Jack In The Box 2011 Annual Report Download - page 28

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Table of Contents
Impairment and other charges, net decreased $36.2 million in 2011 and increased $26.9 million in 2010 as compared to the prior year. The following table
presents the components of impairment and other charges, net in each year (in thousands):
  
Impairment charges $ 1,367 $ 12,970 $ 6,586
Losses on disposition of property and equipment, net 7,650 10,757 11,418
Costs of closed restaurants (primarily lease obligations) and other 3,655 25,160 4,010
$ 12,672 $ 48,887 $ 22,014
Fiscal 2010 includes a charge of $28.0 million (primarily including future lease obligations of $19.0 million and property and equipment impairment
charges of $8.4 million) related to the closure of 40 underperforming Jack in the Box restaurants. The decision to close these restaurants was based on a
comprehensive analysis that took into consideration levels of return on investment and other key operating performance metrics. After consideration of the
fiscal 2010 closure charge, impairment and other charges, net decreased an additional $8.2 million in 2011 due primarily to declines in costs related to our
restaurant re-image and new logo program as this program nears completion and lower impairment charges for underperforming Jack in the Box restaurants as
compared with 2010.
Gains on the sale of company-operated restaurants to franchisees, net are detailed in the following table ( dollars in thousands):
  
Number of restaurants sold to franchisees 332 219 194
Gains on the sale of company-operated restaurants $ 61,125 $ 54,988 $ 81,013
Loss on expected sale of underperforming market - - (2,371)
Gains on the sale of company-operated restaurants, net $ 61,125 $ 54,988 $ 78,642
Average gain on restaurants sold $ 184 $ 251 $ 418
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. The lower average gains in 2011 and 2010 relate to the sale of markets with lower-than-average sales volumes and cash flows. 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 ( in thousands):
  
Interest expense $ 18,165 $ 17,011 $ 22,155
Interest income (1,310) (1,117) (1,388)
Interest expense, net $ 16,855 $ 15,894 $ 20,767
Interest expense, net increased $1.0 million in 2011 and decreased $4.9 million in 2010. The increase in 2011 is primarily attributable to an increase in the
amortization of deferred finance fees related to the refinancing of our credit facility in 2010 and higher average borrowings, offset in part by lower average
interest rates. The decrease in 2010 is primarily due to lower average interest rates and borrowings, partially offset by a $0.5 million loss on the early
retirement of debt recorded in connection with the refinancing of our credit facility.
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