Jack In The Box 2010 Annual Report Download - page 25

Table of Contents
$2.7 million in 2010 compared with negative impacts of $0.3 million in 2009 and $3.0 million in 2008. The increase in pension and
postretirement benefits expense in 2010 principally relates to a decrease in our discount rate. The fluctuations in pre-opening costs
primarily relate to changes in the number of new Jack in the Box restaurants opened which decreased to 30 locations in 2010, compared
with 43 in 2009 and 23 in 2008.
Impairment and other charges, net is comprised of the following :
  
Impairment $ 12,970 $ 6,586 $ 3,507
Losses on disposition of property and equipment, net 10,757 11,418 17,373
Costs of closed restaurants (primarily lease obligations) 22,262 2,080 (21)
Other 2,898 1,930 1,898
$ 48,887 $ 22,014 $ 22,757
Impairment and other charges, net increased $26.9 million in 2010 and decreased slightly in 2009 compared to the prior years. The
increase in 2010 is due primarily to the closure of 40 underperforming Jack in the Box restaurants in the fourth quarter of the fiscal year.
The decision to close these restaurants was based on a comprehensive analysis performed that took into consideration levels of return on
investment and other key operating performance metrics. In connection with these closures, we recorded a total charge of $28.0 million
which included property and equipment impairment charges of $8.4 million and $19.0 million related to future lease commitments.
Gains on the sale of company-operated restaurants to franchisees, net are detailed in the following table ( ):
  
Number of restaurants sold to franchisees 219 194 109
Gains on the sale of company-operated restaurants $ 54,988 $ 81,013 $ 66,349
Loss on expected sale of underperforming market - (2,371) -
Gains on the sale of company-operated restaurants, net $ 54,988 $ 78,642 $ 66,349
Average gain on restaurants sold $ 251 $ 418 $ 609
Gains were impacted by the number of restaurants sold and changes in average gains recognized, which relate to the specific sales and
cash flows of those restaurants. In 2009, gains on the sale of company-operated restaurants to franchisees, net included a loss of
$2.4 million relating to the anticipated sale of a lower performing Jack in the Box market.

Interest expense, net is comprised of the following ( ):
  
Interest expense $ 17,011 $ 22,155 $ 28,070
Interest income (1,117) (1,388) (642)
Interest expense, net $ 15,894 $ 20,767 $ 27,428
Interest expense, net decreased $4.9 million in 2010 and $6.7 million in 2009 due primarily to lower average interest rates. In 2010,
lower average borrowings, partially offset by a $0.5 million charge to write off deferred financing fees in connection with the refinancing
of our credit facility, also contributed to the decrease. In 2009, higher average borrowings partially offset the impact of lower interest rates.

The income tax provisions reflect effective tax rates of 33.8%, 37.7% and 37.3% of pretax earnings from continuing operations in 2010,
2009 and 2008, respectively. The lower tax rate in 2010 is largely attributable to the impact of impairment and other charges, higher work
opportunity tax credits and the market performance of insurance investment products used to fund certain non-qualified retirement plans.
Changes in the cash value of the insurance products are not included in taxable income.
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