10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 4, 2004

Commission file no. 1-9390

JACK IN THE BOX INC.

(Exact name of registrant as specified in its charter)

DELAWARE	95-2698708
(State of Incorporation)	(I.R.S. Employer Identification No.)

9330 BALBOA AVENUE, SAN DIEGO, CA	92123
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (858) 571-2121

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes x No o

Number of shares of common stock, $.01 par value, outstanding as of the close of business August 9, 2004 – 36,811,866.

1

JACK IN THE BOX INC. AND SUBSIDIARIES

INDEX

				Page
			PART I
Item 1.	Consolidated Financial Statements:
		Condensed Consolidated Balance Sheets			3
		Unaudited Consolidated Statements of Earnings			4
		Unaudited Consolidated Statements of Cash Flows			5
		Notes to Unaudited Consolidated Financial Statements			6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations				11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk				19
Item 4.	Controls and Procedures				20
			PART II
Item 1.	Legal Proceedings				20
Item 6.	Exhibits and Reports on Form 8-K				21
	Signature				23
EXHIBIT 10.1.1
EXHIBIT 10.16
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

2

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

JACK IN THE BOX INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	July 4,			September 28,
	2004			2003
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	87,486		$	22,362
Accounts and notes receivable, net		25,820			31,582
Inventories		36,608			31,699
Prepaid expenses and other current assets		20,077			21,056
Assets held for sale and leaseback		46,458			41,916
Total current assets		216,449			148,615
Property and equipment, net		883,128			866,960
Goodwill		90,218			90,218
Intangible assets, net		28,083			29,640
Other assets, net		44,927			40,517
TOTAL	$	1,262,805		$	1,175,950
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current maturities of long-term debt	$	8,470		$	12,334
Accounts payable		44,065			51,031
Accrued expenses		201,069			174,369
Total current liabilities		253,604			237,734
Deferred income taxes		44,579			33,910
Long-term debt, net of current maturities		298,669			290,746
Other long-term liabilities		130,806			143,238
Stockholders’ equity:
Common stock		436			432
Capital in excess of par value		333,059			325,510
Retained earnings		357,518			300,682
Accumulated other comprehensive loss, net		(27,184	)		(27,184	)
Unearned compensation		(4,219	)		(4,655	)
Treasury stock		(124,463	)		(124,463	)
Total stockholders’ equity		535,147			470,322
TOTAL	$	1,262,805		$	1,175,950

See accompanying notes to consolidated financial statements.

3

JACK IN THE BOX INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

	Twelve Weeks Ended				Forty Weeks Ended
	July 4,		July 6,		July 4,		July 6,
	2004		2003		2004		2003
Revenues:
Restaurant sales	$	470,621	$	443,990	$	1,528,042	$	1,421,695
Distribution and other sales		49,575		25,927		132,740		78,351
Franchise rents and royalties		14,402		11,803		48,654		39,799
Other		6,614		6,854		18,962		25,411
		541,212		488,574		1,728,398		1,565,256
Costs of revenues:
Restaurant costs of sales		145,601		140,088		473,447		436,832
Restaurant operating costs		240,488		230,593		792,122		748,914
Costs of distribution and other sales		48,532		25,282		130,287		76,562
Franchised restaurant costs		7,265		6,157		23,449		19,402
		441,886		402,120		1,419,305		1,281,710
Selling, general and administrative		61,245		51,629		195,147		174,211
Earnings from operations		38,081		34,825		113,946		109,335
Interest expense		3,757		5,538		23,730		19,599
Earnings before income taxes		34,324		29,287		90,216		89,736
Income taxes		12,700		9,515		33,380		32,485
Net earnings	$	21,624	$	19,772	$	56,836	$	57,251
Net earnings per share:
Basic	$	.60	$	.55	$	1.57	$	1.56
Diluted	$	.58	$	.54	$	1.55	$	1.54
Weighted-average shares outstanding:
Basic		36,291		36,007		36,139		36,608
Diluted		37,254		36,559		36,737		37,082

See accompanying notes to consolidated financial statements.

4

JACK IN THE BOX INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Forty Weeks Ended
	July 4,			July 6,
	2004			2003
Cash flows from operating activities:
Net earnings	$	56,836		$	57,251
Non-cash items included in operations:
Depreciation and amortization		59,784			53,526
Amortization of unearned compensation		436			367
Deferred finance cost amortization		1,208			2,231
Deferred income taxes		10,675			12,025
Loss on early retirement of debt		9,180			—
Tax benefit associated with exercise of stock options		1,878			—
Gains on the sale of company-operated restaurants		(14,497	)		(22,149	)
Changes in assets and liabilities, excluding the effect of the Qdoba acquisition:
Increase (decrease) in receivables		(7,143	)		1,481
Increase in inventories		(4,909	)		(2,278	)
Decrease in prepaid expenses and other current assets		980			2,984
Decrease in accounts payable		(6,743	)		(17,054	)
Increase in other liabilities		46,910			15,825
Cash flows provided by operating activities		154,595			104,209
Cash flows from investing activities:
Additions to property and equipment		(84,342	)		(77,109	)
Purchase of Qdoba, net of $2,856 cash acquired		—			(42,606	)
Dispositions of property and equipment		5,560			19,453
Proceeds from the sale of company-operated restaurants		16,507			3,072
Increase in assets held for sale and leaseback		(437	)		(14,035	)
Collections on notes receivable		18,152			12,563
Pension contributions		(30,000	)		(4,400	)
Other		(7,582	)		(4,566	)
Cash flows used in investing activities		(82,142	)		(107,628	)
Cash flows from financing activities:
Borrowings under revolving bank loans		45,000			510,500
Principal repayments under revolving bank loans		(45,000	)		(538,000	)
Proceeds from term loans		275,000			150,000
Principal payments on long-term debt, including current maturities		(280,901	)		(56,601	)
Debt issuance and debt repayment costs		(7,103	)		(7,832	)
Repurchase of common stock		—			(50,157	)
Proceeds from issuance of common stock		5,675			217
Cash flows provided by (used in) financing activities		(7,329	)		8,127
Net increase in cash and cash equivalents	$	65,124		$	4,708

See accompanying notes to consolidated financial statements.

5

JACK IN THE BOX INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

1.	GENERAL
	The accompanying unaudited consolidated financial statements of Jack in the Box Inc. (the “Company”) and its subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles and the rules and regulations of the Securities and Exchange Commission (“SEC”). In our opinion, all adjustments considered necessary for a fair presentation of financial condition and results of operations for the interim periods have been included. Operating results for any interim period are not necessarily indicative of the results for any other interim period or for the full year. Our fiscal year is 52 or 53 weeks ending the Sunday closest to September 30 with fiscal year 2004 and 2003, including 53 weeks and 52 weeks, respectively. Our first quarter includes 16 weeks and each remaining quarter includes 12 weeks, with the exception of the fourth quarter of fiscal year 2004 which will include 13 weeks.
	Certain financial statement reclassifications have been made in the prior year to conform to the current year presentation. These financial statements should be read in conjunction with the notes to the fiscal year 2003 consolidated financial statements contained in our Annual Report on Form 10-K filed with the SEC.
2.	STOCK-BASED EMPLOYEE COMPENSATION
	Stock awards are accounted for under Accounting Principles Board Opinion 25, Accounting for Stock Issued to Employees, using the intrinsic method. Under this method, compensation expense is recognized for the excess, if any, of the quoted market price of the Company’s stock at the date of grant over the exercise price. Our policy is to grant stock options at fair value at the date of grant. Had compensation expense been recognized for our stock-based compensation plans by applying the fair value recognition provisions of Statement of Financial Accounting Standards (“SFAS”) 123, Accounting for Stock-Based Compensation, we would have recorded net earnings as follows:

	Twelve Weeks Ended				Forty Weeks Ended
	July 4,		July 6,		July 4,		July 6,
	2004		2003		2004		2003
Net earnings, as reported	$	21,624	$	19,772	$	56,836	$	57,251
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of taxes		1,219		1,031		4,384		3,855
Pro forma net earnings	$	20,405	$	18,741	$	52,452	$	53,396
Net earnings per share:
Basic-as reported	$	.60	$	.55	$	1.57	$	1.56
Basic-pro forma	$	.56	$	.52	$	1.45	$	1.46
Diluted-as reported	$	.58	$	.54	$	1.55	$	1.54
Diluted-pro forma	$	.55	$	.51	$	1.43	$	1.44

6

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)

3.	INTANGIBLE ASSETS
	Intangible assets consist of the following at July 4, 2004 and September 28, 2003:

	2004		2003
Amortized intangible assets:
Gross carrying amount	$	60,660	$	61,069
Less: accumulated amortization		41,377		40,229
Net carrying amount	$	19,283	$	20,840
Unamortized intangible assets:
Goodwill	$	90,218	$	90,218
Qdoba trademark		8,800		8,800
	$	99,018	$	99,018

	Amortized intangible assets include lease acquisition costs and acquired franchise contracts. Lease acquisition costs represent the fair values of acquired lease contracts having contractual rents lower than fair market rents, and are amortized on a straight-line basis over the remaining lease term. Acquired franchise contracts are amortized over the term of the franchise agreements based on the projected royalty revenue stream. The weighted-average life of the amortized intangible assets is approximately 28 years. In the quarter and year-to-date, total amortization expense related to intangible assets was approximately $400 and $1,500, respectively, in 2004, and $500 and $1,700, respectively, in 2003. The estimated amortization expense for each fiscal year through 2008 ranges from approximately $1,400 to $1,800.
4.	INDEBTEDNESS
	Credit Facility. On January 8, 2004, we secured a new senior term loan and amended our revolving credit facility, each with extended maturities. Our new financing is intended to provide a more flexible capital structure, facilitate the execution of our strategic plan, and decrease borrowing costs. Additionally, during the third quarter, we amended the term loan portion of our credit facility to achieve an approximate 50 basis point reduction in our borrowing rate over the loan term. Fees paid in association with the repricing were customary for such arrangements of this type and were not material.
	Our credit facility, as amended, provides borrowings in the aggregate amount of $475,000 and is comprised of: (i) a $200,000 revolving credit facility maturing on January 8, 2008, and (ii) a $275,000 term loan maturing on January 8, 2011, each with a rate of London Interbank Offered Rate plus 2.25%. The credit facility requires the payment of an annual commitment fee based on the unused portion of the credit facility. The annual commitment rate and the credit facility’s interest rates are based on a financial leverage ratio, as defined in the credit agreement. The Company and certain of its subsidiaries granted liens in substantially all personal property assets to secure our respective obligations under the credit facility. Under certain circumstances, the Company and each of its certain subsidiaries will be required to grant liens in certain real property assets to secure their respective obligations under the new credit facility. Additionally, certain of our real and personal property secure other indebtedness of the Company. At July 4, 2004, we had no borrowings under our revolving credit facility and letters of credit outstanding of approximately $34,142.
	We are subject to a number of covenants under our various debt instruments, including limitations on additional borrowings, acquisitions, loans to franchisees, capital expenditures, lease commitments and dividend payments, as well as requirements to maintain certain financial ratios, cash flows and net worth. As of July 4, 2004, we were in compliance with all debt covenants.
	Debt Extinguishment. We used the proceeds from the new term loan to refinance our existing $150,000 term loan and redeem $125,000 of 8 3/8% senior subordinated notes due April 15, 2008, which resulted in a charge to interest expense of approximately $9,200.

7

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)

5.	NET PERIODIC BENEFIT COST
	We have funded and unfunded non-contributory defined benefit pension plans covering those employees meeting certain eligibility requirements. The components of net defined benefit pension costs for each period is presented below:

	Twelve Weeks Ended						Forty Weeks Ended
	July 4,			July 6,			July 4,			July 6,
	2004			2003			2004			2003
Service cost	$	2,426		$	1,387		$	6,697		$	4,622
Interest cost		3,034			2,105			8,372			7,018
Expected return on plan assets		(1,962	)		(1,528	)		(5,416	)		(5,095	)
Recognized actuarial loss		1,748			562			4,825			1,874
Net amortization		410			181			1,131			604
Net periodic pension cost	$	5,656		$	2,707		$	15,609		$	9,023

During the third quarter, we elected to contribute $13,000 to our qualified defined benefit pension plans from available cash on hand. The additional funding contribution was based on the Company’s intent to fully fund its qualified plans’ accumulated benefit obligation at fiscal year-end, and the amount was determined based on an annual actuarial review of the plans. Year-to-date we have contributed $30,000 to our qualified defined benefit pension plans and do not anticipate making any further funding contributions during the fiscal year.

Our qualified pension plans’ net periodic pension cost increased in the third quarter, due primarily to lower than anticipated employee turnover, as determined by the annual actuarial review.

We sponsor a health care plan that provides postretirement medical benefits for employees who meet minimum age and service requirements. The plan is contributory, with retiree contributions adjusted annually, and contains other cost-sharing features such as deductibles and coinsurance. The components of net periodic postretirement benefit cost for each period is presented below:

	Twelve Weeks Ended						Forty Weeks Ended
	July 4,			July 6,			July 4,			July 6,
	2004			2003			2004			2003
Service cost	$	60		$	74		$	199		$	248
Interest cost		190			153			635			508
Net amortization		(117	)		(211	)		(389	)		(703	)
Net periodic postretirement benefit cost	$	133		$	16		$	445		$	53

Our postretirement health care plan provides for prescription drug benefits. On December 8, 2003, Medicare legislation was enacted introducing a federal prescription drug subsidy to sponsors of retiree health care plans that provide a benefit that is at least actuarially equivalent to the Medicare prescription drug benefit. On May 19, 2004, the FASB issued FSP 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which supersedes FSP 106-1. FSP 106-2 discusses certain accounting and disclosure requirements related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003. We will adopt the provisions of FSP 106-2 in the fourth quarter of fiscal year 2004 as required. Any such subsidy we may be eligible to receive would be recorded as a reduction in our accumulated benefit obligation and a decrease in future net periodic postretirement benefit cost. We have not yet determined whether the prescription drug benefits provided under our postretirement plan meet the requirements to receive the federal subsidy; however, we do not believe any such benefits we may be eligible for will have a material impact on our results of operations or financial position.

8

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)

6.	INCOME TAXES
	The income tax provisions reflect the projected annual tax rates of 37% in 2004 and 36.2% in 2003. In the second quarter, we reduced our projected annual tax rate for 2004 to 37% from 38%, primarily as a result of the Company’s ongoing tax-planning initiatives. During the third quarter of fiscal year 2003, the annual tax rate was reduced to the effective annual rate of 36.2% primarily due to the favorable resolution of a long-standing tax matter. The final 2004 annual tax rate cannot be determined until the end of the fiscal year; therefore, the actual rate could differ from our current estimates.
7.	AVERAGE SHARES OUTSTANDING
	Net earnings per share for each period is based on the weighted-average number of shares outstanding during the period, determined as follows (in thousands):

	Twelve Weeks Ended					Forty Weeks Ended
	July 4,		July 6,			July 4,		July 6,
	2004		2003			2004		2003
Shares outstanding, beginning of fiscal year		36,034		38,558			36,034		38,558
Effect of common stock issued		257		15			105		9
Effect of common stock reacquired		—		(2,566	)		—		(1,959	)
Weighted-average shares outstanding - basic		36,291		36,007			36,139		36,608
Assumed additional shares issued upon exercise of stock options, net of shares reacquired at the average market price		862		309			531		280
Effect of restricted stock issued		101		243			67		194
Weighted-average shares outstanding - diluted		37,254		36,559			36,737		37,082
Stock options excluded (1)		45		3,498			2,072		3,571

(1) Excluded from diluted weighted-average shares outstanding because their exercise prices exceeded the average market price of common stock for the period.

8.	CONTINGENCIES AND LEGAL MATTERS
	The Company is principally liable for lease obligations on various properties sub-leased to third parties. We are also obligated under a lease guarantee agreement associated with one Chi-Chi’s restaurant property. Due to the bankruptcy of the Chi-Chi’s restaurant chain, previously owned by the Company, we are obligated to perform in accordance with the terms of the guarantee agreement, as well as four other lease agreements which expire at various dates in 2010 and 2011. During fiscal year 2003, we established an accrual for these lease obligations and do not anticipate incurring any additional charges related to the Chi-Chi’s bankruptcy in future years.
	Legal Proceedings – The Company is also subject to normal and routine litigation. In the opinion of management, based in part on the advice of legal counsel, the ultimate liability from all pending legal proceedings, asserted legal claims and known potential legal claims should not materially affect our operating results, financial position or liquidity.

9

JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)

9.	SEGMENT REPORTING
	Prior to the acquisition of Qdoba, the Company operated its business in a single segment. Subsequent to the Qdoba acquisition the Company has two operating segments, Jack in the Box and Qdoba, based on the Company’s management structure and internal method of reporting. Based upon certain quantitative thresholds, only Jack in the Box is considered a reportable segment.
	Summarized financial information concerning our reportable segment is shown in the following table:

	Twelve Weeks Ended				Forty Weeks Ended
	July 4,		July 6,		July 4,		July 6,
	2004		2003		2004		2003
Revenues	$	531,846	$	481,921	$	1,701,168	$	1,552,513
Earnings from operations		37,248		34,515		113,529		108,798

Interest expense and income taxes are not reported on an operating segment basis in accordance with the Company’s method of internal reporting.

A reconciliation of reportable segment revenues to consolidated revenue follows:

	Twelve Weeks Ended				Forty Weeks Ended
	July 4,		July 6,		July 4,		July 6,
	2004		2003		2004		2003
Revenues	$	531,846	$	481,921	$	1,701,168	$	1,552,513
Other		9,366		6,653		27,230		12,743
Consolidated revenues	$	541,212	$	488,574	$	1,728,398	$	1,565,256

A reconciliation of reportable segment earnings from operations to consolidated earnings from operations follows:

	Twelve Weeks Ended				Forty Weeks Ended
	July 4,		July 6,		July 4,		July 6,
	2004		2003		2004		2003
Earnings from operations	$	37,248	$	34,515	$	113,529	$	108,798
Other		833		310		417		537
Consolidated earnings from operations	$	38,081	$	34,825	$	113,946	$	109,335

10.

SUPPLEMENTAL CASH FLOW INFORMATION

The consolidated statements of cash flows exclude the following non-cash transactions: (i) equipment capital lease commitments of $9,865 and $3,506 in 2004 and 2003, respectively; (ii) non-cash proceeds from the Company’s short-term financing of a portion of the sale of company-operated restaurants to certain qualified franchisees of $5,264 and $24,729 in 2004 and 2003, respectively, included in accounts receivable; and (iii) the use of sinking fund payments to retire financing lease obligations during 2003.

10

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

     All comparisons under this heading between 2004 and 2003 refer to the 12-week (“quarter”) and 40-week (“year-to-date”) periods ended July 4, 2004 and July 6, 2003, respectively, unless otherwise indicated.

     The Company acquired Qdoba Restaurant Corporation (“Qdoba”), operator and franchisor of Qdoba Mexican Grill®, on January 21, 2003. As such, Qdoba’s results of operations are not reflected in the consolidated results for the first quarter of fiscal year 2003.

Overview

     Jack in the Box Inc. (the “Company”) owns, operates and franchises 1,987 Jack in the Box® quick-service restaurants and 150 Qdoba Mexican Grill (“Qdoba”) fast-casual restaurants, primarily in the western and southern United States.

     The Company’s primary source of revenue is from the sale of food and beverages at company-operated restaurants. The Company also derives revenue from distribution sales to Jack in the Box and Qdoba franchises, retail sales from fuel and convenience stores (“Quick Stuff®”), royalties from franchised restaurants, rents from real estate leased to certain franchisees, franchise fees, and the sale of company-operated restaurants to franchisees.

     The quick-serve restaurant industry has become more complex and challenging in recent years. Challenges presently facing the sector include higher levels of consumer expectations, intense competition with respect to market share, restaurant locations, labor, and menu and product development, the emergence of a new fast-casual restaurant segment, changes in the economy and trends for healthier eating.

     To address these challenges and others, and support our goal of transitioning to a national restaurant company, management has developed a two part strategic plan centered around brand reinvention and multifaceted growth. Brand reinvention initiatives include product innovation with a focus on high-quality products, enhancements to the quality of service and renovation to the restaurant facility. Our multifaceted growth strategy includes growing our restaurant base, increasing our franchising activities, expanding our proprietary Quick Stuff fuel and convenience store concept and continuing to grow Qdoba. We believe that brand reinvention will differentiate us from our competition and that our growth strategy will support us in our objective to become a national restaurant company.

     The following summarizes the most significant events occurring in fiscal year 2004:

• Increase in Company-operated Restaurant Sales. Quality improvements to our menu and new product innovations have contributed to increased sales trends in the quarter and year-to-date, which are expected to continue. Year-to-date, same store sales increased 4.8% compared with a decrease of 2.4% in fiscal year 2003. We project sales at Jack in the Box restaurants open more than one fiscal year (“same-store sales”) to increase 2.2% to 2.6% in the fourth quarter and 4.0% to 4.5% for the full year.

• Restaurant Operating Margin. In the quarter and for the year our restaurant operating margin improved to 18% and 17.2% in 2004 from 16.5% and 16.6% a year ago. The improvements are primarily related to Profit Improvement Program initiatives and labor and fixed cost leverage provided from higher sales offset by in part by higher commodity costs. However, in the quarter, total food and packaging costs as a percentage of sales were lower than last year, due to start-up costs associated with the introduction of our premium entrée salad line in 2003.

• Refinancing Transaction. In the first quarter of fiscal year 2004, we secured new financing intended to provide a more flexible capital structure, facilitate the execution of our strategic plan, and decrease borrowing costs. In connection with the refinancing, we recorded a $9.2 million charge to interest expense for the early retirement of debt. In addition to providing us with a more flexible capital structure, this refinancing transaction is expected to lower our borrowing costs over the life of our new term loan.

• Credit Facility Amendment. In the third quarter of fiscal year 2004, we amended the $275 million term loan portion of our credit facility to achieve an approximate 50 basis point reduction in our borrowing rate over the loan term. Fees paid in association with the repricing were customary for such arrangements of this type and were not material.

11

• Purchase Option. In the second quarter of fiscal year 2004, we exercised our purchase option under certain lease agreements and acquired 80 restaurant properties. During the third quarter, we sold and leased back 67 of these properties, at more favorable rates.

• Brand Reinvention Progress. We are continuing to upgrade our menu, service and facilities in Jack in the Box restaurants and evaluate our new fast-casual concept, called JBX™, with our test of two converted Jack in the Box restaurants in San Diego. We plan to expand the testing of our JBX concept to selected restaurants in two additional markets, Bakersfield, California and Boise, Idaho, by calendar year-end. This test phase is intended to evaluate the opportunity to generate incremental sales by attracting new customers to JBX, as well as benefit from the transfer of sales to non-converted Jack in the Box restaurants.

• Pension Contributions. In the third quarter we elected to contribute $13 million to our qualified pension plans from available cash on hand. The additional funding contribution was based on the Company’s intent to fully fund its qualified plans’ accumulated benefit obligation at fiscal year-end, and the amount was determined based on an annual actuarial review of the plans.

     The following table sets forth, unless otherwise indicated, the percentage relationship to total revenues of certain items included in the Company’s statements of earnings.

STATEMENTS OF EARNINGS DATA

	Twelve Weeks Ended						Forty Weeks Ended
	July 4,			July 6,			July 4,			July 6,
	2004			2003			2004			2003
Revenues:
Restaurant sales		87.0	%		90.9	%		88.4	%		90.8	%
Distribution and other sales		9.1			5.3			7.7			5.0
Franchise rents and royalties		2.7			2.4			2.8			2.6
Other		1.2			1.4			1.1			1.6
Total revenues		100.0	%		100.0	%		100.0	%		100.0	%
Costs of revenues:
Restaurant costs of sales (1)		30.9	%		31.6	%		31.0	%		30.7	%
Restaurant operating costs (1)		51.1			51.9			51.8			52.7
Costs of distribution and other sales (1)		97.9			97.5			98.2			97.7
Franchise restaurant costs (1)		50.4			52.2			48.2			48.7
Total costs of revenues		81.6			82.3			82.1			81.9
Selling, general and administrative		11.3			10.6			11.3			11.1
Earnings from operations		7.0			7.1			6.6			7.0

(1) As a percentage of the related sales and/or revenues.

     The following table summarizes the number of restaurants:

SYSTEMWIDE UNITS

	July 4,		July 6,
	2004		2003
Jack in the Box:
Company-operated		1,553		1,534
Franchised		434		386
Total system		1,987		1,920
Consolidated:
Company-operated		1,597		1,563
Franchised		540		455
Total system		2,137		2,018

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Revenues

     Restaurant sales were $470.6 million and $1.5 billion, respectively, in 2004 compared with $444.0 million and $1.4 billion in 2003. This growth primarily reflects an increase in sales at Jack in the Box company-operated restaurants and growth in the number of company-operated restaurants. Same-store sales at Jack in the Box restaurants increased 3.9% and 4.8%, respectively, in 2004 compared with 2003, primarily due to the continued success of our premium products, including Jack’s Ultimate Salads^TM and our Pannido^TM line of gourmet sandwiches, as well as improved economic conditions compared with a year ago. The number of Jack in the Box company-operated restaurants increased 1.2% to 1,553 in 2004 from 1,534 a year ago.

     Distribution and other sales, representing distribution sales to Jack in the Box and Qdoba franchisees, as well as Quick Stuff sales, increased $23.6 million and $54.4 million, respectively, to $49.6 million and $132.7 million in 2004 compared with 2003. Quick Stuff fuel and convenience store sales increased primarily due to an increase in the number of Quick Stuff locations to 25 at the end of the quarter from 13 a year ago and an increase in the retail price per gallon of fuel in 2004. Distribution sales also grew in 2004 compared with 2003, primarily due to an increase in the number of Jack in the Box and Qdoba franchised restaurants serviced by our distribution centers.

     Franchise rents and royalties increased $2.6 million and $8.9 million, respectively, to $14.4 million and $48.7 million in 2004 compared with 2003, primarily reflecting an increase in the number of Jack in the Box franchised restaurants to 434 at the end of the quarter from 386 a year ago, and to a lesser extent an increase in same-store sales at franchised restaurants. As a percentage of franchise restaurant sales, franchise rents and royalties increased to 10.0% in the quarter from 9.5% a year ago, primarily due to higher contractual rents and royalties provided by the 46 additional Jack in the Box restaurants sold to franchisees since a year ago. Year-to-date, the percentage remained constant at 10.7%, as the increase in Jack in the Box rents and royalties was offset by the acquisition of Qdoba in the second quarter of fiscal year 2003, whose royalties are lower than Jack in the Box’s average rents and royalties.

     Other revenues include principally gains and fees from the sale of company-operated restaurants to franchisees, as well as interest income from notes receivable and investments. Other revenues decreased $0.2 million and $6.4 million, respectively, to $6.6 million and $19.0 million in 2004 compared with 2003. In the quarter, this decrease is primarily due to a decline in the number of restaurants sold to 12 restaurants compared with 14 a year ago. Year-to-date, the decrease in other revenues is primarily due to lower average gains recognized in 2004 compared with 2003, reflecting differences in the sales volumes and cash flows of the restaurants sold. Year-to-date, we sold 38 restaurants versus 28 in 2003. Gains related to sales of restaurants to franchisees were $5.3 million and $14.5 million, respectively, in 2004 and $5.6 million and $22.1 million in 2003. In the fourth quarter, we expect to generate approximately $5 million in other revenues primarily from the sale of approximately 11 restaurants to franchisees. For the full year, other revenues are expected to be approximately $24 million, primarily from the sale of approximately 49 restaurants, compared with approximately $31 million, primarily from 36 such sales last year.

Costs and Expenses

     Restaurant costs of sales, which include food and packaging costs, increased to $145.6 million and $473.4 million, respectively, in 2004 from $140.1 million and $436.8 million in 2003, primarily due to sales growth and higher ingredient costs. As a percentage of restaurant sales, costs of sales were 30.9% and 31.0%, respectively, in 2004 compared with 31.6% and 30.7% in 2003. The cost of sales percentage improvement in the quarter is primarily due to the impact of start up costs associated with the Company’s introduction of its new premium salad line in 2003, offset in part by higher commodity costs in 2004, principally poultry, pork and dairy. Year-to-date, the cost of sales percentage increased primarily due to higher commodity costs, principally beef and dairy compared with a year ago.

     Restaurant operating costs grew with the addition of company-operated restaurants to $240.5 million and $792.1 million, respectively, in 2004 from $230.6 million and $748.9 million in 2003. As a percentage of restaurant sales, operating costs improved to 51.1% and 51.8%, respectively, in 2004 from 51.9% and 52.7% in 2003. The percentage improvement in 2004 is primarily due to continued Profit Improvement Program initiatives and increased leverage on labor and fixed costs from higher sales in 2004 compared with a year ago.

     Costs of distribution and other sales increased to $48.5 million and $130.3 million, respectively, in 2004 from $25.3 million and $76.6 million in 2003, primarily reflecting an increase in the related sales. As a percentage of distribution and other sales, these costs increased to 97.9% and 98.2% in 2004 from 97.5% and 97.7% a year ago, primarily due to additional Quick Stuff sales, primarily higher fuel sales at Quick Stuff locations, and distribution

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sales at slightly lower margin rates. The Quick Stuff margins reflect higher retail prices per gallon of fuel, with accompanying higher costs of sales, resulting in stable penny profits but increasing costs of sales rates. Distribution margins were impacted by growth in the number of Jack in the Box and Qdoba restaurants serviced from our distribution centers with higher delivery costs, in addition to increased fuel costs compared with a year ago.

     Franchise restaurant costs, which consist principally of rents and depreciation on properties leased to franchisees and other miscellaneous costs, increased to $7.3 million and $23.4 million, respectively, in 2004 from $6.2 million and $19.4 million in 2003, primarily reflecting an increase in the number of franchised restaurants. As a percentage of franchise rents and royalties, franchise restaurant costs improved to 50.4% and 48.2%, respectively, in 2004 from 52.2% and 48.7% in 2003. The percentage improvement in 2004 is primarily due to the leverage provided from higher royalties, principally due to an increase in the number of franchised restaurants and to a lesser extent, an increase in same store sales at franchised restaurants.

     Selling, general and administrative expenses (“SG&A”) increased to $61.2 million and $195.1 million, respectively, in 2004 from $51.6 million and $174.2 million in 2003. As a percentage of revenues, SG&A expenses increased to 11.3% in both periods in 2004 from 10.6% and 11.1%, respectively, in 2003. Cost increases for pension benefits, brand reinvention market tests, and incentive accruals were partially offset by leverage from higher revenues and continued cost reduction initiatives from our Profit Improvement Program. Pension costs have increased due to declines in discount rates and the assumed long-term rate of return on plan assets, and are expected to continue at higher levels throughout fiscal year 2004. Additionally in the quarter, we increased our pension expense, primarily due to lower-than-anticipated employee turnover, as determined by the Company’s annual actuarial review of its qualified pension plans.

     Interest expense was $3.8 million and $23.7 million, respectively, in 2004 compared with $5.5 million and $19.6 million in 2003. The decrease in interest expense in the quarter relates primarily to lower average interest rates associated with the Company’s recent refinancing. The year-to-date increase in interest expense primarily relates to the refinancing of the Company’s term loan and the early redemption of its senior subordinated notes, which resulted in a $9.2 million charge for the payment of a call premium and the write-off of deferred financing fees.

     The income tax provisions reflect the projected annual tax rates of 37% in 2004 and 36.2% in 2003. In the second quarter, we reduced our fiscal 2004 projected annual tax rate to 37% from 38%, primarily due to the Company’s ongoing tax-planning initiatives. During the third quarter of fiscal year 2003, the annual tax rate was reduced to the effective annual rate of 36.2% primarily due to the favorable resolution of a long-standing tax matter. The final 2004 annual tax rate cannot be determined until the end of the fiscal year; therefore, the actual rate could differ from our current estimates.

Net Earnings

     Net earnings were $21.6 million in the quarter, or $.58 per diluted share, in 2004 compared to $19.8 million, or $.54 per diluted share, in 2003. Year-to-date net earnings were $56.8 million, or $1.55 per diluted share, in 2004 compared to $57.3 million, or $1.54 per diluted share, in 2003. In 2004, year-to-date net earnings includes a loss on early retirement of debt recorded in the first quarter, which was $5.7 million, net of income taxes, or $.15 per diluted share.

Liquidity and Capital Resources

     General. Cash and cash equivalents increased to $87.5 million at July 4, 2004 from $22.4 million at the beginning of the fiscal year, primarily reflecting lower working capital requirements, higher proceeds from the sale of company-operated restaurants to franchisees and collections on notes receivable from franchisees, offset in part by increased pension contributions. We generally expect to maintain low levels of cash and cash equivalents, reinvesting available cash flows from operations to develop new or enhance existing restaurants, and to reduce borrowings under the new credit facility.

     Financial Condition. The Company and the restaurant industry in general, maintain relatively low levels of accounts receivable and inventories, and vendors grant trade credit for purchases such as food and supplies. We also continually invest in our business through the addition of new units and refurbishment of existing units, which are reflected as long-term assets and not as part of working capital. As a result, we typically maintain a working capital deficit, which was $37.2 million at July 4, 2004. Our current ratio increased to .9 to 1 at the end of the quarter compared with .6 to 1 at the beginning of the year, primarily reflecting a $65.1 million increase in cash as discussed above.

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     New Financing. On January 8, 2004, we secured a new senior term loan and amended our revolving credit facility, each with extended maturities. Our new financing is intended to provide a more flexible capital structure, facilitate the execution of our strategic plan, and decrease borrowing costs. Furthermore, the new term loan provides for a more favorable repayment schedule set at 1% per year for the first 6 years of the 7-year term. During the third quarter, we amended the term loan portion of our credit facility, to achieve an approximate 50 basis point reduction in our borrowing rate over the loan term. Fees paid in connection with the repricing were customary for such arrangements of this type and not material.

     Our credit facility, as amended, provides borrowings in the aggregate amount of $475 million and is comprised of: (i) a $200 million revolving credit facility maturing on January 8, 2008, and (ii) a $275 million term loan maturing on January 8, 2011, both with a rate of LIBOR plus 2.25%. The credit facility requires the payment of an annual commitment fee based on the unused portion of the credit facility. The annual commitment rate and the credit facility’s interest rates are based on a financial leverage ratio, as defined in the credit agreement. To secure our respective obligations under the credit facility, the Company and certain of its subsidiaries granted liens in substantially all personal property assets. Under certain circumstances, the Company and each of its certain subsidiaries will be required to grant liens in certain real property assets to secure their respective obligations under the new credit facility. Additionally, certain of our real and personal property secure other indebtedness of the Company. At July 4, 2004, we had no borrowings under our revolving credit facility and had letters of credit outstanding of $34.1 million.

     We used the proceeds from the new term loan to refinance our existing $150 million term loan and redeem $125 million of 8 3/8% senior subordinated notes due April 15, 2008, which resulted in a charge to interest expense of $9.2 million. The amended revolving credit facility is intended to support general corporate purposes.

     We are subject to a number of covenants under our various debt instruments, including limitations on additional borrowings, acquisitions, loans to franchisees, capital expenditures, lease commitments and dividend payments, as well as requirements to maintain certain financial ratios, cash flows and net worth. As of July 4, 2004, we were in compliance with all debt covenants.

     Total debt outstanding increased to $307.1 million at July 4, 2004 from $303.1 million at the beginning of the fiscal year, primarily due to an increase in capital lease obligations associated with new restaurant equipment leases.

     Sale of Company-Operated Restaurants. We have continued our strategy of selectively selling company-operated restaurants to franchisees, selling 38 restaurants in 2004 compared with 28 a year ago. Year-to-date, proceeds from the sale of company-operated restaurants and collections on notes receivable, primarily related to such sales, were $34.7 million and $15.6 million, respectively, in 2004 and 2003.

     Other Transactions. In the second quarter of fiscal year 2004, we exercised our purchase option under certain lease agreements and purchased 80 Jack in the Box restaurant properties. During the third quarter, we sold and leased back 67 of these properties, at more favorable rental rates.

     In January 1994, we entered into financing lease arrangements with two limited partnerships (the “Partnerships”) that related to 76 restaurants. At the inception of the financing lease arrangements, we recorded cash and cash held in trust, and established financing lease obligations of approximately $70 million requiring semi-annual payments to cover interest and sinking fund obligations due in equal installments on January 1, 2003 and November 1, 2003. In January 2003, we paid a $1.3 million fee to retire the debt early. The fee was charged to interest expense in the first quarter of fiscal year 2003 when the obligations were retired. We used borrowings under our credit facility and previous sinking fund payments to reacquire the interests in the restaurant properties and retire the high interest rate bearing financing lease obligations.

     In fiscal years 2000 and 2002, our Board of Directors authorized the repurchase of our outstanding common stock in the open market for an aggregate amount not to exceed $90 million. Under these authorizations, we acquired 4,115,853 shares at an aggregate cost of $90 million prior to the beginning of fiscal year 2004 and have no repurchase availability remaining. The stock repurchase program was intended to increase shareholder value and offset the dilutive effect of stock option exercises.

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     Contractual Obligations and Commitments. The following is a summary of the Company’s contractual obligations and commercial commitments as of July 4, 2004:

	Payments Due by Period (in thousands)
			Less than						After
	Total		1 year		1-3 years		3-5 years		5 years
Contractual Obligations:
Credit facility term loan	$	274,313	$	2,750	$	5,500	$	5,500	$	260,563
Revolving credit facility		—		—		—		—		—
Capital lease obligations		30,597		4,367		9,553		7,552		9,125
Other long-term debt obligations		2,229		1,353		581		295		—
Operating lease obligations		1,601,407		160,296		293,565		250,173		897,373
Guarantee (1)		1,094		198		321		317		258
Total contractual obligations	$	1,909,640	$	168,964	$	309,520	$	263,837	$	1,167,319
Other Commercial Commitments:
Stand-by letters of credit (2)	$	34,142	$	34,142	$	—	$	—	$	—

(1) Consists of a guarantee associated with one Chi-Chi’s property. Due to the bankruptcy of the Chi-Chi’s restaurant chain, previously owned by the Company, we are obligated to perform in accordance with the terms of the guarantee agreement.

(2) Consists primarily of letters of credit for workers’ compensation and general liability insurance.

     Capital Expenditures. Year-to-date total capital expenditures, including capital lease obligations, were $94.2 million and $80.6 million in 2004 and 2003, respectively. Cash flows used for additions to property and equipment, increased to $84.3 million in 2004 from $77.1 million in 2003, primarily due to a decision to finance the new Innovation Center utilizing the Company’s credit facility instead of through a sale and leaseback transaction. Increases in Jack in the Box restaurant improvements and Qdoba capital expenditures, primarily related to new company-operated restaurants, also contributed to the overall increase, but to a lesser extent. These increases were partially offset by a decrease in expenditures for new Jack in the Box restaurants, reflecting a reduction in the number of new restaurant openings to 39 in 2004 from 63 a year ago. Year-to-date, we also incurred capital lease obligations of $9.9 million for certain restaurant equipment.

     In the fourth quarter of fiscal year 2004 and for the full year, capital expenditures and lease commitments are expected to be $41 million to $46 million and $135 million to $140 million, respectively. Fiscal year capital expenditures have decreased from amounts previously forecast due to rescheduling the JBX market tests from the fourth quarter of fiscal year 2004 to the end of the calendar year, the timing of expenditures for new restaurant openings, and savings on new store development. Our fourth quarter capital projections include spending related to approximately 21 new Jack in the Box restaurants, brand re-invention initiatives and ongoing capital expenditures.

     Pension Funding. Lower discount rates and a reduction in our assumed long-term rate of return on plan assets impacted the funding level of our accumulated benefit plan obligations. During the third quarter, we elected to contribute $13 million to our qualified defined benefit pension plans from available cash on hand. The additional funding contribution was based on the Company’s intent to fully fund its qualified plans’ accumulated benefit obligation at fiscal year-end, and the amount was determined based on an annual actuarial review of the plans. Year-to-date we have contributed $30 million to our qualified defined benefit pension plans compared with $4.4 million a year ago and we do not anticipate making any additional funding contributions during the fiscal year.

     Future Liquidity. We require capital principally to grow the business through new restaurant construction, as well as to maintain, improve and refurbish existing restaurants, and for general operating purposes. Our primary short-term and long-term sources of liquidity are expected to be cash flows from operations, the revolving bank credit facility, and the sale and leaseback of certain restaurant properties. Additional potential sources of liquidity include the conversion of company-operated restaurants to franchised restaurants. Based upon current levels of operations and anticipated growth, we expect that cash flows from operations, combined with other financing alternatives in place or available, will be sufficient to meet debt service, capital expenditure and working capital requirements.

     We do not have material related party transactions or off-balance sheet arrangements, other than our operating leases. We do not enter into commodity contracts for which market price quotations are not available. Furthermore, we are not aware of any other factors, which are reasonably likely to affect our liquidity, other than those disclosed as risk factors in our Form 10-K filed with the SEC. While we have noted that certain operating expenses are rising,

16

including pension costs, we believe that there are sufficient funds available from operations, our existing credit facility and the sale and leaseback of restaurant properties to accommodate the Company’s future growth.

Discussion of Critical Accounting Policies

     We have identified the following as the Company’s most critical accounting policies, which are those that are most important to the portrayal of the Company’s financial condition and results and require management’s most subjective and complex judgments. Information regarding the Company’s other significant accounting policies are disclosed in Note 1 of our most recent Annual Report on Form 10-K filed with the SEC.

     Pension Benefits – The Company sponsors pension and other retirement plans in various forms covering those employees who meet certain eligibility requirements. Several statistical and other factors which attempt to anticipate future events are used in calculating the expense and liability related to the plans, including assumptions about the discount rate, expected return on plan assets and the rate of increase in compensation levels, as determined by the Company using specified guidelines. In addition, our outside actuarial consultants also use certain statistical factors such as turnover, retirement and mortality rates to estimate the Company’s future benefit obligations. The actuarial assumptions used may differ materially from actual results due to changing market and economic conditions, higher or lower turnover and retirement rates or longer or shorter life spans of participants. These differences may impact the amount of pension expense recorded by the Company. Due principally to decreases in discount rates, declines in the return on assets in the plans and lower than anticipated employee turnover, the pension expense in fiscal year 2004 is expected to be approximately $9 million higher than fiscal year 2003.

     Self-Insurance – The Company is self-insured for a substantial portion of its current and prior years’ losses related to its workers’ compensation, general liability, automotive, medical and dental programs. In estimating the Company’s self-insurance reserves, we utilize independent actuarial estimates of expected losses, which are based on statistical analyses of historical data. These assumptions are closely monitored and adjusted when warranted by changing circumstances. Should a greater amount of claims occur compared to what was estimated, or medical costs increase beyond what was expected, reserves might not be sufficient, and additional expense may be recorded.

     Long-lived Assets – Property, equipment and certain other assets, including amortized intangible assets, are reviewed for impairment when indicators of impairment are present. This review includes a market-level analysis and evaluations of restaurant operating performance from operations and marketing management. When indicators of impairment are present, we perform an impairment analysis on a restaurant-by-restaurant basis. If the sum of undiscounted future cash flows is less than the net carrying value of the asset, we recognize an impairment loss by the amount which the carrying value exceeds the fair value of the asset. Our estimates of future cash flows may differ from actual cash flows due to, among other things, economic conditions or changes in operating performance. In the second quarter, we recorded an immaterial impairment charge related to one restaurant we intend to close upon the expiration of its lease at the end of the calendar year. During 2004, we noted no other indicators of impairment of our long-lived assets.

     Goodwill and Other Intangibles – We also evaluate goodwill and intangible assets not subject to amortization annually, or more frequently if indicators of impairment are present. If the estimated fair values of these assets are less than the related carrying amounts, an impairment loss is recognized. The methods we use to estimate fair value include future cash flow assumptions, which may differ from actual cash flows due to, among other things, economic conditions or changes in operating performance. During the fourth quarter of 2003, we reviewed the carrying value of our goodwill and indefinite life intangible assets and determined that no impairment existed as of September 28, 2003.

     Allowances for Doubtful Accounts – Our trade receivables consist primarily of amounts due from franchisees for rents on subleased sites, royalties and distribution sales. We also have notes receivable related to short-term financing provided on the sale of company-operated restaurants to certain qualified franchisees. We continually monitor amounts due from franchisees and maintain an allowance for doubtful accounts for estimated losses resulting from the potential inability of our franchisees to make required payments. This estimate is based on our assessment of the collectibility of specific franchisee accounts, as well as a general allowance based on historical trends, the financial condition of our franchisees, consideration of the general economy and the aging of such receivables. The Company has good relationships with its franchisees and achieves high collection rates; however, if the future financial condition of our franchisees were to deteriorate, resulting in their inability to make specific required payments, additions to the allowance for doubtful accounts may be required.

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     Legal Accruals – The Company is subject to claims and lawsuits in the ordinary course of its business. A determination of the amount accrued, if any, for these contingencies is made after analysis of each matter. We continually evaluate such accruals and may increase or decrease accrued amounts as we deem appropriate.

Future Application of Accounting Principles

     On May 19, 2004, the FASB issued FSP 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which supersedes FSP 106-1. FSP 106-2 discusses certain accounting and disclosure requirements related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which introduces a federal subsidy to sponsors of retiree health care benefit plan that provide a benefit that is at least the actuarial equivalent of the Medicare benefit. We will adopt the provisions of FSP 106-2 in the fourth quarter of fiscal year 2004 as required. Any such subsidy we may be eligible to receive would be recorded as a reduction in our accumulated benefit obligation and a decrease in future net periodic postretirement benefit cost. We have not yet determined whether the prescription drug benefits provided under our postretirement plan meet the requirements to receive the federal subsidy; however, we do not believe any such benefits we may be eligible for will have a material impact on our results of operations or financial position.

Cautionary Statements Regarding Forward-Looking Statements

     This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities law. These forward-looking statements are principally contained in the sections captioned, Notes to Unaudited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations. Statements regarding our expectations about the impact of our refinancing and our borrowing costs, the funding status of our pension plans and assumed rate of return on plan assets, the impact of recently enacted Medicare legislation, our effective tax rate, expectations regarding any liability that may result from claims and actions filed against us, our contingent obligations and future charges related to the Chi-Chi’s bankruptcy, estimated and future costs, expenses, same-store sales and other revenues, our brand reinvention strategy and testing plans, our growth strategy, our anticipated capital expenditures relating to new restaurants, brand reinvention and refurbishment of existing facilities, our future financial performance, sources of liquidity, including the sale and leaseback of restaurant properties and conversion of company-operated restaurants to franchised restaurants, uses of cash and sufficiency of our cash flows are forward-looking statements. Forward-looking statements are generally identifiable by the use of the words “anticipate,” “assume,” “believe,” “estimate,” “seek,” “expect,” “intend,” “plan,” “project,” “may,” “will,” “would,” and similar expressions. Forward-looking statements are based on management’s current plans and assumptions and are subject to known and unknown risks and uncertainties, which may cause actual results to differ materially from expectations. The following is a discussion of some of those factors.

     There is intense competition in the quick service restaurant industry with respect to market share, restaurant locations, labor, menu and product development. The quick-service restaurant segment itself faces competitive pressures from the emerging “fast-casual” chains. The Company competes primarily on the basis of quality, variety and innovation of menu items, service, brand, convenience and price against several larger national and international chains with potentially significantly greater financial resources. The Company’s results depend upon the effectiveness of its strategies, including its brand reinvention strategy, as compared to its competitors, and can be adversely affected by aggressive competition from numerous and varied competitors in all areas of business, including new product introductions, advertising and promotions, and discounting. In addition, restaurant sales can be affected by factors, including but not limited to, demographic changes, consumer preferences, tastes and spending patterns, widespread negative publicity, perceptions about the health and safety of food products and severe weather conditions. With approximately 70% of its restaurants in California and Texas, Jack in the Box restaurant sales can be significantly affected by demographic changes, adverse weather, economic and political conditions and other significant events in those states. The quick service restaurant industry is mature, with significant chain penetration. There can be no assurances that the Company’s growth objectives in the regional domestic markets in which it operates restaurants and convenience stores will be met or that the new facilities will be profitable. The development and profitability of restaurants can be adversely affected by many factors including the ability of the Company and its franchisees to select and secure suitable sites on satisfactory terms, the availability of financing and general business and general economic conditions. The realization of gains from our program of selective sales of company-operated restaurants to existing and new franchisees depends upon various factors, including failure of the market for our franchisees to develop as expected, sales trends at franchised restaurants and the financing market and economic conditions. The Company has provided a portion of the purchase financing for certain franchisees that have acquired franchises for existing

18

restaurants from the Company. There can be no assurance that all such borrowers will make timely payments or ultimately perform on the terms contemplated. The ongoing success of our selective sale and leaseback of restaurant properties is subject to changes in the economy, credit market, real estate market and the ability of the company to obtain acceptable prices and terms. The success of our brand reinvention initiatives at franchised sites will depend upon franchiees’ willingness to participate in our strategy and the availability of financing resources at satisfactory rates and terms. Our results of operations can also be adversely affected by changes in commodity prices or supply, higher costs associated with new technologies, increasing occupancy and insurance costs, including workers compensation insurance, interest rates, inflation, recession, the effects of war and terrorist activities and other factors over which the Company has no control, including the possibility of increased pension expense and contributions resulting from declines in discount rates and stock market returns. Because a large majority of its restaurants are company-operated, the Company’s earnings are more sensitive to increasing costs than majority franchised chains. In January 2003, the Company completed its acquisition of Qdoba Restaurant Corporation, a fast-casual restaurant chain. The Company may not successfully integrate or fully realize the potential benefits or synergies of this or other acquisition transactions. Other factors that can cause actual results to differ materially from expectations include the unpredictable nature of litigation, including strategies and settlement costs; changes in accounting standards, policies and practices; new legislation and governmental regulation; potential variances between estimated and actual liabilities; and the possibility of unforeseen events affecting the industry in general.

     Our income tax provision is sensitive to expected earnings and, as expectations change, our income tax provision may vary from quarter-to-quarter and year-to-year. In addition, from time-to-time, we may take positions for filing our tax returns, which differ, from the treatment for financial reporting purposes. Our effective tax rate for fiscal 2004 is expected to be higher than our fiscal 2003 rate.

     This discussion of uncertainties is not exhaustive. Additional risk factors associated with our business are described in our most recent Annual Report on Form 10-K filed with the SEC. Jack in the Box Inc. assumes no obligation and does not intend to update these forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

     Our primary exposure relating to financial instruments is to changes in interest rates. Our credit facility, which is comprised of a revolving credit facility and a term loan, bears interest at an annual rate equal to the prime rate or the LIBOR plus an applicable margin based on a financial leverage ratio. The majority of the credit facility borrowings are LIBOR based. As of July 4, 2004, our applicable margins for the LIBOR based revolving loans and term loan were set at 2.25%. A hypothetical one percent increase in short-term interest rates, based on the outstanding balance of our revolving credit facility and term loan at July 4, 2004, would result in an estimated increase of $2.7 million in annual interest expense.

     Changes in interest rates also impact our pension expense, as do changes in the expected long-term rate of return on our pension plan assets. An assumed discount rate is used in determining the present value of future cash outflows currently expected to be required to satisfy the pension benefit obligation when due. Additionally, an assumed long-term rate of return on plan assets is used in determining the average rate of earnings expected on the funds invested or to be invested to provide the benefits to meet our projected benefit obligation. A hypothetical 25 basis point reduction in the assumed discount rate and expected long-term rate of return on plan assets would result in an estimated increase of $1.4 million and $0.2 million, respectively, in our future annual pension expense.

     We are also exposed to the impact of commodity and utility price fluctuations related to unpredictable factors such as weather and various other market conditions outside our control. Our ability to recover increased costs through higher prices is limited by the competitive environment in which we operate. From time-to-time we enter into futures and option contracts to manage these fluctuations. We had no significant open commodity futures and option contracts at July 4, 2004.

     At July 4, 2004, we had no other material financial instruments subject to significant market exposure.

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ITEM 4. CONTROLS AND PROCEDURES

     (a) Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d –15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

     (b) There have been no significant changes in our internal control over financial reporting during the quarter ended July 4, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.OTHER INFORMATION

     There is no information required to be reported for any items under Part II, except as follows:

ITEM 1. LEGAL PROCEEDINGS

     The Company is also subject to normal and routine litigation. In the opinion of management, based in part on the advice of legal counsel, the ultimate liability from all pending legal proceedings, asserted legal claims and known potential legal claims should not materially affect our operating results, financial position or liquidity.

20

ITEM 6.EXHIBITS AND REPORTS ON FORM 8-K

ITEM 6 (a). Exhibits

Number	Description
3.1	Restated Certificate of Incorporation, as amended(7)
3.2	Amended and Restated Bylaws (15)
4.1	Indenture for the 8 3/8% Senior Subordinated Notes due 2008(6) (Instruments with respect to the registrant’s long-term debt not in excess of 10% of the total assets of the registrant and its subsidiaries on a consolidated basis have been omitted. The registrant agrees to furnish supplementally a copy of any such instrument to the Commission upon request.)
4.2	Shareholder Rights Agreement(3)
10.1	Amended and Restated Credit Agreement dated as of January 8, 2004 by and among Jack in the Box Inc. and the lenders named therein (15)
10.1.1	First Amendment dated as of June 18, 2004 to the Amended and Restated Credit Agreement
10.2	Purchase Agreements dated as of January 22, 1987 between Foodmaker, Inc. and FFCA/IIP 1985 Property Company and FFCA/IIP 1986 Property Company(1)
10.3	Land Purchase Agreements dated as of February 18, 1987 by and between Foodmaker, Inc. and FFCA/IPI 1984 Property Company and FFCA/IPI 1985 Property Company and Letter Agreement relating thereto(1)
10.4.1*	Amended and Restated 1992 Employee Stock Incentive Plan(4)
10.4.2*	Jack in the Box Inc. 2002 Stock Incentive Plan(10)
10.5*	Capital Accumulation Plan for Executives(9)
10.5.1*	First Amendment dated as of August 2, 2002 to the Capital Accumulation Plan for Executives(11)
10.6*	Supplemental Executive Retirement Plan(9)
10.6.1*	First Amendment dated as of August 2, 2002 to the Supplemental Executive Retirement Plan(11)
10.7*	Performance Bonus Plan(8)
10.8*	Deferred Compensation Plan for Non-Management Directors(2)
10.9*	Amended and Restated Non-Employee Director Stock Option Plan(7)
10.10*	Form of Compensation and Benefits Assurance Agreement for Executives(5)
10.11*	Form of Indemnification Agreement between Jack in the Box Inc. and certain officers and directors(11)
10.12	Consent Agreement(11)
10.13*	Executive Deferred Compensation Plan(12)
10.14*	Form of Restricted Stock Award for certain executives(12)
10.14(a)	Schedule of Restricted Stock Awards(14)
10.15*	Executive Agreement between Jack in the Box Inc. and Gary J. Beisler, President and Chief Executive Officer of Qdoba Restaurant Corporation(13)
10.16*	Amended and Restated 2004 Stock Incentive Plan
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

* Management contract or compensatory plan.

21

(1)	Previously filed and incorporated herein by reference from registrant’s Registration Statement on Form S-1 (No. 33-10763) filed February 24, 1987.
(2)	Previously filed and incorporated herein by reference from registrant’s Definitive Proxy Statement dated January 17, 1995 for the Annual Meeting of Stockholders on February 17, 1995.
(3)	Previously filed and incorporated by reference from registrant’s current report on Form 8-K dated July 26, 1996.
(4)	Previously filed and incorporated herein by reference from registrant’s Registration Statement on Form S-8 (No. 333-26781) filed May 9, 1997.
(5)	Previously filed and incorporated herein by reference from registrant’s Annual Report on Form 10-K for the fiscal year ended September 28, 1997.
(6)	Previously filed and incorporated herein by reference from registrant’s Quarterly Report on Form 10-Q for the quarter ended April 12, 1998.
(7)	Previously filed and incorporated herein by reference from registrant’s Annual Report on Form 10-K for the fiscal year ended October 3, 1999.
(8)	Previously filed and incorporated herein by reference from registrant’s Definitive Proxy Statement dated January 19, 2001 for the Annual Meeting of Stockholders on February 23, 2001.
(9)	Previously filed and incorporated herein by reference from registrant’s Annual Report on Form 10-K for the fiscal year ended September 30, 2001.
(10)	Previously filed and incorporated herein by reference from the registrant’s Definitive Proxy Statement dated January 18, 2002 for the Annual Meeting of Stockholders’ on February 22, 2002.
(11)	Previously filed and incorporated herein by reference from registrant’s Annual Report on Form 10-K for the fiscal year ended September 29, 2002.
(12)	Previously filed and incorporated herein by reference from registrant’s Quarterly Report on Form 10-Q for the quarter ended July 6, 2003.
(13)	Previously filed and incorporated herein by reference from registrant’s Quarterly Report on Form 10-Q for the quarter ended July 6, 2003.
(14)	Previously filed and incorporated herein by reference from the registrant Quarterly Report on Form 10-Q for the quarter ended July 6, 2003.
(15)	Previously filed and incorporated herein by reference from the registrant’s Quarterly Report on Form 10-Q for the quarter ended January 18, 2004.

ITEM 6(b). Form 8-K.

     We filed the following reports on Form 8-K with the Securities and Exchange Commission during the third quarter ended July 4, 2004: On May 12, 2004, we filed a report on Form 8-K containing an earnings release that reported results of operations for the second quarter ended April 11, 2004.

22

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized and in the capacities indicated.

JACK IN THE BOX INC.
By:	/S/JOHN F. HOFFNER
	John F. Hoffner
	Executive Vice President
	and Chief Financial Officer
	(Principal Financial Officer)
	(Duly Authorized Signatory)

Date: August 12, 2004

23

EX-10.1.1

                                                                  EXHIBIT 10.1.1

                                 FIRST AMENDMENT
                               TO CREDIT AGREEMENT

      THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made and
entered into as of this 18th day of June, 2004, with an effective date as set
forth in Section 3 hereof, by and among JACK IN THE BOX INC., a corporation
organized under the laws of Delaware (the "Borrower"), those certain
subsidiaries of the Borrower party to the Guaranty Agreement referred to below
(the "Guarantors"), the Lenders party to the Credit Agreement referred to below
(the "Lenders") pursuant to the authorization (in the form attached hereto as
Annex A, the "Authorization"), WACHOVIA BANK, NATIONAL ASSOCIATION, as
Administrative Agent for the Lenders (the "Administrative Agent"), FLEET
NATIONAL BANK and US BANK, NATIONAL ASSOCIATION, each in its capacity as a
Syndication Agent (collectively, the "Syndication Agents"), COOPERATIEVE
CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., "RABOBANK INTERNATIONAL," NEW YORK
BRANCH and BNP PARIBAS, each in its capacity as a Documentation Agent
(collectively, the "Documentation Agents"). WACHOVIA CAPITAL MARKETS, LLC acted
as Lead Arranger in connection with this Amendment.

                              Statement of Purpose

      The Lenders agreed to extend certain credit facilities to the Borrower
pursuant to the Amended and Restated Credit Agreement dated as of January 8,
2004 by and among the Borrower, the Lenders, the Administrative Agent, the
Syndication Agents and the Documentation Agents (as amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement").
In connection therewith, certain of the Subsidiaries of the Borrower reaffirmed
their respective obligations under the Guaranty Agreement dated as of January
22, 2003 in favor of the Administrative Agent for the ratable benefit of itself
and the other Lenders (as reaffirmed and amended by the Reaffirmation and Master
Amendment dated as of January 8, 2004 and as further amended, restated,
supplemented or otherwise modified from time to time, the "Guaranty Agreement").

      The parties now desire to amend or modify certain provisions of the Credit
Agreement in certain respects on the terms and conditions set forth below.

      NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:

      1.    Capitalized Terms. All capitalized undefined terms used in this
Amendment shall have the meanings assigned thereto in the Credit Agreement.

      2.    Amendments to the Credit Agreement. The Credit Agreement is hereby
modified as follows:

      (a)   Amendment to Existing Definition. The definition of the following
defined term which is set forth in Section 1.1 of the Credit Agreement is hereby
amended in its entirety as follows:

                                                                      2239344.03
                                                                          LIB:CH



            "Applicable Margin" means the applicable margin with respect to the
      Loans as set forth in Section 5.1(c).

      (b)   Amendment to Section 5.1(c). Section 5.1(c) of the Credit Agreement
is hereby amended in its entirety as follows:

            "(c)  Applicable Margin.

                  (i)   The Applicable Margin provided for in Section 5.1 (a)
      with respect to any Revolving Credit Loan or Swingline Loan shall be based
      upon the Leverage Ratio as of the end of the fiscal quarter immediately
      preceding the delivery of the financial statements and the accompanying
      Officer's Compliance Certificate for such fiscal quarter, as follows:



                                             APPLICABLE
                                               LIBOR
PRICING LEVEL       LEVERAGE RATIO             MARGIN       APPLICABLE BASE RATE MARGIN
- -------------    ------------------------    ----------     ---------------------------
                                                   
I                Greater than or equal to       2.50%                 1.25%
                 1.75 to 1.00
II               Greater than or equal          2.25%                 1.00%
                 to 1.00 to 1.00 but less
                 than 1.75 to 1.00
III              Less than 1.00 to              2.00%                 0.75%
                 1.00


                  (ii)  The Applicable Margin with respect to the Term Loans
      shall be 1.00% with respect to Base Rate Loans and 2.25% with respect to
      LIBOR Rate Loans.

                  (iii) Adjustments, if any, in the Applicable Margin with
      respect to Revolving Credit Loans and Swingline Loans shall be made on the
      date (each a "Calculation Date") ten (10) Business Days after the date by
      which the Borrower is required to provide quarterly financial statements
      of the Borrower and its Subsidiaries and an accompanying Officer's
      Compliance Certificate setting forth the Leverage Ratio of the Borrower
      and its Subsidiaries for the most recently ended fiscal quarter of the
      Borrower and its Subsidiaries; provided further that if the Borrower fails
      to provide the Officer's Compliance Certificate as required by Section 8.2
      for the most recently ended fiscal quarter of the Borrower and its
      Subsidiaries preceding the applicable Calculation Date, the Applicable
      Margin with respect to Revolving Credit Loans and Swingline Loans shall be
      based on Pricing Level I (as shown above) from such Calculation Date until
      such time as an appropriate Officer's Compliance Certificate is provided,
      at which time the Applicable Margin with respect to Revolving Credit Loans
      and Swingline Loans shall be determined by reference to the Leverage Ratio
      as of the last day of the most recently ended fiscal quarter of the
      Borrower and its Subsidiaries preceding such Calculation Date. Except as
      provided in the preceding sentence, the Applicable Margin with respect to
      Revolving Credit Loans and Swingline Loans shall be effective from one
      Calculation Date until the next Calculation Date.

      3.    Effectiveness. This Amendment shall become effective on the date
that each of the following conditions has been satisfied:

                                                                      2239344.03
                                                                          LIB:CH

                                       2


            (a)   Amendment Documents. The Administrative Agent shall have
      received (1) a duly executed counterpart of this Amendment from the
      Administrative Agent, the Borrower and each Guarantor and (2) an
      Authorization from each Lender that has made Term Loans.

            (b)   Fees and Expenses. The Administrative Agent shall have been
      reimbursed for all fees and out of pocket charges and other expenses
      incurred in connection with this Amendment, including, without limitation,
      the fees and expenses referred to in Section 7 of this Amendment, the
      Credit Agreement and the transactions contemplated thereby.

            (c)   Other Documents. The Administrative Agent shall have received
      any other documents or instruments reasonably requested by the
      Administrative Agent in connection with the execution of this Amendment.

      4.    Acknowledgement of Guarantors: Reaffirmation of Security Documents.

      (a)   By their execution hereof, each Guarantor hereby expressly (i)
consents to the modifications and amendments set forth in this Amendment, (ii)
reaffirms all of its respective covenants, representations, warranties and other
obligations set forth in the Guaranty Agreement and the other Loan Documents to
which it is a party and (iii) acknowledges, represents and agrees that its
respective covenants, representations, warranties and other obligations set
forth in the Guaranty Agreement and the other Loan Documents to which it is a
party remain in full force and effect.

      (b)   The Borrower and each Guarantor hereby confirms that each of the
Security Documents to which it is a party shall continue to be in full force and
effect and is hereby ratified and reaffirmed in all respects as if fully
restated as of the date hereof by this Amendment. In furtherance of the
reaffirmations set forth in this Section 4, the Borrower and each Guarantor
hereby grants and assigns a security interest in all Collateral identified in
any Security Document as collateral security for the Obligations and the
Guaranteed Obligations (as defined in the Guaranty Agreement).

      5.    Effect of Amendment. Except as expressly amended hereby, the Credit
Agreement and Loan Documents shall remain in full force and effect in accordance
with their respective terms. The amendments granted herein are specific and
limited and shall not constitute a modification, acceptance or waiver of any
other provision of or default under the Credit Agreement, the Loan Documents or
any other document or instrument entered into in connection therewith or a
future modification, acceptance or waiver of the provisions set forth therein.

      6.    Representations and Warranties/No Default.

      (a)   By its execution hereof, the Borrower and each Guarantor hereby
certifies that each of the representations and warranties set forth in the
Credit Agreement, the Guaranty Agreement and the other Loan Documents is true
and correct as of the date hereof as if fully set forth herein (except for any
representation and warranty made as of an earlier date, which representation and
warranty shall remain true and correct as of such earlier date) and that no
Default or Event of Default has occurred and is continuing as of the date
hereof.

                                                                      2239344.03
                                                                          LIB:CH

                                       3


      (b)   By its execution hereof, the Borrower and each Guarantor hereby
represents and warrants that the Borrower and each Guarantor thereof has the
right, power and authority and has taken all necessary corporate and other
action to authorize the execution, delivery and performance of this Amendment
and each other document executed in connection herewith to which it is a party
in accordance with their respective terms.

      (c)   This Amendment and each other document executed in connection
herewith has been duly executed and delivered by the duly authorized officers of
the Borrower and each Guarantor party thereto, and each such document
constitutes the legal, valid and binding obligation of the Borrower and each
Guarantor party thereto, enforceable in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar state or federal debtor relief laws from time to time in
effect which affect the enforcement of creditors' rights in general and the
availability of equitable remedies.

      7.    Fees and Expenses. The Borrower shall pay all reasonable
out-of-pocket fees and expenses of the Administrative Agent in connection with
the preparation, execution and delivery of this Amendment, including, without
limitation, the reasonable fees and disbursements of counsel for the
Administrative Agent.

      8.    Governing Law. This Amendment shall be governed by, construed and
enforced in accordance with, the laws of the State of New York (including
Section 5-1401 and Section 5-1402 of the General Obligations Law of the State of
New York), without regard to the conflicts of law provisions of such state.

      9.    Counterparts. This Amendment may be executed in separate
counterparts, each of which when executed and delivered is an original but all
of which taken together constitute one and the same instrument.

      10.   Facsimile Transmission. A facsimile, telecopy or other reproduction
of this Amendment may be executed by one or more parties hereto, and an executed
copy of this Amendment may be delivered by one or more parties hereto by
facsimile or similar instantaneous electronic transmission device pursuant to
which the signature of or on behalf of such party can be seen, and such
execution and delivery shall be considered valid, binding and effective for all
purposes. At the request of any party hereto, all parties hereto agree to
execute an original of this Amendment as well as any facsimile, telecopy or
other reproduction hereof.

                           [Signature Pages To Follow]

                                                                      2239344.03
                                                                          LIB:CH

                                       4


      IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date and year first above written.

                                        BORROWER:

                                        JACK IN THE BOX INC.

                                        By: /s/ Harold Sachs
                                           -----------------------------------
                                           Name:  Harold Sachs
                                           Title: Vice President and Treasurer

                                        GUARANTORS:

                                        JACK IN THE BOX EASTERN DIVISION
                                        L.P.

                                        By: JBX General Partner LLC, its General
                                        Partner

                                        By: Jack in the Box Inc., its Sole and
                                        Managing Member

                                        By: /s/ Harold Sachs
                                           ------------------------------------
                                           Name:  Harold Sachs
                                           Title: Vice President and Treasurer

                                        JBX GENERAL PARTNER LLC

                                        By: Jack in the Box Inc., its Sole and
                                        Managing Member

                                        By: /s/ Harold Sachs
                                           ------------------------------------
                                           Name:  Harold Sachs
                                           Title: Vice President and Treasurer

                                        JBX LIMITED PARTNER LLC

                                        By: Jack in the Box Inc., its Sole and
                                        Managing Member

                                        By: /s/ Harold Sachs
                                           ------------------------------------
                                           Name:  Harold Sachs
                                           Title: Vice President and Treasurer

                           [Signature Pages Continue]

[First Amendment - Jack in the Box Inc.]



                                        QDOBA RESTAURANT CORPORATION

                                        By: /s/ Gary J Beisler
                                           ------------------------------
                                        Name:  GARY J BEISLER
                                        Title: PRESIDENT & CEO

                  [Signatures Continued on the Following Page]

[First Amendment - Jack in the Box, Inc.]



                                      ADMINISTRATIVE AGENT AND LENDERS:

                                      WACHOVIA BANK, NATIONAL
                                      ASSOCIATION, as Administrative Agent,
                                       as Lender and at the request of the other
                                       Lenders party to the Credit Agreement
                                       pursuant to the Authorization

                                      By: /s/ Louis K. Beasley, lil
                                         ------------------------------
                                      Name:  Louis K. Beasley, lil
                                      Title: Director

[First Amendment - Jack in the Box, Inc.]

EX-10.16

                                                                               .
                                                                               .
                                                                               .


                                                                   EXHIBIT 10.16

                              JACK IN THE BOX INC.
                            2004 STOCK INCENTIVE PLAN

                       INDEX TO 2004 STOCK INCENTIVE PLAN

                                                                                  
1.    Establishment, Purpose and Term of Plan...................................      3
      1.1      Establishment....................................................      3
      1.2      Purpose..........................................................      3
      1.3      Term of Plan.....................................................      3

2.    Definitions and Construction..............................................      3
      2.1      Definitions......................................................      3
      2.2      Construction.....................................................      6

3.    Administration............................................................      6
      3.1      Administration by the Committee..................................      6
      3.2      Authority of Officers............................................      6
      3.3      Powers of the Committee..........................................      6
      3.4      Administration with Respect to Insiders..........................      7
      3.5      Committee Complying with Section 162(m)..........................      7
      3.6      No Repricing.....................................................      7
      3.7      Indemnification..................................................      7

4.    Shares Subject to Plan....................................................      8
      4.1      Maximum Number of Shares Issuable................................      8
      4.2      Adjustments for Changes in Capital Structure.....................      8

5.    Eligibility and Award Limitations.........................................      8
      5.1      Persons Eligible for Incentive Stock Options.....................      8
      5.2      Persons Eligible for Other Awards................................      9
      5.3      Fair Market Value Limitation on Incentive Stock Options..........      9
      5.4      Award Limits.....................................................      9
      5.5      Performance Awards...............................................      9

6.    Terms and Conditions of Options...........................................     10
      6.1      Exercise Price...................................................     10
      6.2      Exercisability and Term of Options...............................     10
      6.3      Payment of Exercise Price........................................     10
      6.4      Effect of Termination of Service.................................     11
      6.5      Transferability of Options.......................................     11

7.    Terms and Conditions of Stock Appreciation Rights.........................     11
      7.1      Types of SARs Authorized.........................................     11
      7.2      Exercise Price...................................................     11
      7.3      Exercisability and Term of SARs..................................     12
      7.4      Exercise of SARs.................................................     12
      7.5      Deemed Exercise of SARs..........................................     12
      7.6      Effect of Termination of Service.................................     12
      7.7      Nontransferability of SARs.......................................     12



Adopted 2/14/04; Amended & Restated 5/7/04

                                       1



                                                                                  
8.    Terms and Conditions of Restricted Stock Awards...........................     12
      8.1      Purchase Price...................................................     13
      8.2      Purchase Period..................................................     13
      8.3      Payment of Purchase Price........................................     13
      8.4      Vesting and Restrictions on Transfer.............................     13
      8.5      Voting Rights; Dividends.........................................     14
      8.6      Effect of Termination of Service.................................     14
      8.7      Nontransferability of Restricted Stock Award Rights..............     14

9.    Terms and Conditions of Performance Awards................................     14
      9.1      Initial Value of Performance Shares and Performance Units........     14
      9.2      Establishment of Performance Goals and Performance Period........     14
      9.3      Measurement of Performance Goals.................................     14
      9.4      Determination of Final Value of Performance Awards...............     15
      9.5      Dividend Equivalents.............................................     16
      9.6      Payment in Settlement of Performance Awards......................     16
      9.7      Restrictions Applicable to Payment in Shares.....................     16
      9.8      Effect of Termination of Service.................................     16
      9.9      Nontransferability of Performance Awards.........................     16

10.   Standard Forms of Award Agreement.........................................     16
      10.1     Award Agreements.................................................     16
      10.2     Authority to Vary Terms..........................................     16

11.   Change in Control.........................................................     17
      11.1     Definitions......................................................     17
      11.2     Effect of Change in Control on Options...........................     17
      11.3     Effect of Change in Control on SARs..............................     17
      11.4     Effect of Change in Control on Restricted Stock Awards...........     18
      11.5     Effect of Change in Control on Performance Awards................     18

12.   Compliance with Securities Law............................................     18

13.   Tax Withholding...........................................................     18
      13.1     Tax Withholding in General.......................................     18
      13.2     Withholding in Shares............................................     19

14.   Termination or Amendment of Plan..........................................     19

15.   Miscellaneous Provisions..................................................     19
      15.1     Provision of Information.........................................     19
      15.2     Rights as Employee, Consultant or Director.......................     19
      15.3     Rights as a Stockholder..........................................     19
      15.4     Beneficiary Designation..........................................     19
      15.5     Unfunded Benefit Obligation......................................     20



Adopted 2/14/04; Amended & Restated 5/7/04

                                       2


                              JACK IN THE BOX INC.
                            2004 STOCK INCENTIVE PLAN

1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

      1.1 ESTABLISHMENT. Jack in the Box Inc., a Delaware corporation (the
"Company"), hereby establishes the Jack in the Box 2004 Stock Incentive Plan
(the "Plan") effective as of February 14, 2004, the date of its approval by the
stockholders of the Company (the "Effective Date").

      1.2 PURPOSE. The purpose of the Plan is to advance the interests of the
Participating Company Group and its stockholders by providing an incentive to
attract, retain and reward persons performing services for the Participating
Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group. The Plan seeks to achieve this
purpose by providing for Awards in the form of Options, Indexed Options, Stock
Appreciation Rights, Restricted Stock Purchase Rights, Restricted Stock Bonuses,
Restricted Stock Units, Performance Shares and Performance Units.

      1.3 TERM OF PLAN. The Plan shall continue in effect until the earlier of
its termination by the Board or the date on which all of the shares of Stock
available for issuance under the Plan have been issued and all restrictions on
such shares under the terms of the Plan and the agreements evidencing Awards
granted under the Plan have lapsed. However, all Awards shall be granted, if at
all, within ten (10) years from the Effective Date.

2. DEFINITIONS AND CONSTRUCTION.

      2.1 DEFINITIONS. Whenever used herein, the following terms shall have
their respective meanings set forth below:

            (a)   "Award" means any Option, Indexed Option, Stock Appreciation
Right, Restricted Stock Purchase Right, Restricted Stock Bonus, Restricted Stock
Unit, Performance Share or Performance Unit granted under the Plan.

            (b)   "Award Agreement" means a written agreement between the
Company and a Participant setting forth the terms, conditions and restrictions
of the Award granted to the Participant. An Award Agreement may be an "Option
Agreement," an "Indexed Option Agreement," a "SAR Agreement," a "Restricted
Stock Purchase Agreement," a "Restricted Stock Bonus Agreement," a "Restricted
Stock Unit Agreement," a "Performance Share Agreement," or a "Performance Unit
Agreement."

            (c)   "Board" means the Board of Directors of the Company.

            (d)   "Code" means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.

            (e)   "Committee" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. If no committee of the Board has been
appointed to administer the Plan, the Board shall exercise all of the powers of
the Committee granted herein, and, in any event, the Board may in its discretion
exercise any or all of such powers.

            (f)   "Company" means Jack in the Box Inc., a Delaware corporation,
or any successor corporation thereto.

            (g)   "Consultant" means a person engaged to provide consulting or
advisory services (other than as an Employee or a Director) to a Participating
Company, provided that the identity of such person, the nature of such services
or the entity to which such services are provided would not preclude the

Adopted 2/14/04; Amended & Restated 5/7/04

                                       3


Company from offering or selling securities to such person pursuant to the Plan
in reliance on registration on a Form S-8 Registration Statement under the
Securities Act.

            (h)   "Director" means a member of the Board or of the board of
directors of any other Participating Company.

            (i)   "Disability" means the inability of the Participant, in the
opinion of a qualified physician acceptable to the Company, to perform the major
duties of the Participant's position with the Participating Company Group
because of the sickness or injury of the Participant.

            (j)   "Dividend Equivalent" means a credit, made at the discretion
of the Committee or as otherwise provided by the Plan, to the account of a
Participant in an amount equal to the cash dividends paid on one share of Stock
for each share of Stock represented by an Award of Restricted Stock Units or
Performance Shares held by such Participant.

            (k)   "Employee" means any person treated as an employee (including
an officer or a Director who is also treated as an employee) in the records of a
Participating Company and, with respect to any Incentive Stock Option granted to
such person, who is an employee for purposes of Section 422 of the Code;
provided, however, that neither service as a Director nor payment of a
director's fee shall be sufficient to constitute employment for purposes of the
Plan.

            (l)   "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            (m)   "Fair Market Value" means, as of any date, the value of a
share of Stock or other property as determined by the Committee, in its
discretion, or by the Company, in its discretion, if such determination is
expressly allocated to the Company herein, subject to the following:

                  (i)              If, on such date, the Stock is listed on a
national or regional securities exchange or market system, the Fair Market Value
of a share of Stock shall be the closing price of a share of Stock (or the mean
of the closing bid and asked prices of a share of Stock if the Stock is so
quoted instead) as quoted on the New York Stock Exchange or such other national
or regional securities exchange or market system constituting the primary market
for the Stock, as reported in The Wall Street Journal or such other source as
the Company deems reliable. If the relevant date does not fall on a day on which
the Stock has traded on such securities exchange or market system, the date on
which the Fair Market Value shall be established shall be the last day on which
the Stock was so traded prior to the relevant date, or such other appropriate
day as shall be determined by the Committee, in its discretion.

                  (ii)  If, on such date, the Stock is not listed on a national
or regional securities exchange or market system, the Fair Market Value of a
share of Stock shall be as determined by the Committee in good faith without
regard to any restriction other than a restriction which, by its terms, will
never lapse.

            (n)   "Incentive Stock Option" means an Option intended to be (as
set forth in the Option Agreement) and which qualifies as an incentive stock
option within the meaning of Section 422(b) of the Code.

            (o)   "Indexed Option" means an Option with an exercise price which
either increases by a fixed percentage over time or changes by reference to a
published index, as determined by the Committee and set forth in the Option
Agreement.

            (p)   "Insider" means any person whose transactions in Stock are
subject to Section 16 of the Exchange Act.

            (q)   "Nonstatutory Stock Option" means an Option not intended to be
(as set forth in the Option Agreement) or which does not qualify as an Incentive
Stock Option.

            (r)   "Option" means a right to purchase Stock (subject to
adjustment as provided in Section 4.2) pursuant to the terms and conditions of
the Plan. An Option may be either an Incentive Stock Option, a Nonstatutory
Stock Option or an Indexed Option.

Adopted 2/14/04; Amended & Restated 5/7/04

                                       4


            (s)   "Parent Corporation" means any present or future "parent
corporation" of the Company, as defined in Section 424(e) of the Code.

            (t)   "Participant" means any eligible person who has been granted
one or more Awards.

            (u)   "Participating Company" means the Company or any Parent
Corporation or Subsidiary Corporation.

            (v)   "Participating Company Group" means, at any point in time, all
corporations collectively which are then Participating Companies.

            (w)   "Performance Award" means an Award of Performance Shares or
Performance Units.

            (x)   "Performance Goal" means a performance goal established by the
Committee pursuant to Section 9.2.

            (y)   "Performance Period" means a period established by the
Committee pursuant to Section 9.2 at the end of which one or more Performance
Goals are to be measured. Performance Periods shall be a minimum of twelve
months.

            (z)   "Performance Share" means a bookkeeping entry representing a
right granted to a Participant pursuant to the terms and conditions of Section 9
to receive a payment equal to the value of a Performance Share, as determined by
the Committee, based on performance.

            (aa)  "Performance Unit" means a bookkeeping entry representing a
right granted to a Participant pursuant to the terms and conditions of Section 9
to receive a payment equal to the value of a Performance Unit, as determined by
the Committee, based upon performance.

            (bb)  "Restricted Stock Award" means an Award of a Restricted Stock
Bonus, a Restricted Stock Purchase Right or a Restricted Stock Unit.

            (cc)  "Restricted Stock Bonus" means Stock granted to a Participant
pursuant to the terms and conditions of Section 8.

            (dd)  "Restricted Stock Purchase Right" means a right to purchase
Stock granted to a Participant pursuant to the terms and conditions of Section
8.

            (ee)  "Restricted Stock Unit" means a bookkeeping entry representing
a right granted to a Participant to receive in cash or Stock the Fair Market
Value of a share of Stock granted pursuant to the terms and conditions of
Section 8.

            (ff)  "Restriction Period" means the period established in
accordance with Section 8.4 during which shares subject to a Restricted Stock
Award are subject to Vesting Conditions. Restriction Periods shall be a minimum
of three years.

            (gg)  "Rule 16b-3" means Rule 16b-3 under the Exchange Act, as
amended from time to time, or any successor rule or regulation.

            (hh)  "Section 162(m)" means Section 162(m) of the Code.

            (ii)  "Securities Act" means the Securities Act of 1933, as amended.

            (jj)  "Service" means a Participant's employment or service with the
Participating Company Group, whether in the capacity of an Employee, a Director
or a Consultant. A Participant's Service shall not be deemed to have terminated
merely because of a change in the capacity in which the Participant renders
Service to the Participating Company Group or a change in the Participating
Company for which the Participant renders such Service, provided that there is
no interruption or termination of the Participant's Service. Furthermore, a
Participant's Service with the Participating Company Group may be deemed, as
provided in the applicable Award Agreement, to have terminated if the
Participant takes any military leave, sick leave, or other bona fide leave of
absence approved by the Company; provided, however, that if any such leave
exceeds ninety (90) days, on the one hundred eighty-first (181st) day of such
leave any Incentive Stock Option held by such Participant shall cease to be
treated as an Incentive Stock Option and instead shall be treated thereafter as
a Nonstatutory Stock Option unless the Participant's right to return to Service
with the Participating Company Group is guaranteed by statute or

Adopted 2/14/04; Amended & Restated 5/7/04

                                       5


contract. Notwithstanding the foregoing, unless otherwise designated by the
Company or required by law, a leave of absence shall not be treated as Service
for purposes of determining vesting under the Participant's Award Agreement. A
Participant's Service shall be deemed to have terminated either upon an actual
termination of Service or upon the corporation for which the Participant
performs Service ceasing to be a Participating Company. Subject to the
foregoing, the Company, in its discretion, shall determine whether the
Participant's Service has terminated and the effective date of such termination.

            (kk)  "Stock" means the common stock of the Company, as adjusted
from time to time in accordance with Section 4.2.

            (ll)  "SAR" or "Stock Appreciation Right" means a bookkeeping entry
representing, for each share of Stock subject to such SAR, a right granted to a
Participant pursuant to Section 7 of the Plan to receive payment of an amount
equal to the excess, if any, of the Fair Market Value of a share of Stock on the
date of exercise of the SAR over the exercise price.

            (mm)  "Subsidiary Corporation" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.

            (nn)  "Ten Percent Owner" means a Participant who, at the time an
Option is granted to the Participant, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of a
Participating Company within the meaning of Section 422(b)(6) of the Code.

            (oo)  "Vesting Conditions" mean those conditions established in
accordance with Section 8.4 prior to the satisfaction of which shares subject to
a Restricted Stock Award remain subject to forfeiture or a repurchase option in
favor of the Company.

      2.2 CONSTRUCTION. Captions and titles contained herein are for convenience
only and shall not affect the meaning or interpretation of any provision of the
Plan. Except when otherwise indicated by the context, the singular shall include
the plural and the plural shall include the singular. Use of the term "or" is
not intended to be exclusive, unless the context clearly requires otherwise.

3. ADMINISTRATION.

      3.1 ADMINISTRATION BY THE COMMITTEE. The Plan shall be administered by the
Committee. All questions of interpretation of the Plan or of any Award shall be
determined by the Committee, and such determinations shall be final and binding
upon all persons having an interest in the Plan or such Award.

      3.2 AUTHORITY OF OFFICERS. Any officer of a Participating Company shall
have the authority to act on behalf of the Company with respect to any matter,
right, obligation, determination or election which is the responsibility of or
which is allocated to the Company herein, provided the officer has apparent
authority with respect to such matter, right, obligation, determination or
election.

      3.3 POWERS OF THE COMMITTEE. In addition to any other powers set forth in
the Plan and subject to the provisions of the Plan, the Committee shall have the
full and final power and authority, in its discretion:

            (a)   to determine the persons to whom, and the time or times at
which, Awards shall be granted and the number of shares of Stock or units to be
subject to each Award;

            (b)   to determine the type of Award granted and to designate
Options as Incentive Stock Options, Nonstatutory Stock Options or Indexed
Options;

            (c)   to determine the Fair Market Value of shares of Stock or other
property;

            (d)   to determine the terms, conditions and restrictions applicable
to each Award (which need not be identical) and any shares acquired pursuant
thereto, including, without limitation, (i) the purchase price of any Stock,
(ii) the method of payment for shares purchased pursuant to any Award, (iii) the
method for satisfaction of any tax withholding obligation arising in connection
with Award, including by the withholding or delivery of shares of Stock, (iv)
the timing, terms and conditions of the exercisability or

Adopted 2/14/04; Amended & Restated 5/7/04

                                       6


vesting of any Award or any shares acquired pursuant thereto, (v) the
Performance Goals applicable to any Award and the extent to which such
Performance Goals have been attained, (vi) the time of the expiration of any
Award, (vii) the effect of the Participant's termination of Service on any of
the foregoing, and (viii) all other terms, conditions and restrictions
applicable to any Award or shares acquired pursuant thereto not inconsistent
with the terms of the Plan;

            (e)   to determine whether an Award of Restricted Stock Units,
Performance Shares, Performance Units or Stock Appreciation Rights will be
settled in shares of Stock, cash, or in any combination thereof;

            (f)   to approve one or more forms of Award Agreement;

            (g)   to amend, modify, extend, cancel or renew any Award or to
waive any restrictions or conditions applicable to any Award or any shares
acquired pursuant thereto, except that waiver of restrictions and conditions
applicable to awards of restricted stock and restricted stock units to
circumstances of death or disability of the awardee or change of control of the
Company;

            (h)   to accelerate, continue, extend or defer the exercisability or
vesting of any Award or any shares acquired pursuant thereto, including with
respect to the period following a Participant's termination of Service;

            (i)   to prescribe, amend or rescind rules, guidelines and policies
relating to the Plan, or to adopt supplements to, or alternative versions of,
the Plan, including, without limitation, as the Committee deems necessary or
desirable to comply with the laws of, or to accommodate the tax policy or custom
of, foreign jurisdictions whose citizens may be granted Awards;

            (j)   to authorize, in conjunction with any applicable Company
deferred compensation plan, that the receipt of cash or Stock subject to any
Award under this Plan, may be deferred under the terms and conditions of such
Company deferred compensation plan; and

            (k)   to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award Agreement and to make all other
determinations and take such other actions with respect to the Plan or any Award
as the Committee may deem advisable to the extent not inconsistent with the
provisions of the Plan or applicable law.

      3.4 ADMINISTRATION WITH RESPECT TO INSIDERS. With respect to participation
by Insiders in the Plan, at any time that any class of equity security of the
Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall
be administered in compliance with the requirements, if any, of Rule 16b-3.

      3.5 COMMITTEE COMPLYING WITH SECTION 162(m). If the Company is a "publicly
held corporation" within the meaning of Section 162(m), the Board may establish
a Committee of "outside directors" within the meaning of Section 162(m) to
approve the grant of any Award which might reasonably be anticipated to result
in the payment of employee remuneration that would otherwise exceed the limit on
employee remuneration deductible for income tax purposes pursuant to Section
162(m).

      3.6 NO REPRICING. Without the affirmative vote of holders of a majority of
the shares of Stock cast in person or by proxy at a meeting of the stockholders
of the Company at which a quorum representing a majority of all outstanding
shares of Stock is present or represented by proxy, the Board shall not approve
a program providing for either (a) the cancellation of outstanding Options
and/or SARs and the grant in substitution therefore of new Options and/or SARs
having a lower exercise price or (b) the amendment of outstanding Options and/or
SARs to reduce the exercise price thereof. This paragraph shall not be construed
to apply to "issuing or assuming a stock option in a transaction to which
section 424(a) applies," within the meaning of Section 424 of the Code.

      3.7 INDEMNIFICATION. In addition to such other rights of indemnification
as they may have as members of the Board or the Committee or as officers or
employees of the Participating Company Group, members of the Board or the
Committee and any officers or employees of the Participating Company Group to
whom authority to act for the Board, the Committee or the Company is delegated
shall be indemnified by the Company against all reasonable expenses, including
attorneys' fees, actually and

Adopted 2/14/04; Amended & Restated 5/7/04

                                       7


necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.

4. SHARES SUBJECT TO PLAN.

      4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as provided
in Section 4.2, the maximum aggregate number of shares of Stock that may be
issued under the Plan shall be One Million Two Hundred Fifty Thousand
(1,250,000). If an outstanding Award for any reason expires or is terminated or
canceled without having been exercised or settled in full, or if shares of Stock
acquired pursuant to an Award subject to forfeiture or repurchase are forfeited
or repurchased by the Company at the Participant's purchase price, the shares of
Stock allocable to the terminated portion of such Award or such forfeited or
repurchased shares of Stock shall again be available for issuance under the
Plan. Shares of Stock shall not be deemed to have been issued pursuant to the
Plan (i) with respect to any portion of an Award that is settled in cash or (ii)
to the extent such shares are withheld and/or attested to in satisfaction of tax
withholding obligations pursuant to Section 13.2. Upon payment in shares of
Stock pursuant to the exercise of a SAR, the number of shares available for
issuance under the Plan shall be reduced only by the number of shares actually
issued in such payment. If the exercise price of an Option is paid by tender to
the Company, or attestation to the ownership, of shares of Stock owned by the
Participant, the number of shares available for issuance under the Plan shall be
reduced by the gross number of shares for which the Option is exercised.

      4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
stock dividend, stock split, reverse stock split, recapitalization, combination,
reclassification or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number and class of shares subject
to the Plan and to any outstanding Awards, in the ISO Share Limit set forth in
Section 4.1, and in the exercise price per share of any outstanding Options and
Restricted Stock Purchase Rights. If a majority of the shares which are of the
same class as the shares that are subject to outstanding Awards are exchanged
for, converted into, or otherwise become (whether or not pursuant to an
Ownership Change Event, as defined in Section 11.1) shares of another
corporation (the "New Shares"), the Committee may unilaterally amend the
outstanding Awards to provide that such Awards shall be for New Shares. In the
event of any such amendment, the number of shares subject to outstanding Awards
and the exercise price per share of outstanding Options and Restricted Stock
Purchase Rights shall be adjusted in a fair and equitable manner as determined
by the Committee, in its discretion. Notwithstanding the foregoing, any
fractional share resulting from an adjustment pursuant to this Section 4.2 shall
be rounded down to the nearest whole number, and in no event may the exercise
price of any Option or Restricted Stock Purchase Right be decreased to an amount
less than the par value, if any, of the stock subject to such Award. The
adjustments determined by the Committee pursuant to this Section 4.2 shall be
final, binding and conclusive.

5.0  ELIGIBILITY AND AWARD LIMITATIONS

      5.1 PERSONS ELIGIBLE FOR INCENTIVE STOCK OPTIONS. Incentive Stock Options
may be granted only to Employees. For purposes of the foregoing sentence, the
term "Employees" shall include prospective Employees to whom Incentive Stock
Options are granted in connection with written offers of employment with the
Participating Company Group, provided that any such Incentive Stock Option shall
be deemed granted effective on the date such person commences Service as an
Employee, with an exercise price

Adopted 2/14/04; Amended & Restated 5/7/04

                                       8


determined as of such date in accordance with Section 6.1. Eligible persons may
be granted more than one (1) Incentive Stock Option.

      5.2 PERSONS ELIGIBLE FOR OTHER AWARDS. Awards other than Incentive Stock
Options may be granted only to Employees, Consultants and Directors. For
purposes of the foregoing sentence, "Employees," "Consultants" and "Directors"
shall include prospective Employees, prospective Consultants and prospective
Directors to whom Awards are granted in connection with written offers of an
employment or other service relationship with the Participating Company Group;
provided, however, that no Stock subject to any such Award shall vest, become
exercisable or be issued prior to the date on which such person commences
Service. Eligible persons may be granted more than one (1) Award.

      5.3 FAIR MARKET VALUE LIMITATION ON INCENTIVE STOCK OPTIONS. To the extent
that options designated as Incentive Stock Options (granted under all stock
option plans of the Participating Company Group, including the Plan) become
exercisable by a Participant for the first time during any calendar year for
stock having a Fair Market Value greater than One Hundred Thousand Dollars
($100,000), the portions of such options which exceed such amount shall be
treated as Nonstatutory Stock Options. For purposes of this Section 5.3, options
designated as Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of stock shall be
determined as of the time the option with respect to such stock is granted. If
the Code is amended to provide for a different limitation from that set forth in
this Section 5.3, such different limitation shall be deemed incorporated herein
effective as of the date and with respect to such Options as required or
permitted by such amendment to the Code. If an Option is treated as an Incentive
Stock Option in part and as a Nonstatutory Stock Option in part by reason of the
limitation set forth in this Section 5.3, the Participant may designate which
portion of such Option the Participant is exercising. In the absence of such
designation, the Participant shall be deemed to have exercised the Incentive
Stock Option portion of the Option first. Separate certificates representing
each such portion shall be issued upon the exercise of the Option.

      5.4 AWARD LIMITS.

            (a)   Aggregate Limit on Restricted Stock Awards and Performance
Awards. Subject to adjustment as provided in Section 4.2, in no event shall more
than Two Hundred Fifty Thousand (250,000) shares of Stock in the aggregate be
issued under the Plan pursuant to the exercise or settlement of Restricted Stock
Awards and Performance Awards.

            (b)   Section 162(m) Award Limits. The following limits shall apply
to the grant of any Award if, at the time of grant, the Company is a "publicly
held corporation" within the meaning of Section 162(m).

               (i)   Options and SARs. Subject to adjustment as provided in
Section 4.2, no Employee shall be granted within any fiscal year of the Company
one or more Options or Freestanding SARs (as defined in Section 7) which in the
aggregate are for more than Two Hundred and Fifty Thousand (250,000) shares of
Stock. An Option which is canceled (or a Freestanding SAR as to which the
exercise price is reduced to reflect a reduction in the Fair Market Value of the
Stock) in the same fiscal year of the Company in which it was granted shall
continue to be counted against such limit for such fiscal year.

              (ii)   Restricted Stock Awards. Subject to adjustment as provided
in Section 4.2, no Employee shall be granted within any fiscal year of the
Company one or more Restricted Stock Awards, subject to Vesting Conditions based
on the attainment of Performance Goals, for more than One Hundred Thousand
(100,000) shares of Stock.

      5.5 PERFORMANCE AWARDS. Subject to adjustment as provided in Section 4.2,
no Employee shall be granted (A) Performance Shares which could result in such
Employee receiving more than One Hundred Thousand (100,000) shares of Stock for
each full fiscal year of the Company contained in the Performance Period for
such Award, or (B) Performance Units which could result in such Employee
receiving more than One Million dollars ($1,000,000) for each full fiscal year
of the Company contained in the Performance Period for such Award. No
Participant may be granted more than one Performance Award for the same
Performance Period.

Adopted 2/14/04; Amended & Restated 5/7/04

                                       9


6. TERMS AND CONDITIONS OF OPTIONS.

            Options shall be evidenced by Option Agreements specifying the
number of shares of Stock covered thereby, in such form as the Committee shall
from time to time establish. No Option or purported Option shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Option
Agreement. Option Agreements may incorporate all or any of the terms of the Plan
by reference and shall comply with and be subject to the following terms and
conditions:

      6.1 EXERCISE PRICE. The exercise price for each Option shall be
established in the discretion of the Committee; provided, however, that (a) the
exercise price per share shall be not less than the Fair Market Value of a share
of Stock on the effective date of grant of the Option, (b) no Incentive Stock
Option granted to a Ten Percent Owner shall have an exercise price per share
less than one hundred ten percent (110%) of the Fair Market Value of a share of
Stock on the effective date of grant of the Option, and (c) in the case of an
Indexed Option, the Committee shall determine the exercise price of such Indexed
Option and the terms and conditions that affect, if any, any adjustments to the
exercise price of such Indexed Option. Notwithstanding the foregoing, an Option
may be granted with an exercise price lower than the minimum exercise price set
forth above if such Option is granted pursuant to an assumption or substitution
for another option in a manner qualifying under the provisions of Section 424(a)
of the Code.

      6.2 EXERCISABILITY AND TERM OF OPTIONS. Options shall be exercisable at
such time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria and restrictions as shall be determined by the
Committee and set forth in the Option Agreement evidencing such Option;
provided, however, that (a) no Option shall be exercisable after the expiration
of ten (10) years after the effective date of grant of such Option, (b) no
Incentive Stock Option granted to a Ten Percent Owner shall be exercisable after
the expiration of five (5) years after the effective date of grant of such
Option, (c) no Option granted to a prospective Employee, prospective Consultant
or prospective Director may become exercisable prior to the date on which such
person commences Service. Subject to the foregoing, unless otherwise specified
by the Committee in the grant of an Option, any Option granted hereunder shall
terminate ten (10) years after the effective date of grant of the Option, unless
earlier terminated in accordance with its provisions.

      6.3 PAYMENT OF EXERCISE PRICE.

            (a)   Forms of Consideration Authorized. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check or
cash equivalent, (ii) by tender to the Company, or attestation to the ownership,
of shares of Stock owned by the Participant having a Fair Market Value not less
than the exercise price, (iii) by delivery of a properly executed notice
together with irrevocable instructions to a broker providing for the assignment
to the Company of the proceeds of a sale with respect to some or all of the
shares being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System) (a "Cashless Exercise"), (iv) by such other consideration as may be
approved by the Committee from time to time to the extent permitted by
applicable law, or (v) by any combination thereof. The Committee may at any time
or from time to time grant Options which do not permit all of the foregoing
forms of consideration to be used in payment of the exercise price or which
otherwise restrict one or more forms of consideration.

            (b)   Limitations on Forms of Consideration.

                  (i)   Tender of Stock. Notwithstanding the foregoing, an
Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock to the extent such tender or attestation would
constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company's stock. Unless otherwise provided by
the Committee, an Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock unless such

Adopted 2/14/04; Amended & Restated 5/7/04

                                      10


shares either have been owned by the Participant for more than six (6) months
(and not used for another Option exercise by attestation during such period) or
were not acquired, directly or indirectly, from the Company.

                  (ii)  Cashless Exercise. The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for the exercise of
Options by means of a Cashless Exercise.

      6.4 EFFECT OF TERMINATION OF SERVICE.

            (a)   Option Exercisability. An Option granted to a Participant
shall be exercisable after the Participant's termination of Service only during
the applicable time period determined in accordance with the Option's term as
set forth in the Option Agreement evidencing such Option (the "Option Expiration
Date").

            (b)   Extension if Exercise Prevented by Law. Notwithstanding the
foregoing other than termination of a Participant's Service for Cause, if the
exercise of an Option within the applicable time periods set forth in an Option
Agreement is prevented by the provisions of Section 12 below, the Option shall
remain exercisable until one (1) month (or such longer period of time as
determined by the Committee, in its discretion) after the date the Participant
is notified by the Company that the Option is exercisable, but in any event no
later than the Option Expiration Date.

            (c)   Extension if Participant Subject to Section 16(b).
Notwithstanding the foregoing other than termination of a Participant's Service
for Cause, if a sale within the applicable time periods set forth in an Option
Agreement of shares acquired upon the exercise of the Option would subject the
Participant to suit under Section 16(b) of the Exchange Act, the Option shall
remain exercisable until the earliest to occur of (i) the tenth (10th) day
following the date on which a sale of such shares by the Participant would no
longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day
after the Participant's termination of Service, or (iii) the Option Expiration
Date.

      6.5 TRANSFERABILITY OF OPTIONS. During the lifetime of the Participant, an
Option shall be exercisable only by the Participant or the Participant's
guardian or legal representative. No Option shall be assignable or transferable
by the Participant, except by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Committee, in its
discretion, and set forth in the Option Agreement evidencing such Option, a
Nonstatutory Stock Option shall be assignable or transferable subject to the
applicable limitations, if any, described in the General Instructions to Form
S-8 Registration Statement under the Securities Act.

7. TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS.

            SARs shall be evidenced by Award Agreements specifying the number of
shares of Stock subject to the Award, in such form as the Committee shall from
time to time establish. No SAR or purported SAR shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Award Agreement.
Award Agreements evidencing SARs may incorporate all or any of the terms of the
Plan by reference and shall comply with and be subject to the following terms
and conditions:

      7.1 TYPES OF SARs Authorized. SARs may be granted in tandem with all or
any portion of a related Option (a "Tandem SAR") or may be granted independently
of any Option (a "Freestanding SAR"). A Tandem SAR may be granted either
concurrently with the grant of the related Option or at any time thereafter
prior to the complete exercise, termination, expiration or cancellation of such
related Option.

      7.2 EXERCISE PRICE. The exercise price for each SAR shall be established
in the discretion of the Committee; provided, however, that (a) the exercise
price per share subject to a Tandem SAR shall be the exercise price per share
under the related Option and (b) the exercise price per share subject to a

Adopted 2/14/04; Amended & Restated 5/7/04

                                      11


Freestanding SAR shall be not less than the Fair Market Value of a share of
Stock on the effective date of grant of the SAR.

      7.3 EXERCISABILITY AND TERM OF SARs.

            (a)   Tandem SARs. Tandem SARs shall be exercisable only at the time
and to the extent that the related Option is exercisable, subject to such
provisions as the Committee may specify where the Tandem SAR is granted with
respect to less than the full number of shares of Stock subject to the related
Option. The Committee may, in its discretion, provide in any Award Agreement
evidencing a Tandem SAR that such SAR may not be exercised without the advance
approval of the Company and, if such approval is not given, then the Option
shall nevertheless remain exercisable in accordance with its terms. A Tandem SAR
shall terminate and cease to be exercisable no later than the date on which the
related Option expires or is terminated or canceled. Upon the exercise of a
Tandem SAR with respect to some or all of the shares subject to such SAR, the
related Option shall be canceled automatically as to the number of shares with
respect to which the Tandem SAR was exercised. Upon the exercise of an Option
related to a Tandem SAR as to some or all of the shares subject to such Option,
the related Tandem SAR shall be canceled automatically as to the number of
shares with respect to which the related Option was exercised.

            (b)   Freestanding SARs. Freestanding SARs shall be exercisable at
such time or times, or upon such event or events, and subject to such terms,
conditions, performance criteria and restrictions as shall be determined by the
Committee and set forth in the Award Agreement evidencing such SAR; provided,
however, that no Freestanding SAR shall be exercisable after the expiration of
ten (10) years after the effective date of grant of such SAR.

      7.4 EXERCISE OF SARs. Upon the exercise (or deemed exercise pursuant to
Section 7.5) of a SAR, the Participant (or the Participant's legal
representative or other person who acquired the right to exercise the SAR by
reason of the Participant's death) shall be entitled to receive payment of an
amount for each share with respect to which the SAR is exercised equal to the
excess, if any, of the Fair Market Value of a share of Stock on the date of
exercise of the SAR over the exercise price. Payment of such amount shall be
made in cash, shares of Stock, or any combination thereof as determined by the
Committee. Unless otherwise provided in the Award Agreement evidencing such SAR,
payment shall be made in a lump sum as soon as practicable following the date of
exercise of the SAR. The Award Agreement evidencing any SAR may provide for
deferred payment in a lump sum or in installments. When payment is to be made in
shares of Stock, the number of shares to be issued shall be determined on the
basis of the Fair Market Value of a share of Stock on the date of exercise of
the SAR. For purposes of Section 7, an SAR shall be deemed exercised on the date
on which the Company receives notice of exercise from the Participant.

      7.5 DEEMED EXERCISE OF SARs. If, on the date on which an SAR would
otherwise terminate or expire, the SAR by its terms remains exercisable
immediately prior to such termination or expiration and, if so exercised, would
result in a payment to the holder of such SAR, then any portion of such SAR
which has not previously been exercised shall automatically be deemed to be
exercised as of such date with respect to such portion.

      7.6 EFFECT OF TERMINATION OF SERVICE. An SAR shall be exercisable after a
Participant's termination of Service to such extent and during such period as
determined by the Committee, in its discretion, and set forth in the Award
Agreement evidencing such SAR.

      7.7 NONTRANSFERABILITY OF SARs. SARs may not be assigned or transferred in
any manner except by will or the laws of descent and distribution, and, during
the lifetime of the Participant, shall be exercisable only by the Participant or
the Participant's guardian or legal representative.

8. TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS.

            The Committee may from time to time grant Restricted Stock Awards
upon such conditions as the Committee shall determine, including, without
limitation, upon the attainment of one or more Performance

Adopted 2/14/04; Amended & Restated 5/7/04

                                      12


Goals described in Section 8.3. If either the grant of a Restricted Stock Award
or the lapsing of the Restriction Period is to be contingent upon the attainment
of one or more Performance Goals, the Committee shall follow procedures
substantially equivalent to those set forth in Sections 8.2 through 8.4.
Restricted Stock Awards may be in the form of a Restricted Stock Bonus, which
shall be evidenced by Restricted Stock Bonus Agreement, a Restricted Stock
Purchase Right, which shall be evidenced by Restricted Stock Purchase Agreement
or a Restricted Stock Unit, which shall be evidenced by a Restricted Stock Unit
Agreement. Each such Award Agreement shall specify the number of shares of Stock
subject to and the other terms, conditions and restrictions of the Award, and
shall be in such form as the Committee shall establish from time to time. No
Restricted Stock Award or purported Restricted Stock Award shall be a valid and
binding obligation of the Company unless evidenced by a fully executed Award
Agreement. Restricted Stock Award Agreements may incorporate all or any of the
terms of the Plan by reference and shall comply, as applicable, with and be
subject to the following terms and conditions:

      8.1 PURCHASE PRICE. The purchase price under each Restricted Stock
Purchase Right shall be established by the Committee. No monetary payment (other
than applicable tax withholding) shall be required as a condition of receiving a
Restricted Stock Bonus or Restricted Stock Unit, the consideration for which
shall be services actually rendered to a Participating Company or for its
benefit.

      8.2 PURCHASE PERIOD. A Restricted Stock Purchase Right shall be
exercisable within a period established by the Committee, which shall in no
event exceed thirty (30) days from the effective date of the grant of the
Restricted Stock Purchase Right; provided, however, that no Restricted Stock
Purchase Right granted to a prospective Employee, prospective Director or
prospective Consultant may become exercisable prior to the date on which such
person commences Service.

      8.3 PAYMENT OF PURCHASE PRICE. Except as otherwise provided below, payment
of the purchase price for the number of shares of Stock being purchased pursuant
to any Restricted Stock Purchase Right shall be made (i) in cash, by check, or
cash equivalent, (ii) provided that the Participant is an Employee (unless
otherwise not prohibited by law, including, without limitation, any regulation
promulgated by the Board of Governors of the Federal Reserve System) and in the
Company's sole discretion at the time the Restricted Stock Purchase Right is
exercised, by delivery of the Participant's promissory note in a form approved
by the Company for the aggregate purchase price, provided that, if the Company
is incorporated in the State of Delaware, the Participant shall pay in cash that
portion of the aggregate purchase price not less than the par value of the
shares being acquired, (iii) by such other consideration as may be approved by
the Committee from time to time to the extent permitted by applicable law, or
(iv) by any combination thereof. Payment by means of the Participant's
promissory note shall be subject to the conditions described in Section
6.3(b)(iii). The Committee may at any time or from time to time grant Restricted
Stock Purchase Rights which do not permit all of the foregoing forms of
consideration to be used in payment of the purchase price or which otherwise
restrict one or more forms of consideration. Restricted Stock Bonuses and
Restricted Stock Units shall be issued in consideration for services actually
rendered to a Participating Company or for its benefit.

      8.4 VESTING AND RESTRICTIONS ON TRANSFER. Shares issued pursuant to any
Restricted Stock Award may be made subject to vesting conditioned upon the
satisfaction of such Service requirements, conditions, restrictions or
performance criteria, including, without limitation, Performance Goals as
described in Section 8.3 (the "Vesting Conditions"), as shall be established by
the Committee and set forth in the Award Agreement evidencing such Award. During
any period (the "Restriction Period") in which shares acquired pursuant to a
Restricted Stock Award remain subject to Vesting Conditions, such shares may not
be sold, exchanged, transferred, pledged, assigned or otherwise disposed of
other than pursuant to an Ownership Change Event, as defined in Section 11.1, or
as provided in Section 8.7. Restriction Periods shall be a minimum of three
years. Upon request by the Company, each Participant shall execute any agreement
evidencing such transfer restrictions prior to the receipt of shares of Stock
hereunder and shall promptly present to the Company any and all certificates
representing shares of Stock acquired hereunder for the placement on such
certificates of appropriate legends evidencing any such transfer restrictions.

Adopted 2/14/04; Amended & Restated 5/7/04

                                      13


      8.5 VOTING RIGHTS; DIVIDENDS. Except as provided in this Section and
Section 8.4, during the Restriction Period applicable to shares subject to a
Restricted Stock Purchase Right and a Restricted Stock Bonus held by a
Participant, the Participant shall have all of the rights of a stockholder of
the Company holding shares of Stock, including the right to vote such shares and
to receive all dividends and other distributions paid with respect to such
shares; provided, however, that if any such dividends or distributions are paid
in shares of Stock, such shares shall be subject to the same Vesting Conditions
as the shares subject to the Restricted Stock Purchase Right and Restricted
Stock Bonus with respect to which the dividends or distributions were paid. A
Participant who is awarded a Restricted Stock Unit shall possess no incidents of
ownership with respect to such a Restricted Stock Award; provided that the award
agreement may provide for payments in lieu of dividends to such Participant.

      8.6 EFFECT OF TERMINATION OF SERVICE. The effect of the Participant's
termination of Service on any Restricted Stock Award shall be determined by the
Committee, in its discretion, and set forth in the Award Agreement evidencing
such Restricted Stock Award.

      8.7 NONTRANSFERABILITY OF RESTRICTED STOCK AWARD RIGHTS. Rights to acquire
shares of Stock pursuant to a Restricted Stock Award may not be assigned or
transferred in any manner except by will or the laws of descent and
distribution, and, during the lifetime of the Participant, shall be exercisable
only by the Participant.

9. TERMS AND CONDITIONS OF PERFORMANCE AWARDS

      The Committee may from time to time grant Performance Awards upon such
conditions as the Committee shall determine. Performance Awards may be in the
form of either Performance Shares, which shall be evidenced by a Performance
Share Agreement, or Performance Units, which shall be evidenced by a Performance
Unit Agreement. Each such Award Agreement shall specify the number of
Performance Shares or Performance Units subject thereto, the method of computing
the value of each Performance Share or Performance Unit, the Performance Goals
and Performance Period applicable to the Award, and the other terms, conditions
and restrictions of the Award, and shall be in such form as the Committee shall
establish from time to time. No Performance Award or purported Performance Award
shall be a valid and binding obligation of the Company unless evidenced by a
fully executed Award Agreement. Performance Share and Performance Unit
Agreements may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the following terms and conditions:

      9.1 INITIAL VALUE OF PERFORMANCE SHARES AND PERFORMANCE UNITS. Unless
otherwise provided by the Committee in granting a Performance Award, each
Performance Share shall have an initial value equal to the Fair Market Value of
a share of Stock on the effective date of grant of the Performance Share, and
each Performance Unit shall have an initial value of one hundred dollars ($100).
The final value payable to the Participant in settlement of a Performance Award
will depend on the extent to which Performance Goals established by the
Committee are attained within the applicable Performance Period established by
the Committee.

      9.2 ESTABLISHMENT OF PERFORMANCE GOALS AND PERFORMANCE PERIOD. The
Committee shall establish in writing the Performance Period applicable to each
Performance Award and one or more Performance Goals which, when measured at the
end of the Performance Period, shall determine the final value of the
Performance Award to be paid to the Participant. Unless otherwise permitted in
compliance with the requirements under Section 162(m) with respect to
"performance-based compensation," the Committee shall establish the Performance
Goals applicable to each Performance Award no later than the earlier of (a) the
date ninety (90) days after the commencement of the applicable Performance
Period or (b) the date on which 25% of the Performance Period has elapsed, and,
in any event, at a time when the outcome of the Performance Goals remains
substantially uncertain. Once established, the Performance Goals shall not be
changed during the Performance Period.

      9.3 MEASUREMENT OF PERFORMANCE GOALS. Performance Goals shall be
established by the Committee on the basis of targets to be attained
("Performance Targets") with respect one or more

Adopted 2/14/04; Amended & Restated 5/7/04

                                      14


measures of business or financial performance (each, a "Performance Measure").
Performance Measures shall have the same meanings as used in the Company's
financial statements, or if such terms are not used in the Company's financial
statements, they shall have the meaning applied pursuant to generally accepted
accounting principles, or as used generally in the Company's industry.
Performance Targets may include a minimum, maximum, target level and
intermediate levels of performance, with the final value of a Performance Award
determined by the level attained during the applicable Performance Period.
Performance Periods shall be a minimum of twelve months. A Performance Target
may be stated as an absolute value or as a value determined relative to a
standard selected by the Committee. Performance Measures shall be calculated
with respect to the Company and each Subsidiary Corporation consolidated
therewith for financial reporting purposes or such division or other business
unit as may be selected by the Committee. For purposes of the Plan, the
Performance Measures applicable to a Performance Award shall be calculated
before the effect of changes in accounting standards, restructuring charges and
similar extraordinary items, determined according to criteria established by the
Committee, occurring after the establishment of the Performance Goals applicable
to a Performance Award. Performance Measures may be one or more of the
following, as determined by the Committee:

            (a) sales

            (b) revenue

            (c) gross margin

            (d) operating margin

            (e) operating income

            (f) pre-tax profit

            (g) earnings before interest, taxes, depreciation and/or
amortization

            (h) net income

            (i) cash flow

            (j) expenses

            (k) stock price

            (l) earnings per share

            (m) return on stockholders' equity

            (n) return on capital

            (o) return on assets

            (p) economic value added

            (q) number of customers

            (r) market share

            (s) same store sales

            (t) average restaurant margin

            (u) return on investment

            (v) profit after tax

            (w) customer satisfaction

      9.4 DETERMINATION OF FINAL VALUE OF PERFORMANCE AWARDS. As soon as
practicable following the completion of the Performance Period applicable to a
Performance Award, the Committee shall certify in writing the extent to which
the applicable Performance Goals have been attained and the resulting final
value of the Award earned by the Participant and to be paid upon its settlement
in accordance with the terms of the Award Agreement. The Committee shall have no
discretion to increase the value of an Award payable upon its settlement in
excess of the amount called for by the terms of the Award Agreement on the basis
of the degree of attainment of the Performance Goals as certified by the
Committee. However, notwithstanding the attainment of any Performance Goal, if
permitted under a Participant's Award Agreement, the Committee shall have the
discretion, on the basis of such criteria as may be established by the
Committee, to reduce some or all of the value of a Performance Award that would
otherwise be paid upon its settlement. No such reduction may result in an
increase in the amount payable upon settlement of another Participant's
Performance Award. As soon as practicable following the Committee's
certification, the Company shall notify the Participant of the determination of
the Committee.

Adopted 2/14/04; Amended & Restated 5/7/04

                                      15


      9.5 DIVIDEND EQUIVALENTS. In its discretion, the Committee may provide in
the Award Agreement evidencing any Performance Share Award that the Participant
shall be entitled to receive Dividend Equivalents with respect to the payment of
cash dividends on Stock having a record date prior to the date on which the
Performance Shares are settled or forfeited. Dividend Equivalents may be paid
currently or may be accumulated and paid to the extent that Performance Shares
become nonforfeitable, as determined by the Committee. Settlement of Dividend
Equivalents may be made in cash, shares of Stock, or a combination thereof as
determined by the Committee, and may be paid on the same basis as settlement of
the related Performance Share as provided in Section 9.6. Dividend Equivalents
shall not be paid with respect to Performance Units.

      9.6 PAYMENT IN SETTLEMENT OF PERFORMANCE AWARDS. Payment of the final
value of a Performance Award earned by a Participant as determined following the
completion of the applicable Performance Period pursuant to Sections 9.4 and 9.5
may be made in cash, shares of Stock, or a combination thereof as determined by
the Committee. If payment is made in shares of Stock, the number of such shares
shall be determined by dividing the final value of the Performance Award by the
Fair Market Value of a share of Stock on the settlement date. Payment may be
made in a lump sum or installments as prescribed by the Committee. If any
payment is to be made on a deferred basis, the Committee may, but shall not be
obligated to, provide for the payment during the deferral period of Dividend
Equivalents or a reasonable rate of interest within the meaning of Section
162(m).

      9.7 RESTRICTIONS APPLICABLE TO PAYMENT IN SHARES. Shares of Stock issued
in payment of any Performance Award may be fully vested and freely transferable
shares or may be shares of Stock subject to Vesting Conditions as provided in
Section 8.4. Any shares subject to Vesting Conditions shall be evidenced by an
appropriate Restricted Stock Bonus Agreement and shall be subject to the
provisions of Sections 8.4 through 8.7 above.

      9.8 EFFECT OF TERMINATION OF SERVICE. The effect of the Participant's
termination of Service on any Performance Award shall be determined by the
Committee, in its discretion, and set forth in the Award Agreement evidencing
such Performance Award.

      9.9 NONTRANSFERABILITY OF PERFORMANCE AWARDS. Performance Shares and
Performance Units may not be sold, exchanged, transferred, pledged, assigned, or
otherwise disposed of other than by will or by the laws of descent and
distribution until the completion of the applicable Performance Period. All
rights with respect to Performance Shares and Performance Units granted to a
Participant hereunder shall be exercisable during his or her lifetime only by
such Participant.

10. STANDARD FORMS OF AWARD AGREEMENT.

      10.1 AWARD AGREEMENTS. Each Award shall comply with and be subject to the
terms and conditions set forth in the appropriate form of Award Agreement
approved by the Committee concurrently with its adoption of the Plan and as
amended from time to time. Any Award Agreement may consist of an appropriate
form of Notice of Grant and a form of Agreement incorporated therein by
reference, or such other form or forms as the Committee may approve from time to
time.

      10.2 AUTHORITY TO VARY TERMS. The Committee shall have the authority from
time to time to vary the terms of any standard form of Award Agreement either in
connection with the grant or amendment of an individual Award or in connection
with the authorization of a new standard form or forms; provided, however, that
the terms and conditions of any such new, revised or amended standard form or
forms of Award Agreement are not inconsistent with the terms of the Plan.

Adopted 2/14/04; Amended & Restated 5/7/04

                                      16


11. CHANGE IN CONTROL.

      11.1 DEFINITIONS.

            (a)   An "Ownership Change Event" shall be deemed to have occurred
if any of the following occurs with respect to the Company: (i) the direct or
indirect sale or exchange in a single or series of related transactions by the
stockholders of the Company of more than fifty percent (50%) of the voting stock
of the Company; (ii) a merger or consolidation in which the Company is a party;
(iii) the sale, exchange, or transfer of all or substantially all of the assets
of the Company; or (iv) a liquidation or dissolution of the Company.

            (b)   A "Change in Control" shall mean an Ownership Change Event or
a series of related Ownership Change Events (collectively, a "Transaction")
wherein the stockholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or, in the case of a Transaction
described in Section 8.1(a)(iii), the corporation or corporations to which the
assets of the Company were transferred (the "Transferee Corporation(s)"), as the
case may be. For purposes of the preceding sentence, indirect beneficial
ownership shall include, without limitation, an interest resulting from
ownership of the voting stock of one or more corporations which, as a result of
the Transaction, own the Company or the Transferee Corporation(s), as the case
may be, either directly or through one or more subsidiary corporations. The
Committee shall have the right to determine whether multiple sales or exchanges
of the voting stock of the Company or multiple Ownership Change Events are
related, and its determination shall be final, binding and conclusive.

      11.2 EFFECT OF CHANGE IN CONTROL ON OPTIONS. In the event of a Change in
Control, the surviving, continuing, successor, or purchasing corporation or
other business entity or parent corporation thereof, as the case may be (the
"Acquiring Corporation"), may, without the consent of the Participant, either
assume the Company's rights and obligations under outstanding Options or
substitute for outstanding Options substantially equivalent options for the
Acquiring Corporation's stock. In the event that the Acquiring Corporation
elects not to assume or substitute for outstanding Options in connection with a
Change in Control, the exercisability and vesting of each such outstanding
Option and any shares acquired upon the exercise thereof held by a Participant
whose Service has not terminated prior to such date shall be accelerated,
effective as of the date ten (10) days prior to the date of the Change in
Control. The exercise or vesting of any Option and any shares acquired upon the
exercise thereof that was permissible solely by reason of this Section 10.2 and
the provisions of such Option Agreement shall be conditioned upon the
consummation of the Change in Control. Any Options which are neither assumed or
substituted for by the Acquiring Corporation in connection with the Change in
Control nor exercised as of the date of the Change in Control shall terminate
and cease to be outstanding effective as of the date of the Change in Control.
Notwithstanding the foregoing, shares acquired upon exercise of an Option prior
to the Change in Control and any consideration received pursuant to the Change
in Control with respect to such shares shall continue to be subject to all
applicable provisions of the Option Agreement evidencing such Option except as
otherwise provided in such Option Agreement. Furthermore, notwithstanding the
foregoing, if the corporation the stock of which is subject to the outstanding
Options immediately prior to an Ownership Change Event described in Section
10.1(a)(i) constituting a Change in Control is the surviving or continuing
corporation and immediately after such Ownership Change Event less than fifty
percent (50%) of the total combined voting power of its voting stock is held by
another corporation or by other corporations that are members of an affiliated
group within the meaning of Section 1504(a) of the Code without regard to the
provisions of Section 1504(b) of the Code, the outstanding Options shall not
terminate unless the Committee otherwise provides in its discretion.

      11.3 EFFECT OF CHANGE IN CONTROL ON SARs. In the event of a Change in
Control, the Acquiring Corporation may, without the consent of any Participant,
either assume the Company's rights and obligations under outstanding SARs or
substitute for outstanding SARs substantially equivalent SARs for

Adopted 2/14/04; Amended & Restated 5/7/04

                                      17


the Acquiring Corporation's stock. In the event the Acquiring Corporation elects
not to assume or substitute for outstanding SARs in connection with a Change in
Control, then any unexercised and/or unvested portions of outstanding SARs shall
be immediately exercisable and vested in full as of the date thirty (30) days
prior to the date of the Change in Control. The exercise and/or vesting of any
SAR that was permissible solely by reason of this paragraph 11.3 shall be
conditioned upon the consummation of the Change in Control. Any SARs which are
not assumed by the Acquiring Corporation in connection with the Change in
Control nor exercised as of the time of consummation of the Change in Control
shall terminate and cease to be outstanding effective as of the time of
consummation of the Change in Control.

      11.4 EFFECT OF CHANGE IN CONTROL ON RESTRICTED STOCK AWARDS. In the event
of a Change in Control, the lapsing of the Vesting Conditions applicable to the
shares subject to the Restricted Stock Award held by a Participant whose Service
has not terminated prior to such date shall be accelerated effective as of the
date of the Change in Control. Any acceleration of the lapsing of Vesting
Conditions that was permissible solely by reason of this Section 11.4 and the
provisions of such Award Agreement shall be conditioned upon the consummation of
the Change in Control.

      11.5 EFFECT OF CHANGE IN CONTROL ON PERFORMANCE AWARDS. In the event of a
Change in Control, the Performance Award held by a Participant whose Service has
not terminated prior to such date (unless the Participant's Service terminated
by reason of the Participant's death or Disability) shall become payable
effective as of the date of the Change in Control. For this purpose, the final
value of the Performance Award shall be determined by the greater of (a) the
extent to which the applicable Performance Goals have been attained during the
Performance Period prior to the date of the Change in Control or (b) the
pre-established 100% level with respect to each Performance Target comprising
the applicable Performance Goals. Any acceleration of a Performance Award that
was permissible solely by reason of this Section 11.5 and the provisions of such
Award Agreement shall be conditioned upon the consummation of the Change in
Control.

12. COMPLIANCE WITH SECURITIES LAW.

            The grant of Awards and the issuance of shares of Stock pursuant to
any Award shall be subject to compliance with all applicable requirements of
federal, state and foreign law with respect to such securities and the
requirements of any stock exchange or market system upon which the Stock may
then be listed. In addition, no Award may be exercised or shares issued pursuant
to an Award unless (a) a registration statement under the Securities Act shall
at the time of such exercise or issuance be in effect with respect to the shares
issuable pursuant to the Award or (b) in the opinion of legal counsel to the
Company, the shares issuable pursuant to the Award may be issued in accordance
with the terms of an applicable exemption from the registration requirements of
the Securities Act. The inability of the Company to obtain from any regulatory
body having jurisdiction the authority, if any, deemed by the Company's legal
counsel to be necessary to the lawful issuance and sale of any shares hereunder
shall relieve the Company of any liability in respect of the failure to issue or
sell such shares as to which such requisite authority shall not have been
obtained. As a condition to issuance of any Stock, the Company may require the
Participant to satisfy any qualifications that may be necessary or appropriate,
to evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect thereto as may be requested by the
Company.

13. TAX WITHHOLDING.

      13.1 TAX WITHHOLDING IN GENERAL. The Company shall have the right to
require the Participant, through payroll withholding, cash payment or otherwise,
including by means of a Cashless Exercise of an Option, to make adequate
provision for the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Participating Company Group with respect to an Award
or the shares acquired pursuant thereto. The Company shall have no obligation to
deliver shares of Stock, to release shares of Stock from an escrow established
pursuant to an Award Agreement, or to make any payment in cash under the Plan
until the Participating Company Group's tax withholding obligations have been
satisfied by the Participant.

Adopted 2/14/04; Amended & Restated 5/7/04

                                      18


      13.2 WITHHOLDING IN SHARES. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable to a Participant upon
the exercise or settlement of an Award, or to accept from the Participant the
tender of, a number of whole shares of Stock having a Fair Market Value, as
determined by the Company, equal to all or any part of the tax withholding
obligations of the Participating Company Group. The Fair Market Value of any
shares of Stock withheld or tendered to satisfy any such tax withholding
obligations shall not exceed the amount determined by the applicable minimum
statutory withholding rates.

14. TERMINATION OR AMENDMENT OF PLAN.

            The Committee may terminate or amend the Plan at any time. However,
subject to changes in applicable law, regulations or rules that would permit
otherwise, without the approval of the Company's stockholders, there shall be
(a) no increase in the maximum aggregate number of shares of Stock that may be
issued under the Plan (except by operation of the provisions of Section 4.2),
(b) no change in the class of persons eligible to receive Incentive Stock
Options, and (c) no other amendment of the Plan that would require approval of
the Company's stockholders under any applicable law, regulation or rule. No
termination or amendment of the Plan shall affect any then outstanding Award
unless expressly provided by the Committee. In any event, no termination or
amendment of the Plan may adversely affect any then outstanding Award without
the consent of the Participant, unless such termination or amendment is required
to enable an Option designated as an Incentive Stock Option to qualify as an
Incentive Stock Option or is necessary to comply with any applicable law,
regulation or rule.

15. MISCELLANEOUS PROVISIONS.

      15.1 PROVISION OF INFORMATION. Each Participant shall be given access to
information concerning the Company equivalent to that information generally made
available to the Company's common stockholders.

      15.2 RIGHTS AS EMPLOYEE, CONSULTANT OR DIRECTOR. No person, even though
eligible pursuant to Section 5, shall have a right to be selected as a
Participant, or, having been so selected, to be selected again as a Participant.
Nothing in the Plan or any Award granted under the Plan shall confer on any
Participant a right to remain an Employee, Consultant or Director, or interfere
with or limit in any way the right of a Participating Company to terminate the
Participant's Service at any time.

      15.3 RIGHTS AS A STOCKHOLDER. A Participant shall have no rights as a
stockholder with respect to any shares covered by an Award until the date of the
issuance of a certificate for such shares (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the
Company). No adjustment shall be made for dividends, distributions or other
rights for which the record date is prior to the date such certificate is
issued, except as provided in Section 4.2 or another provision of the Plan.

      15.4 BENEFICIARY DESIGNATION. Each Participant may file with the Company a
written designation of a beneficiary who is to receive any benefit under the
Plan to which the Participant is entitled in the event of such Participant's
death before he or she receives any or all of such benefit. Each designation
will revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant's lifetime. If a
married Participant designates a beneficiary other than the Participant's
spouse, the effectiveness of such designation shall be subject to the consent of
the Participant's spouse. If a Participant dies without an effective designation
of a beneficiary who is living at the time of the Participant's death, the
Company will pay any remaining unpaid benefits to the Participant's legal
representative.

Adopted 2/14/04; Amended & Restated 5/7/04

                                      19


      15.5 UNFUNDED OBLIGATION. Any amounts payable to Participants pursuant to
the Plan shall be unfunded obligations for all purposes, including, without
limitation, Title I of the Employee Retirement Income Security Act of 1974. No
Participating Company shall be required to segregate any monies from its general
funds, or to create any trusts, or establish any special accounts with respect
to such obligations. The Company shall retain at all times beneficial ownership
of any investments, including trust investments, which the Company may make to
fulfill its payment obligations hereunder. Any investments or the creation or
maintenance of any trust or any Participant account shall not create or
constitute a trust or fiduciary relationship between the Committee or any
Participating Company and a Participant, or otherwise create any vested or
beneficial interest in any Participant or the Participant's creditors in any
assets of any Participating Company. The Participants shall have no claim
against any Participating Company for any changes in the value of any assets
which may be invested or reinvested by the Company with respect to the Plan.

Adopted 2/14/04; Amended & Restated 5/7/04

                                      20

EX-31.1

                                                                    EXHIBIT 31.1

                                  CERTIFICATION

I, Robert J. Nugent, certify that:

      1.    I have reviewed this quarterly report on Form 10-Q of Jack in the
            Box Inc.;

      2.    Based on my knowledge, this report does not contain any untrue
            statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this report, fairly present in all material
            respects the financial condition, results of operations and cash
            flows of the registrant as of, and for, the periods presented in
            this report;

      4.    The registrant's other certifying officer and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
            registrant and have:

            a.    Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

            b.    Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

            c.    Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter that has
                  materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

      5.    The registrant's other certifying officer and I have disclosed,
            based on our most recent evaluation of internal control over
            financial reporting, to the registrant's auditors and the audit
            committee of the registrant's board of directors (or persons
            performing the equivalent function):

            a.    All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

            b.    Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting.

                                            By: /S/ ROBERT J. NUGENT
                                                --------------------------------
                                                Robert J. Nugent
                                                Chief Executive Officer and
                                                Chairman of the Board

                                                Date: August 12, 2004

EX-31.2

                                                                    EXHIBIT 31.2

                                  CERTIFICATION

I, John F. Hoffner, certify that:

      1.    I have reviewed this quarterly report on Form 10-Q of Jack in the
            Box Inc.;

      2.    Based on my knowledge, this report does not contain any untrue
            statement of a material fact or omit to state a material fact
            necessary to make the statements made, in light of the circumstances
            under which such statements were made, not misleading with respect
            to the period covered by this report;

      3.    Based on my knowledge, the financial statements, and other financial
            information included in this report, fairly present in all material
            respects the financial condition, results of operations and cash
            flows of the registrant as of, and for, the periods presented in
            this report;

      4.    The registrant's other certifying officer and I are responsible for
            establishing and maintaining disclosure controls and procedures (as
            defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the
            registrant and have:

            a.    Designed such disclosure controls and procedures, or caused
                  such disclosure controls and procedures to be designed under
                  our supervision, to ensure that material information relating
                  to the registrant, including its consolidated subsidiaries, is
                  made known to us by others within those entities, particularly
                  during the period in which this report is being prepared;

            b.    Evaluated the effectiveness of the registrant's disclosure
                  controls and procedures and presented in this report our
                  conclusions about the effectiveness of the disclosure controls
                  and procedures, as of the end of the period covered by this
                  report based on such evaluation; and

            c.    Disclosed in this report any change in the registrant's
                  internal control over financial reporting that occurred during
                  the registrant's most recent fiscal quarter that has
                  materially affected, or is reasonably likely to materially
                  affect, the registrant's internal control over financial
                  reporting; and

      5.    The registrant's other certifying officer and I have disclosed,
            based on our most recent evaluation of internal control over
            financial reporting, to the registrant's auditors and the audit
            committee of the registrant's board of directors (or persons
            performing the equivalent function):

            a.    All significant deficiencies and material weaknesses in the
                  design or operation of internal control over financial
                  reporting which are reasonably likely to adversely affect the
                  registrant's ability to record, process, summarize and report
                  financial information; and

            b.    Any fraud, whether or not material, that involves management
                  or other employees who have a significant role in the
                  registrant's internal control over financial reporting.

                                            By: /S/ JOHN F. HOFFNER
                                                --------------------------------
                                                John F. Hoffner
                                                Executive Vice President and
                                                Chief Financial Officer

                                                Date: August 12, 2004

EX-32.1

                                                                    EXHIBIT 32.1

                    CERTIFICATION OF CHIEF EXECUTIVE OFFICER

      I, Robert J. Nugent, Chief Executive Officer of JACK IN THE BOX INC. (the
"Registrant"), do hereby certify in accordance with 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my
knowledge:

      (1)   the Quarterly Report on Form 10-Q of the Registrant, to which this
            certification is attached as an exhibit (the "Report"), fully
            complies with the requirements of Section 13(a) of the Securities
            Exchange Act of 1934 (15 U.S.C. 78m); and

      (2)   the information contained in the Report fairly presents, in all
            material respects, the financial condition and results of operations
            of the Registrant.

Dated: August 12, 2004                       /S/ ROBERT J. NUGNET
                                             ------------------------
                                             Robert J. Nugent
                                             Chief Executive Officer

A signed original of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by Section 906, has been provided to Jack in the Box Inc. and will be
retained by Jack in the Box Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.

EX-32.2

                                                                    EXHIBIT 32.2

                    CERTIFICATION OF CHIEF FINANCIAL OFFICER

      I, John F. Hoffner, Chief Financial Officer of JACK IN THE BOX INC. (the
"Registrant"), do hereby certify in accordance with 18 U.S.C. 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my
knowledge:

      (1)   the Quarterly Report on Form 10-Q of the Registrant, to which this
            certification is attached as an exhibit (the "Report"), fully
            complies with the requirements of Section 13(a) of the Securities
            Exchange Act of 1934 (15 U.S.C. 78m); and

      (2)   the information contained in the Report fairly presents, in all
            material respects, the financial condition and results of operations
            of the Registrant.

Dated: August 12, 2004                    /S/ JOHN F. HOFFNER
                                          ------------------------
                                          John F. Hoffner
                                          Chief Financial Officer

A signed original of this written statement required by Section 906, or other
document authenticating, acknowledging, or otherwise adopting the signature that
appears in typed form within the electronic version of this written statement
required by Section 906, has been provided to Jack in the Box Inc. and will be
retained by Jack in the Box Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.