Jerry Rebel - EVP and CFO Linda Lang - Chairman and CEO

Larry Miller - RBC Capital Markets Dean Haskell - Morgan Joseph Chris O'Cull - SunTrust Robinson Humphrey Brian Moore - Wedbush Morgan Securities Joe Fischer - Bear Stearns Rachael Rothman - Merrill Lynch Jeff Omohundro - Wachovia

Good day, everyone, and welcome to the Jack in the Box Incorporated first quarter fiscal year 2008 Earnings Call. (Operator Instructions) At this time, for opening remarks and introductions, I would like to turn the call over to Mr. Jerry Rebel, Executive Vice President and Chief Financial Officer of the Jack in the Box Incorporated. Please go ahead.

Good morning and welcome to the Jack in the Box conference call. Joining me today are Chairman and CEO, Linda Lang; and President and Chief Operating Officer, Paul Schultz. During this morning's session, we will review the company's operating results for the first quarter of fiscal 2008, and discuss guidance for the second quarter and full fiscal year. Following today's presentation, we will take questions from the financial community. Please be advised that our presentation contains forward-looking statements that reflect management's expectations for the future, which are based on current information. Actual results may differ materially from these expectations based on risks to the business. The Safe Harbor statement in today's news release is considered a part of this conference call. Material risk factors as well as information relating to company operations are detailed in our most recent 10-K, 10-Q and other public documents filed with the SEC. And now, I'd like to turn the call over to Linda Lang. Linda?

Thank you, Jerry. Good morning and thank you for joining us. As you can see in our new release this morning, Jack in the Box today reported diluted EPS of $0.60 in the first quarter, which exceeded the First Call consensus estimates by $0.03. The overall health of our business is strong, with Jack in the Box and Qdoba brand each continuing to grow sales, and our efforts to control labor and other costs offsetting some of the impact of continued high commodity cost, and regional economic pressures. For the quarter, same-store sales at Jack in the Box company restaurants increased 1.5%. This was our 18th consecutive quarter of comparable sales growth. Price increases were approximately 2.5% in the quarter. Along with a 5.6% increase in the first quarter of last year, the two-year cumulative increase of Jack in the Box was 7.1%. Our restaurants in Texas, the Southeast, and other key markets, continue to perform quite well, but we have seen a slowdown in certain Western markets, such as some of those in California, due to an unstable housing market, continuing high fuel prices, and increases in unemployment. These factors contributed to same-store sales growth in the quarter falling below our guidance. Same-store sales at Qdoba system restaurants, increased to 4.5% in the first quarter, extending Qdoba's streak of consecutive quarters of comparable sales growth to 34. The key initiatives of our strategic plan have us well positioned to continue achieving our near-term earnings expectations, and to continue growing our business in the years ahead. Our two restaurant brands added a combined 35 units in the quarter with Jack in the Box opening 10 new locations, and Qdoba 25 new restaurants. Both brands expanded into new states, with Jack in the Box opening our first restaurant in Colorado in the Denver area, and Qdoba opening our first restaurant in Mississippi. We're also planning on entering new contiguous markets in Texas this calendar year, with new franchise Jack in the Box locations expected to open in Midland/Odessa, Abilene, San Angelo, and Wichita Falls. An additional franchise market, Albuquerque, New Mexico is expected to open either late in 2008 or in early 2009. As we noted in our news release, Jack in the Box introduced several new products in the first quarter. Our Sirloin Steak Melt, for example, the most recent extension of our innovative Sirloin Steak Melt platform began rolling out to our restaurants in mid December. Other new products launched in the first quarter included Grilled Chicken Strip with teriyaki dipping sauce, and a Chicken Fajita Pita, featuring a whole grain pita. Also in January, we expanded our line of shakes made with real ice cream, with the addition of our Cherry Chip Bliss shake. Among the new products scheduled for introduction in April is a Barbecue Bacon Sirloin Burger, which will feature a seasoned 100% sirloin patty, topped with two slices of America cheese, crispy onion rings, bacon strips, and barbecue sauce, and served on a bakery-style bun. We'll also be expanding our breakfast menu with a warn Cinnamon Roll drizzled with icing. Looking a little further ahead, Jack in the Box will continue expanding our premium beverage menu, which now includes a new blend of coffee that we introduced in the first quarter. In April, we'll begin rolling out to all Jack in the Box restaurants our next new beverage platform Real Fruit Smoothies. Also in April, we plan to begin offering Ice Coffee as an additional coffee beverage for our guests. We're excited about the impact that these premium drinks are expected to have on our business, especially our line of Fruit Smoothies. Working with our beverage partner Coca-Cola, we will offer three different Smoothie flavors; each made with non-fat yogurt and Minute Maid fruit juice, strawberry banana, mango and orange sunrise. We've got a strong pipeline of other new products in various stages of development or test that are slated for introduction in our third and fourth quarters. In addition, we have several promotions planned to increase traffic in markets affected by the slowdown in discretionary spending. Those promotions include the bundling of menu items, such as The Big Deal that we launched in January, as well as product price promotions. To improve the level and consistency of guest service at our restaurants, we will continue to develop initiatives that can directly influence our guest dining experience, such as new technologies like self-serve kiosks that are currently in test at several dozen locations. Along with the menu and guest service, another important factor contributing to a superior dining experience is the restaurant environment, and enhancing our restaurant facilities is the third major aspect of our brand reinvention initiative. In the first quarter the company and franchisees re-imaged 51 restaurants, with a comprehensive program that includes a completely re-design of dining rooms and common areas. Including restaurants re-imaged to-date in the second quarter we are well on our way to our full year target of re-imaging 350 to 400 restaurants, including 100 to 150 franchise locations. We expect the entire Jack in the Box system including franchise locations to be re-imaged over the next three to four years. We recognized the importance of investing in the long-term future of Jack in the Box, which is what we are doing with our restaurant re-imaged program, as well as a new restaurant prototype that did due late in 2007. This new generation of restaurant features a completely redesigned exterior, incorporates elements of our re-imaging program and features a reengineered kitchen designed to increase throughput. Our new restaurant design also forwards us an opportunity to test various green initiatives that can reduce energy and water usage, while generating returns for the company. We are currently testing energy efficient lightings, kitchen equipment and building materials at these new locations. Earlier, I mentioned some of the factors that are impacting discretionary spending in some of our markets; we believe that our efforts to control labor, other restaurant cost and G&A will somewhat mitigate the impact of these near-term economic pressures. We also expect that the new products that we will be rolling out over the reminder of the year, including additions to our innovative menu, sterling products, and our new premium beverage platforms, will support continued sales growth at our restaurants, as well as transaction building promotions planned for certain markets. As a result of these initiatives, when the macro economic pressures subside, we believe that our business will be better positioned to continue achieving our long-term goals. We have a well conceived strategic plan in place that has delivered solid results since its implementation four years ago. With a dedicated, experienced team of employees and franchisees executing the strategic initiatives of that plan, we remain optimistic about the near-term and long-term prospects for our company. And now I will turn the call back over to Jerry for closer look at the financial side of our business. Jerry?

Thank you, Linda, and again good morning everyone. Again Jack in the Box reported diluted EPS at $0.60 in the first quarter, which exceeded the first call consensus estimate by $0.03. The quarter same stores sales of the Jack in the Box Company restaurants increased 1.5%, which was slightly below the low-end of the range forecast and compared to a 5.6% increase last year. Slower than expected sales growth and continued high food costs were partially offset by focused across the board, expense controls at our restaurants, field support and corporate G&A levels. Gains on sales of restaurants to franchisees were approximately $0.03 per share higher than our forecast; primarily due to the average gain per restaurants at $600,000, was about 25% higher than the same quarter of last year. Food and packaging costs were 32.8% of restaurant sales in the quarter, about 170 basis points higher than last year, which was consistent with each of the prior two quarters, with continued high cost versus last year for cheese, cooking oil, and eggs. Weather conditions contributed to a short-term supply based increase in produce of 10% in the quarter, and beef was up modestly at 3%. I'd like to provide some detail on the cost control initiatives that Linda and I spoke of earlier. All comparisons referenced were versus the first quarter of 2007. Labor costs were down 40 basis points, after including the impact at minimum wage increases, due to tight labor management, including improved scheduling and reduced overtime. Utility usage was down approximately 9% on average in restaurants where we have completed the kitchen enhancement installations. We reduced restaurants operating costs, including costs associated with packaging redesign, uniforms, and supplies in smallwares. And we've reduced field G&A by approximately $2.5 million, due primarily to our re-franchising strategy, and other expense reduction initiatives. We have a long history or implementing profit improvement program initiatives, such as these cost control strategies just mentioned, which would continue to have a positive impact on earnings in the future. During our fourth quarter conference call, last November, we discussed the incremental facility costs that we were anticipating in 2008. We are accelerating our restaurant re-image and kitchen enhancement projects. These costs included in SG&A, along with an impairment charge in this year's first quarter, were approximately $0.03 a share higher than similar costs last year. With respect to our forecast for fiscal 2008, we're raising the high-end of our full year earnings guidance due primarily to our first quarter results. We now expect to earn $1.98 to $2.08 per diluted share versus $1.88 per share last year. For the year, we've narrowed our same-store sales estimate to an increase of 2% to 3% for Jack in the Box company restaurants, with the second quarter sales guidance of 1% to 2%. Our full year same-store sales guidance for Qdoba remains unchanged at a 4% to 6% increase, including a 3% to 5% increase in the second quarter. We're also raising the high-end of the range for our full year expectations on gains and cash flow resulting from our refranchising efforts. We're now forecasting $45 million to $50 million in gains on refranchising 100 to 120 restaurants, with resulting cash flow of $65 million to $75 million. We believe that we'll be in the range of the other assumptions poured into the full year earnings forecast that we issued last November. Now, I'd like to turn the call back over to Linda. Linda?

Thanks, Jerry. We'll be happy to take your questions at this time.

(Operator Instructions) Our first question comes from Larry Miller with RBC Capital Markets. Your line is open, sir. Larry Miller - RBC Capital Markets: Yeah. Hi, guys.

Hi, Larry.

Hi, Larry. Larry Miller - RBC Capital Markets: I had two questions, if I may. When you mentioned that sales are slower in some of the Western markets, I'm sure there is a lot of noise there, so I had two questions on that. Are you able to kind of separate out what is sort of that macro trend of housing and so forth, and what might be the weather, you had the fires in San Diego as an issue, is there a lot of rain there? And then, also related to that, you talked about doing more value-oriented promotions, can you give us an idea how that Big Deal Meal work in some of those more challenged economical markets there?

Yeah. It's difficult to kind of tease out what's weather-related, what's macro. Our belief is that it's more macro-related and less weather-related. Certainly, the weather has been worse this winter. But we don't think that had a significant impact on our sales in the West. We think it's more related to reduced consumer spending. The housing has been significantly affected in California. So we think that's more of the case. And really, our plan is to get people back in the door of Jack in the Box to really drive traffic. And the Big Deal helped us in that regard. It was a very short promotion. It was a three-week promotion. But we have another promotion that starts actually next Monday in certain markets in the West. Larry Miller - RBC Capital Markets: And then I had a question, Jerry, I'm still surprised that cost of goods is up so much. And then the reason I'm surprised is that these costs really were a big headwind for you guys at the end of last year and seem to be lesser right now and you're running about 2.5% price. Is there a mix shift going on the menu maybe toward the more value-oriented stuff that's causing some shift or is it something else that we're not seeing, I'd hope that might explain cost of sales being up to that range?

Larry, we weren't maybe as surprised as you may have been. The food cost for us, the 32.8% is right on where we were in Q3 of last year as well as Q4 of last year. And while you are right, beef increased higher in Q3 of last year versus where it was in '06, on a consecutive quarter-to-quarter basis beef is pretty much where it had been for the last two quarters. And we continue to see high cost for cheese, eggs and cooking oil. But we think this is pretty consistent with where our expectations were for the quarter. Larry Miller - RBC Capital Markets: And just on those 50s, as you guys have been mixing in, I guess, we're not seeing the retrenchment in pricings on beef.

Can you say that again? You were breaking up on me just a bit. Larry Miller - RBC Capital Markets: Sorry about that. I remember at the end of the fourth quarter you were saying you are seeing some easing of the 50s that you mix on ground beef to the 57 rate from dollar. Is that still the case?

Yeah. Beef were in our 50 or in the 57 range for the quarter. Larry Miller - RBC Capital Markets: Okay. Thank you, guys.

Thanks, Larry.

Our next question comes from Dean Haskell with Morgan Joseph. Your line is open. Dean Haskell - Morgan Joseph: Thank you very much. Congratulations on a great fourth quarter, Linda, Jerry and the whole team.

Thanks, Dean. Dean Haskell - Morgan Joseph: Can you give me more disclosure on the company openings and closures in the fourth quarter as well as franchise openings and closures? The detail in the release is a little stretchy.

Sure. Dean, for Jack in the Box 10 restaurants were opened, six company and four franchise. Company and franchisees each closed two restaurants. On Qdoba, company openings were four, franchisees opened 21 and Qdoba franchise location six closed in the quarter. Dean Haskell - Morgan Joseph: Okay. And then, more directly Larry's question. Was there a mix shift towards value, did you see that in the -- perhaps even on just the West Coast?

No, we didn't really see that Dean, we track a bottom tier mix and we didn't see a significant increase in the bottom tier mix. Dean Haskell - Morgan Joseph: Okay, good. Congratulations again.

Thanks a lot.

Our next question comes from Chris O'Cull with SunTrust Robinson Humphrey. Your line is open. Chris O'Cull - SunTrust Robinson Humphrey: Good morning everyone.

Hi, Chris.

Hi, Chris. Chris O'Cull - SunTrust Robinson Humphrey: Hi. My first question relates to the promotions, Linda you talked a little bit about the new Smoothies, do you expect to see a shift in preference from the milkshakes to the Smoothies, and if so, would that not have a benefit to margin, given where diary prices are?

Yeah. There is a little bit of transfer or canalization of the shake mix, but not significantly. We are seeing that it is a different customer. And that in our test markets that we got incremental beverage sales, overall incremental beverage sales with the Smoothie introduction. Chris O'Cull - SunTrust Robinson Humphrey: And if there is any canalization, it should be higher profit pennies within that?

Correct, exactly. Chris O'Cull - SunTrust Robinson Humphrey: Okay, good. And then, it looks like your comp guidance for the second quarter implies an acceleration on a two-year basis from what was reported in the first? What gives you comfort that you can achieve that guidance?

All right. I think it's around our marketing plan and our targeted promotion to really get traffic back in, in the west. Chris O'Cull - SunTrust Robinson Humphrey: Okay. So The Big Deal or the value-oriented promotions weren't targeted I guess to specific traffic issues last quarter, but they will be going forward?

They were, but it was really only a three-week promotion growth. So we're doing a little bit longer promotion in the second quarter. Chris O'Cull - SunTrust Robinson Humphrey: Okay, that's fine. And then question Jerry, regarding the commodities. Can you tell us which commodities you are exposed to price fluctuations in '08?

Yeah. Maybe what I can do is give you guys a little more color than what we usually do around some of our contract pricings for commodities, we usually don't talk a lot about that, but with food costs where they are, it makes a little more sense to offer a bit more. Well if we take cheese as an example, I'm going to talk about some of the commodities that have really seen significant price increases; I'm not going to run down through all of them. But between now and the end of our fiscal year, depending upon the month, we have somewhere between 16% to 18% of our cheese needs covered with contracts, that are at higher prices than what we would like them to be, but prices lower than today's current market price. And we are pretty pleased about that and that's part of the comfort that we have with our guidance going forward. Eggs not quite as much cover there, we are exposed on eggs after June, but we have a 100% contracted up until June. Cooking oil, the forward contracts on the cooking oil are just in place, so we don't think it makes a lot of sense to take a great deal of coverage beyond the next couple of months. But we are pretty well protected on that through the end of the second quarter. Beef, we are contracted like we usually are, our chicken contracts expire at the end of March and we are in negotiations obviously now and we do have a fairly modest increased based upon those current discussions backed in to our full year guidance Chris. Chris O'Cull - SunTrust Robinson Humphrey: Okay

And that helps. Chris O'Cull - SunTrust Robinson Humphrey: What about wheat Jerry?

Wheat yeah, let me talk about bakery for a bit. We have two-thirds of our bakery needs have or are contracted through 2008. And we have one third of the needs up in the late second quarter, early third quarter timeframe, again we are in negotiations with those bakery suppliers and we do have an increased baked into the forecast for that. Chris O'Cull - SunTrust Robinson Humphrey: Okay. Great. And then one last question and Paul I am asking your view of the labor productivity improvements that you guys are seeing, what's driving what initiatives are driving this improvement.

Well I wish I could share something magical with you, but it's that old fashion cost control primarily focused on labor usage and overtime in those restaurants that we are not meeting targets. Chris O'Cull - SunTrust Robinson Humphrey: Okay, great. Thanks guys.

Thanks Chris.

Our next question comes from Brian Moore with Wedbush Morgan Securities. Your line is open. Brian Moore - Wedbush Morgan Securities: Good morning.

Hi, Brian. Brian Moore - Wedbush Morgan Securities: Linda, I was hoping if you could give us some color on the product platforms and I know that historically has been a stronger same store sales driver, I am just thinking about how many additional, beyond the ones we've talked about this morning, we might expect for this calendar year, as well as for calendar year 2009? And then if you could also perhaps maybe what the Smoothie platform addresses the complexity issue in terms of store level execution, ticket times, what your experiences been there?

Sure, Brian we just don’t disclosed much at all on the marketing calendar for competitive reasons. So, we continue with our strategy of new product -- one new product platform a year, so this year at Smoothies. We'll continue with some line extensions around the sirloin product. And then we have another product, a unique innovative product, coming in, in the fourth quarter. So, can't give you much additional information on that. With regards to the Smoothies operationally not an issue. We did not see a negative impact on speed of service. It does require new equipment that will be installed starting in the next 90 days or so, and it's a rollout for the system that will take about four months. But it's working well for us. We have tested it extensively and it's a great program. Brian Moore - Wedbush Morgan Securities: Great. Thank you. Just maybe one follow-up question related to the remodels. Hope, we could get an update. I guess, the sale that's associated with those remodels, if you're seeing any mix shift between drive-through versus in-store dining, as well when those might be completed? And also, how do you think about those cash flows, the free cash flow that, once you get those remodels done, might be used to accelerate store development or are you more likely to kind of look to additional share repurchases?

Let me talk quickly on the remodels, and then I'll let Jerry talk about that use of cash. On the remodels, we continue to track those early market tests of Waco and Seattle, and they are still outperforming the system even two years into post remodel. So, we feel very good that the re-image is meeting our expectations in terms of the return on that investment. And we're just seeing, in general, overall increase in the business, so higher consumer ratings in those restaurants, in those markets that's giving us just a positive halo and stronger across the board business. And then on the free cash flow, Jerry, if you want to just --

Yeah, Brian. We've been utilizing year before most of the free cash flow on share repurchases. And we continue to have a share repurchase program and authorization from our Board and ability under our current credit facility. But when you look at the cash-on-cash returns for both Jack in the Box and Qdoba company-operated restaurants, we would continue to grow those as well. We haven't talked about acceleration of that program yet, but we are entering in new markets for both of those brands. Brian Moore - Wedbush Morgan Securities: Okay. Thank you very much.

Thanks, Brian.

Our next question comes from Jo Buckley with Bear Stearns. Your line is open. Joe Fischer - Bear Stearns: Hi. It's actually Joe Fischer sitting in. Wanted to ask you about kind of the slowing sales, have you seen any day-part shift, if one day-part has been weaker or if drive-through versus in-restaurant have you seen any changes there?

No. It's not any particular day-part per se. It's really very much concentrated on the Western market. So Texas is still very strong, Southeast still very strong and other key markets that we have. Joe Fischer - Bear Stearns: Okay. And then I think you said you have 2.5% pricing in the first quarter. Is that the amount of pricing that's baked in the guidance for '08? And if not, are you considering taking some additional?

No, that's it. We've taken the price increase that we have planned. Joe Fischer - Bear Stearns: Okay. And then just one more, I was wondering what the cost of the Smoothie platform was on a store basis?

It's $8,000 per location. Joe Fischer - Bear Stearns: Okay. Great. Thanks.

You're welcome.

Our next question comes from Rachael Rothman with Merrill Lynch. Your line is open. Rachael Rothman - Merrill Lynch: Hi. Good morning, guys.

Good morning, Rachael. Rachel Rothman: Good morning. Rachael Rothman - Merrill Lynch Bit of a longer term question. Linda, you guys have done a really great job on all the new product news, and you seem to have a great pipeline coming up as well. Can you talk a little bit about how you've been able to develop so many products and introduce some into the restaurants without developing kind of the operational hurdles that we've heard other companies talk about?

Right. I think we have two things. We have a very, very robust process from idea generation, through execution, through testing and execution, where we have our operations involved, we have our marketing focus involved we have our QA, R&D. And so, a lot of work goes in upfront at the development to make sure that once we get it into restaurant that it doesn't affect our operations at the store, at the restaurant level. And then the second thing is, really our capability, through our innovation center. So, you know the fact that we have all of our cross functional teams housed in one 70,000 square feet center with the kitchens that we need, with marked up Jack in the Box restaurant and equipment that we are testing. I think that gives us a higher likelihood of success when we actually get out into the market. So it's the combination of both. Rachael Rothman - Merrill Lynch: And then if I could, just a quick follow-up, do you think all the new products have served more to increase the frequency of the customers that was already coming or to attract a new clientele?

I would say on the premium products, it's really bringing in new customers, so we are expanding our reach. We are getting in somewhat of the more moderate users with the premium products. Rachael Rothman - Merrill Lynch: Perfect. Thank you so much

You are welcome, thanks Rachael.

(Operator Instructions) Our next question comes from Jeff Omohundro with Wachovia. Your line is open. Jeff Omohundro - Wachovia: Thanks its Jeff Omohundro here. My first question, there was a comment made in the prepared remarks regarding cost controls and specifically around utilities, it seems fairly significant, I just wondered if you could elaborate a little bit on what steps have been taken in that area. Paul Schultz.: This is Paul Jeff. The 9% improvement in utilities refers specifically to restaurants in which we have installed our new proteins staging cabinets, it replaces a piece of equipment that obviously used significantly more electricity, and there are also some labor efficiencies associated with that. Jeff Omohundro - Wachovia: Very good. And then my other one is little bit broader, but if you could just talk a little bit to the premium beverage strategy and just little bit around the thinking of broadening the platform in premium beverages and perhaps going even deeper in coffee beyond ice coffee, perhaps to other premium coffee efforts, so I just wondering about that choice? Thanks.

Right. I mean we saw an opportunity and lot of the other players have as well in the beverage platform; Smoothies are just a huge trend especially among young people. So, we really wanted to take advantage of that trend and we felt that Jack in the Box as a brand would have the believability in really delivering great smoothie products. So, working with our Coca-Cola partners, we came up with it. We tested several versions of smoothies and we came up with what we think is a really great product. So that's with regard to Smoothies. But it really isn't over there Jeff, we think there is an opportunity to expand the coffee, the coffee transactions and the coffee program. We were one of the first players to really enhance our coffee program a couple of years ago. And then the competitors kind of followed too. Now we've enhanced our coffee again and we're rolling out ice-coffee, but we are still working on some other things beyond the ice-coffee selection. Jeff Omohundro - Wachovia: I see great. Thanks so much.

Thanks, Jeff.

(Operator Instructions).

I think that's it. Thank you very much for your time.

Thank you for your participation this does conclude today's conference call.