Company: JACK
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0000807882-25-000030
Chunk: 57

Company: JACK IN THE BOX INC
Filing Date: 2025-05-14
Form: 10-Q
Item: Item 1
Chunk 57
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 related to new markets and third party digital sponsorships, partially offset by a decrease in company-operated restaurant sales in the current year.

Incentive compensation decreased by $1.0 million in the quarter and $1.0 million on a year-to-date basis as compared to the prior year, primarily due to lower achievement levels compared to the prior year for the Company’s annual incentive plan.

Share-based compensation decreased by $2.8 million in the quarter and $4.0 million on a year-to-date basis as compared to the prior year, primarily due to current year forfeitures and lower achievement levels for performance-based equity awards.

The cash surrender value of our company-owned life insurance (“COLI”) policies, net of changes in our non-qualified deferred compensation obligation supported by these policies, are subject to market fluctuations. The changes in market values had an unfavorable impact of $2.6 million in the quarter and $8.9 million on a year-to-date basis, compared to the prior year.

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Litigation matters increased $0.3 million in the quarter and $0.5 million on a year-to-date basis as compared to the prior year, primarily due to the timing of litigation developments. Refer to Note 14, Commitments and Contingencies, in the condensed consolidated financial statements for additional information related to the legal matters.

Impairment of Goodwill and Intangible Assets

As of the March 16, 2025 testing date, the balance of the Del Taco reporting unit goodwill was $25.3 million. During the second quarter of 2025, the Company identified triggering events that indicated the goodwill allocated to the Del Taco reporting unit might be impaired. The triggering events related to i) continued negative trend in Del Taco same store sales, ii) unfavorable changes in the economic environment specifically impacting our industry, including inflation and interest rates, iii) the potential for a divestment of Del Taco, and iv) a sustained lower share price. As a result, the Company performed a quantitative test over the Del Taco reporting unit, noting that the fair value of the reporting unit was less than the carrying value, which resulted in an impairment of goodwill of $25.3 million.

Additionally, as a result of the quantitative test over the Del Taco reporting unit, the Company also impaired the trademark asset associated with the Del Taco reporting unit in the amount of $177.9 million. 

Other Operating Expenses, Net

Other operating expenses, net is comprised of the following (in thousands):

QuarterYear-to-date