BUSINESS COMBINATION (Tables)

9 Months Ended

Jul. 10, 2022

Summary of Recognized Identified Assets Acquired and Liabilities Assumed

The following summarizes the purchase consideration paid to Del Taco shareholders (in thousands, except per share data):


	Amount
Del Taco shares outstanding as of March 8, 2022	36,442
Del Taco RSAs subject to accelerated vesting	805
Del Taco RSUs subject to accelerated vesting	70
Del Taco options subject to accelerated vesting	292
Total Del Taco shares outstanding	37,610
Merger Consideration (per Del Taco share)	$	12.51
Total cash consideration paid to selling shareholders	$	470,500
Del Taco transaction costs paid by Jack in the Box (1)	7,141
Del Taco closing indebtedness settled by Jack in the Box (2)	115,219
Replacement share-based payment awards pre-combination vesting expense	449
Preliminary aggregate purchase consideration	$	593,309

____________________________

(1)Represents the portion of Del Taco merger-related transaction costs that were paid at the Closing Date by the Company.

(2)Represents the closing indebtedness of Del Taco’s existing debt that was paid at the Closing Date by the Company.

The preliminary allocation of the purchase consideration to tangible and intangible assets acquired and liabilities assumed is based on the estimated fair values and is as follows (in thousands):


	Initial Allocation of Consideration		Measurement Period Adjustments (1)		July 10, 2022
Total preliminary aggregate purchase consideration, net of $12,068 cash acquired	$	581,241	$	—	$	581,241
Assets:
Accounts and other receivables	3,809		—		3,809
Inventories	3,233		—		3,233
Prepaid expenses	2,950		—		2,950
Other current assets	105		—		105
Property and equipment	150,826		(5,341)		145,485
Operating lease right-of-use assets	349,489		—		349,489
Intangible assets	12,371		—		12,371
Trademarks	283,500		—		283,500
Other assets	5,128		—		5,128
Liabilities:
Current maturities of long-term debt	22		—		22
Current operating lease liabilities	21,991		—		21,991
Accounts payable	18,808		—		18,808
Accrued liabilities	66,739		45,076		111,815
Long-term debt, net of current maturities	349		—		349
Long-term operating lease liabilities, net of current portion	302,688		—		302,688
Deferred tax liabilities	88,203		(12,668)		75,535
Other long-term liabilities	13,080		—		13,080
Net assets acquired, excluding goodwill	$	299,531	$	(37,749)	$	261,782
Goodwill	$	281,710	$	37,749	$	319,459

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(1)The Company recorded measurement period adjustments in the third quarter of fiscal 2022 attributable to the Company’s review of inputs and assumptions utilized in valuation models, in addition to new information obtained during the quarter surrounding the settlement of a litigation matter which existed at the date of acquisition. Refer to Note 15, Commitments and Contingencies, for further details regarding the litigation matter.

Schedule of Intangible Assets and the Useful Lives

The preliminary values allocated to intangible assets and the useful lives are as follows (in thousands):


	Amount		Useful life (Years)
Trademarks	$	283,500	Indefinite
Franchise contracts	9,700		18
Sublease assets	2,671		13
Estimated fair value of acquired intangible assets	$	295,871

Schedule of Pro Forma Information


	Quarter		Year-to-date
	July 4, 2021		July 10, 2022		July 4, 2021
Total revenue	$	393,521	$	1,283,387	$	1,263,299
Net earnings	$	42,491	$	74,711	$	102,305

The unaudited pro forma financial information for all periods presented includes the business combination accounting effects resulting from this acquisition, mainly including adjustments to reflect additional amortization expense from acquired intangibles, incremental depreciation expense from the fair value property and equipment, elimination of historical interest expense associated with both Del Taco’s and the Company’s historical indebtedness, additional interest expense associated with the new Del Taco revolving credit facility and the Company’s new borrowings as part of the refinancing to fund the acquisition, adjusted rent expense reflecting the acquired right-of-use assets and liabilities to their estimated acquisition-date values based upon preliminary valuation of related lease intangibles and remaining payments, as well as the fair value adjustments made to leasehold improvements, certain material non-recurring adjustments and the tax-related effects as though Del Taco was combined as of the beginning of fiscal 2021. The unaudited pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of fiscal 2021, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.