $0.7 million, or 10.5% year-to-date compared to the prior year. The quarter increase was primarily to increases in bad debt expense of $0.7 million. The year-to-date increase is due to increases in bad debt expense of $1.2 million, partially offset by decreases in digital fees of $0.8 million.
Current wording
Franchise support and other costs increased $0.9 million, or 28.0% in the quarter, and $1.6 million, or 16.4% year-to-date compared to the prior year. For the quarter, the increase is due to an increase in bad debt expense of $1.1 million. The year-to-date increase is due to increases in bad debt expense of $2.4 million, partially offset by decreases in digital fees of $0.8 million.
Previous wording
Franchise advertising and other service expenses decreased $2.4 million, or 5.0% in the quarter and $7.9 million, or 6.8% year-to-date compared to the prior year. The decrease is primarily due to lower sales and fewer restaurants driving lower marketing expenses.
Current wording
Franchise advertising and other service expenses decreased $0.9 million, or 1.8% in the quarter and $8.8 million, or 5.3% year-to-date compared to the prior year. The decrease is primarily due to lower sales and fewer restaurants driving lower marketing expenses.
Previous wording
Depreciation and amortization for the quarter ended April 12, 2026 increased $2.9 million in the quarter and $4.1 million year-to-date compared to the prior year period primarily due to increases for new technology assets placed in service and new company-operated restaurants.
Current wording
Depreciation and amortization for the quarter ended July 5, 2026 increased $1.8 million in the quarter and $5.9 million year-to-date compared to the prior year period primarily due to increases for new technology assets placed in service and new company-operated restaurants.
Previous wording
Advertising costs mainly represent company contributions to our marketing funds and are generally determined as a percentage of company-operated restaurant sales. Advertising costs increased $0.1 million in the quarter and $0.8 million year-to-date compared to the prior year, primarily due to an increase in expenses related to opting into third party digital sponsorships, partially offset by a decrease in company-operated restaurant sales in the current year.
Current wording
Advertising costs mainly represent company contributions to our marketing fund and are generally determined as a percentage of company-operated restaurant sales. Advertising costs increased $0.3 million in the quarter and $1.1 million year-to-date compared to the prior year, primarily due to an increase in expenses related to opting into third party delivery digital sponsorships.
Previous wording
The cash surrender value of our company-owned life insurance (“COLI”) policies, net of changes in our non-qualified deferred compensation obligation supported by these policies, are subject to market fluctuations. The changes in market values had a favorable impact of $1.6 million in the quarter and $5.4 million on a year-to-date basis, compared to the prior year.
Current wording
The cash surrender value of our company-owned life insurance (“COLI”) policies, net of changes in our non-qualified deferred compensation obligation supported by these policies, are subject to market fluctuations. The changes in market values had an unfavorable impact of $4.2 million in the quarter and a favorable impact of $1.2 million year-to-date, compared to the prior year.
Previous wording
Litigation matters decreased $1.6 million for both the quarter and on a year-to-date basis as compared to the prior year, primarily due to the timing of litigation reversal relating to the J&D Restaurant Group. Refer to Note 13, Commitments and Contingencies, in the condensed consolidated financial statements for additional information related to the legal matters.
Current wording
Litigation matters decreased $6.7 million for the quarter and $8.4 million year-to-date, as compared to the prior year, primarily due to the timing of litigation reversals. Refer to Note 13, Commitments and Contingencies, in the condensed consolidated financial statements for additional information related to the legal matters.
Previous wording
Included in the SG&A amounts above are income from the transition services agreement (“TSA”) following the Del Taco sale of $0.6 million in the quarter and $1.5 million on a year-to-date basis in 2026. The TSA period has since concluded as of the end of the second quarter.
Current wording
Income from the transition services agreement (“TSA”) following the Del Taco sale of $1.5 million is included in the fiscal 2026 year-to-date Other amount above. The TSA period had concluded as of the end of the second quarter of 2026.
Previous wording
Other operating expenses, net is comprised of the following (in thousands):
Current wording
Other operating (income) expense, net, is comprised of the following (in thousands):
Previous wording
For the year-to-date period, the increase was primarily due to $12.6 million for proxy contest fees, professional fees for tax refund settlement, restructuring costs, and other consulting fees for strategic initiatives, partially offset by $7.8 million of higher gains in the current year related to the sale of real estate.
Current wording
For the year-to-date period, other operating (income) expense, net, decreased $0.8 million primarily due to an $18.2 million increase in gains from the sale of real estate, partially offset by $15.2 million for restructuring costs, proxy contest fees, professional fees for tax refund settlement and other consulting fees for strategic initiatives.
Previous wording
For the second quarter of and year-to-date fiscal year 2026, the Company recorded income tax expense of $4.8 million and $11.7 million, respectively, resulting in effective tax rates of 27.7% and 30.2%, respectively. The effective tax rate for such periods differed from the U.S. statutory tax rate primarily due to the establishment of valuation allowance on cumulative interest deduction limitations from current and prior fiscal years and the nondeductible component of share-based compensation largely offset by a favorable state refund claim settlement.
Current wording
For the third quarter of and year-to-date fiscal year 2026, the Company recorded income tax expense of $12.3 million and $24.0 million, respectively, resulting in effective tax rates of 36.9% and 33.3%, respectively. The effective tax rate for such periods differed from the U.S. statutory tax rate primarily due to establishment of valuation allowance on cumulative interest deduction limitations from current and prior fiscal years and the nondeductible component of share-based compensation partially offset by a favorable state refund claim settlement and nontaxable gains from the market performance of insurance products used to fund certain non-qualified retirement plans.
Previous wording
For the second quarter of and year-to-date fiscal year 2025, the Company recorded income tax expense of $7.9 million and $21.2 million, respectively, resulting in effective tax rates of 27.6% and 29.1%, respectively. The effective tax rate for such periods differed from the U.S. statutory tax rate primarily due to the nondeductible component of share-based compensation and nondeductible losses from the market performance of insurance products used to fund certain non-qualified retirement plans.
Current wording
For the third quarter of and year-to-date fiscal year 2025, the Company recorded income tax expense of $6.0 million and $27.3 million, respectively, resulting in effective tax rates of 20.9% and 26.8%, respectively. The effective tax rate for such periods differed from the U.S. statutory tax rate primarily due to the nondeductible component of share-based compensation largely offset by nontaxable gains from the market performance of insurance products used to fund certain non-qualified retirement plans.
Previous wording
The results of operations from the sale of our Del Taco business has been reported as discontinued operations for all periods presented. For the second quarter of and year-to-date fiscal year 2026, there were losses from discontinued operations, net of taxes of $2.3 million and $19.1 million, respectively, compared with $162.9 million and $160.2 million, respectively, for the second quarter of and year-to-date fiscal year 2025. Refer to Note 4, Discontinued Operations, in the notes to condensed consolidated financial statements, for additional information regarding discontinued operations.
Current wording
The results of operations from the sale of our Del Taco business has been reported as discontinued operations for all periods presented. For the third quarter of and year-to-date fiscal year 2026, there were losses from discontinued operations, net of taxes of $0.9 million and $20.1 million, respectively, compared with $0.8 million and $161.0 million, respectively, for the third quarter of and year-to-date fiscal year 2025. Refer to Note 4, Discontinued Operations, in the notes to condensed consolidated financial statements, for additional information regarding discontinued operations.
Previous wording
Our primary sources of short-term and long-term liquidity and capital resources are cash flows from operations and borrowings available under our credit facility. Our cash requirements consist principally of working capital, general corporate needs, capital expenditures, income tax payments, debt service requirements, franchise tenant improvement allowance and incentive distributions, and obligations related to our benefit plans. We generally use available cash flows from operations to invest in our business and service our debt obligations.
Current wording
Our primary sources of short-term and long-term liquidity and capital resources are cash flows from operations and borrowings available under our Variable Funding Notes. Based on current operating results and their impact on franchise profitability, cash flows from operations have been impacted and may continue to be impacted by franchisee payment delays and deferrals. Our cash requirements consist principally of working capital, general corporate needs, capital expenditures, income tax payments, debt service requirements, franchise tenant improvement allowance and incentive distributions, and obligations related to our benefit plans. We generally use available cash flows from operations to invest in our business and service our debt obligations.
Previous wording
As of April 12, 2026, the Company had $69.4 million of cash and restricted cash on its condensed consolidated balance sheet and available borrowings of $95.3 million under its $150.0 million Variable Funding Notes. The Company continually assesses the optimal sources and uses of cash for our business. We review our balance sheet for any undervalued assets and pursue opportunities for capital sources, including the sale of our owned Jack in the Box properties.
Current wording
As of July 5, 2026, the Company had $71.8 million of cash and restricted cash on its condensed consolidated balance sheet and available borrowings of $54.6 million under its $150.0 million Variable Funding Notes. The Company continually assesses the optimal sources and uses of cash for our business. We review our balance sheet for any undervalued assets and pursue opportunities for capital sources, including the sale of our owned Jack in the Box properties.
Previous wording
Operating Activities. Operating cash flows decreased $44.0 million compared with a year ago primarily due to a decrease in working capital of $29.8 million, as well as lower net income, when adjusted for non-cash items, of $14.1 million. The change in working capital included the $35.0 million received in the prior year in connection with a supply chain contract, an increase of $12.8 million in franchise incentive disbursements in the current year, partially offset by a decrease of $23.0 million in income and franchise tax payments in the current year.
Current wording
Operating Activities. Operating cash flows decreased $61.6 million compared with a year ago primarily due to a decrease in working capital of $54.2 million, as well as lower net income, when adjusted for non-cash items, of $8.7 million. The change in working capital included a decrease due to $35.0 million received in the prior year in connection with a supply chain contract, an increase of $18.7 million in franchise incentive disbursements in the current year, and a decrease in cash flows of approximately $11.0 million resulting from delayed payments from franchisees, including amounts subject to payment deferral arrangements, a portion of which we have reserved against. An increase in payments for restructuring and other non-core expenses including proxy contest fees, as noted in the Operating Results section of MD&A under Other Operating Expense (Income), Netalso contributed to the decrease. These decreases in working capital were partially offset by lower income tax payments, net of refunds received, of $37.1 million.
Previous wording
Investing Activities. Cash flows used in investing activities decreased by $13.8 million compared with a year ago, primarily due to purchases of assets intended for sale or leaseback of $5.7 million in the prior year, higher proceeds received from assets held for sale and leaseback of $3.6 million, and lower purchases of property and equipment of $5.3 million.
Current wording
Investing Activities. Investing cash flows increased $117.0 million compared with a year ago, primarily due to $80.4 million of proceeds from our COLI policies, higher proceeds from the sale of property and equipment of $11.6 million, lower purchases of property and equipment of $16.2 million, and purchases of assets intended for sale or leaseback of $5.7 million in the prior year.
Previous wording
The $5.3 million change in purchases of property and equipment is primarily a result of lower restaurant information technology costs, partially offset by higher restaurant facility expenditures relating to the beverage dispenser replacement program. The following table summarizes the capital expenditures in each period (in thousands):
Current wording
The following table summarizes the capital expenditures in each period (in thousands):
Previous wording
Financing Activities. Cash flows used in financing activities increased by $75.5 million compared with a year ago, primarily due to a $105.0 million debt prepayment made in the current year using proceeds from the Del Taco sale. The higher debt payments were partially offset by a decrease in dividend payments of $16.6 million, rolling over a $6.0 million repayment in the prior year on the Variable Funding Notes, and a $5.0 million decrease in stock repurchases.
Current wording
Financing Activities. Cash flows used in financing activities increased by $185.5 million compared with a year ago, primarily due to higher debt payments of $740.2 million resulting from two debt prepayments totalling $215 million and our refinancing transaction discussed below as well as payments for debt issuance costs of $13.1 million associated with the aforementioned refinancing. This activity is partially offset by $500.0 million of debt issued and $39.0 million of borrowings on our Variable Funding Notes. Additionally, there was a decrease in payments for dividends of $16.6 million and stock repurchases of $5.0 million in the current year, as well as rolling over a $6.0 million repayment in the prior year on the Variable Funding Notes.
Previous wording
Debt Prepayment— The Anticipated Repayment Dates of the 2019-1 Class A-2-II Notes and the Class A-2-III Notes are August 2026 and August 2029, respectively, and the 2022-1 Class A-2-I Notes and the 2022-1 Class A-2-II Notes are February 2027 and February 2032, respectively.
Current wording
2026 Class A-2 Notes —Interest and principal payments on the 2026 Class A-2 Notes are payable on a quarterly basis. Similar to our 2019 and 2022 Notes, the requirement to make quarterly principal payments is subject to certain financial conditions set forth in the Indenture. Quarterly principal payments may be suspended when the HoldCo Leverage Ratio, which is a measure of outstanding debt to earnings before interest, taxes, depreciation, and amortization, adjusted for certain items (as defined in the Indenture), is less than or equal to 5.0x. Exceeding the leverage ratio of 5.0x does not violate any covenant related to the Notes. The Company has a leverage ratio of greater than 5.0x and, accordingly, is making the scheduled amortization payments on its 2019, 2022 and 2026 Notes. The final maturity date of the 2026 Class A-2 Notes is May 2056, but, unless earlier prepaid to the extent permitted under the Indenture, the Anticipated Repayment Date of the Class A-2 Notes is May 2031. The Anticipated Repayment Date of the 2019-1 Class A-2-III Notes is August 2029, and the 2022-1 Class A-2-I Notes and the 2022-1 Class A-2-II Notes are February 2027 and February 2032, respectively. If the Master Issuer has not repaid or redeemed the Notes prior to their respective Anticipated Repayment Dates, additional interest will accrue pursuant to the Indenture.
Previous wording
Restricted cash — In accordance with the terms of the Indenture, certain cash accounts have been established with the Indenture trustee for the benefit of the note holders and are restricted in their use. As of April 12, 2026, the Company had restricted cash of $26.3 million, which primarily represented cash collections and cash reserves held by the trustee to be used for payments of interest and commitment fees required for the Class A-2 Notes.
Current wording
Restricted cash — In accordance with the terms of the Indenture, certain cash accounts have been established with the Indenture trustee for the benefit of the note holders and are restricted in their use. As of July 5, 2026, the Company had restricted cash of $25.5 million, which primarily represented cash collections and cash reserves held by the trustee to be used for payments of interest and commitment fees required for the Class A-2 Notes.
Previous wording
Dividends — The Company announced on April 23, 2025, that it will discontinue its dividend effective immediately and direct a majority of those funds toward leverage reduction. As such, the Company did not declare any dividends during the current year.
Current wording
Dividends — The Company discontinued its dividend on April 23, 2025, to direct a majority of those funds toward leverage reduction. As such, the Company did not declare any dividends during the current year.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The legal final maturity date of the 2019 Notes and 2022 Notes is August 2049 and February 2052, respectively, but it is anticipated that, unless earlier prepaid to the extent permitted under the Indenture, the Notes will be repaid by the Anticipated Repayment Dates. If the Master Issuer has not repaid or refinanced the Notes prior to the respective Anticipated Repayment Dates, additional interest will accrue pursuant to the Indenture.
Previous report — wording carried elsewhere
The quarterly principal payment on the Class A-2 Notes may be suspended when the specified leverage ratio, which is a measure of outstanding debt to earnings before interest, taxes, depreciation, and amortization, adjusted for certain items (as defined in the Indenture), is less than or equal to 5.0x. Exceeding the leverage ratio of 5.0x does not violate any covenant related to the Class A-2 Notes. Subsequent to closing the issuance of the 2022 Notes, the Company has had a leverage ratio of greater than 5.0x and, accordingly, the Company resumed making the scheduled amortization payments on its 2022 Notes and Series 2019-1 Notes.