Review the Statement of Cash Flows for Jack in the Box (JACK). 1. Does JACK use the direct or indirect method? 2. Looking at the adjustment for prepaid expenses and other current assets for 2018, did JACK pre-pay additional expenses or use up expenses previously pre-paid? Why? 3. We are given the gains from the sale of company-operated restaurants and the proceeds from the sale of those restaurants. Given that information for 2018, what was the book value of the company-operated restaurants? Show your computations: 4. For 2018, under financing activities, explain what "repurchases of common stock" is about 5. For 2018, is JACK borrowing more or paying back more on its revolving line of credit? JACK IN THE BOX INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Fiscal Year 2017 2018 2016 $121,371 $135,332 17,0326 ,759 104,339 128,573 $124,073 17,600 106,473 59,422 67,398 72,786 862 2,803 121 3,487 3 2,736 (2,031) 25,352 9,146 2,324 (4,232) (16,074) 10,637 4,215 (7,461) 33,293 11,327 13,484 Cash flows from operating activities: Net earnings Earnings from discontinued operations Earnings from continuing operations Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Franchise tenant improvement allowance amortization Deferred finance cost amortization Excess tax benefits from share-based compensation arrangements Deferred income taxes Share-based compensation expense Pension and postretirement expense Gains on cash surrender value of company- owned life insurance Gains on the sale of company-operated restaurants Losses on the disposition of property and equipment Impairment charges and other Changes in assets and liabilities, excluding acquisitions and dispositions: Accounts and other receivables Inventories Prepaid expenses and other current assets Accounts payable Accrued liabilities Pension and postretirement contributions Franchise tenant improvement allowance disbursements Other (2.280) (2,424) (5,365) (46,164) (38,034) (1,230) 1,627 2,505 2,891 1,815 2,280 1,543 24,220 1,587 (9,432) 4,890 (38,329) (5,467) (1,868) (9,723) 1,839 (181) 12,718 (13,966) (3,359) 2,739 (16,654) 4,877 (5,363) (101,052) (14,893) (16,426) (11,997) (8,151) 104,055 133,689 104,412 (32,345) (33,284) (43,261) (5,497) 9,336 (5,686) 6,057 (9,500) 15,461 26,486 54,453 10,259 2,969 99,591 1,500 2,921 (3,729) 1,439 3,433 850 (922) 65,661 67,370 (32,500) 757,100 747,900 705,000 Cash flows provided by operating activities Cash flows from investing activities: Purchases of property and equipment Purchases of assets intended for sale and leaseback Proceeds from the sale and leaseback of assets Proceeds from the sale of company-operated restaurants Collections on notes receivable Proceeds from the sale of property and equipment Other Cash flows provided by (used in) investing activities Cash flows from financing activities: Borrowings on revolving credit facilities Repayments of borrowings on revolving credit facilities Proceeds from issuance of debt Principal repayments on debt Debt issuance costs Dividends paid on common stock Proceeds from issuance of common stock Repurchases of common stock Excess tax benefits from share-based compensation arrangements Payroll tax payments for equity award issuances Change in book overdraft Cash flows used in financing activities Cash flows used in (provided by) continuing operations (523,700) (533,300) (817,578) - 417,578 (304,607) (57,266) (26,109) (1,366) - (2,385) (45,412) (48,925) (40,295) 7,959 5,165 10,564 (325,634) (334,361) (284,645) 7.461 (13,182) - 4,232 (7,719) (9,240) (2,150) 2,151 (445,529) (223,644) (43,591) (275,813) (22,585) 28,321 Net cash provided by operating activities of discontinued operations Net cash provided by (used in) investing activities of discontinued operations Net cash used in financing activities of discontinued operations Net cash provided by (used in) discontinued operations Effect of exchange rate changes on cash 4,823 266,125 (78) 270,870 47,388 (34,031) (138) 13,219 (22) 42,951 (71,897) (45) (28,991) (43) 7,642 17,030 17,743 Cash at beginning of year, including discontinued operations cash Cash at end of year, including discontinued operations cash $ 2,705 S 7,642 $ 17,030 Review the Statement of Cash Flows for Jack in the Box (JACK). 1. Does JACK use the direct or indirect method? 2. Looking at the adjustment for prepaid expenses and other current assets for 2018, did JACK pre-pay additional expenses or use up expenses previously pre-paid? Why? 3. We are given the gains from the sale of company-operated restaurants and the proceeds from the sale of those restaurants. Given that information for 2018, what was the book value of the company-operated restaurants? Show your computations: 4. For 2018, under financing activities, explain what "repurchases of common stock" is about 5. For 2018, is JACK borrowing more or paying back more on its revolving line of credit? JACK IN THE BOX INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Fiscal Year 2017 2018 2016 $121,371 $135,332 17,0326 ,759 104,339 128,573 $124,073 17,600 106,473 59,422 67,398 72,786 862 2,803 121 3,487 3 2,736 (2,031) 25,352 9,146 2,324 (4,232) (16,074) 10,637 4,215 (7,461) 33,293 11,327 13,484 Cash flows from operating activities: Net earnings Earnings from discontinued operations Earnings from continuing operations Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Franchise tenant improvement allowance amortization Deferred finance cost amortization Excess tax benefits from share-based compensation arrangements Deferred income taxes Share-based compensation expense Pension and postretirement expense Gains on cash surrender value of company- owned life insurance Gains on the sale of company-operated restaurants Losses on the disposition of property and equipment Impairment charges and other Changes in assets and liabilities, excluding acquisitions and dispositions: Accounts and other receivables Inventories Prepaid expenses and other current assets Accounts payable Accrued liabilities Pension and postretirement contributions Franchise tenant improvement allowance disbursements Other (2.280) (2,424) (5,365) (46,164) (38,034) (1,230) 1,627 2,505 2,891 1,815 2,280 1,543 24,220 1,587 (9,432) 4,890 (38,329) (5,467) (1,868) (9,723) 1,839 (181) 12,718 (13,966) (3,359) 2,739 (16,654) 4,877 (5,363) (101,052) (14,893) (16,426) (11,997) (8,151) 104,055 133,689 104,412 (32,345) (33,284) (43,261) (5,497) 9,336 (5,686) 6,057 (9,500) 15,461 26,486 54,453 10,259 2,969 99,591 1,500 2,921 (3,729) 1,439 3,433 850 (922) 65,661 67,370 (32,500) 757,100 747,900 705,000 Cash flows provided by operating activities Cash flows from investing activities: Purchases of property and equipment Purchases of assets intended for sale and leaseback Proceeds from the sale and leaseback of assets Proceeds from the sale of company-operated restaurants Collections on notes receivable Proceeds from the sale of property and equipment Other Cash flows provided by (used in) investing activities Cash flows from financing activities: Borrowings on revolving credit facilities Repayments of borrowings on revolving credit facilities Proceeds from issuance of debt Principal repayments on debt Debt issuance costs Dividends paid on common stock Proceeds from issuance of common stock Repurchases of common stock Excess tax benefits from share-based compensation arrangements Payroll tax payments for equity award issuances Change in book overdraft Cash flows used in financing activities Cash flows used in (provided by) continuing operations (523,700) (533,300) (817,578) - 417,578 (304,607) (57,266) (26,109) (1,366) - (2,385) (45,412) (48,925) (40,295) 7,959 5,165 10,564 (325,634) (334,361) (284,645) 7.461 (13,182) - 4,232 (7,719) (9,240) (2,150) 2,151 (445,529) (223,644) (43,591) (275,813) (22,585) 28,321 Net cash provided by operating activities of discontinued operations Net cash provided by (used in) investing activities of discontinued operations Net cash used in financing activities of discontinued operations Net cash provided by (used in) discontinued operations Effect of exchange rate changes on cash 4,823 266,125 (78) 270,870 47,388 (34,031) (138) 13,219 (22) 42,951 (71,897) (45) (28,991) (43) 7,642 17,030 17,743 Cash at beginning of year, including discontinued operations cash Cash at end of year, including discontinued operations cash $ 2,705 S 7,642 $ 17,030