Jack In The Box 2015 Annual Report Download - page 30

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In 2015 and 2014, the changes in pension and postretirement benefits primarily relate to changes in the discount rates as compared with the respective
prior year.
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 a negative impact of $0.6 million in 2015, and a positive
impact of $3.2 million in 2014 and $4.6 million in 2013.
In 2015 and 2014, the higher levels of incentive compensation reflects improvements in the Company’s results compared with performance goals. In
2015, higher incentive compensation also relates to an increase in share-based compensation due to our annual grant of nonvested stock units which vest
over five years. As this is our fifth year of offering such grants, we are expensing one additional year of grants compared to a year ago. In 2014, a decrease in
share based compensation due to accelerated vesting for retiree eligible executives in 2013 partially offset the increases in other forms of incentive
compensation.
In 2015, pre-opening costs increased due to an increase in the number of Qdoba restaurants under construction as compared to a year ago, as well as higher
pre-opening labor costs. In 2014, pre-opening costs decreased primarily due to a decline in the number of new Jack in the Box company restaurant openings
as compared to the prior year.
Insurance costs in 2015 decreased primarily due to an unfavorable $1.0 million general liability legal settlement recognized in the prior year as well as
favorable group insurance trends in the current year. In 2014, costs were higher primarily related to aforementioned legal settlement.
Advertising costs in 2015 and 2014 were impacted by our refranchising strategy at Jack in the Box, which resulted in a decrease in company-operated
restaurants and the related overhead expenses to manage and support those restaurants, including advertising costs, which are primarily contributions to our
marketing funds determined as a percentage of gross restaurant sales. As such, in 2015 and 2014, advertising costs decreased at Jack in the Box and were
partially offset in both years by same-store sales growth at Jack in the Box and Qdoba restaurants, and in 2014 higher advertising expenses at Qdoba.
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The following table presents the components of impairment and other charges, net in each fiscal year (in thousands):



Accelerated depreciation
$ 6,260
$ 1,202
$ 2,554
Costs of closed restaurants (primarily lease obligations) and other
3,592
2,841
2,469
Losses on the disposition of property and equipment, net
1,319
1,674
1,091
Restaurant impairment charges
557
570
3,874
Restructuring costs
29
8,621
3,451
$ 11,757
$ 14,908
$ 13,439
Impairment and other charges, net decreased $3.2 million in 2015 versus 2014 due to a decrease in restructuring activities, partially offset by an increase
in accelerated depreciation recognized in connection with various initiatives at our company-operated Jack in the Box restaurants. In 2015, accelerated
depreciation includes $3.6 million recognized in connection with beverage equipment upgrades and $1.5 million related to projects designed to upgrade
outdoor lighting and certain technology at our restaurants.
In 2014, impairment and other charges, net increased $1.5 million in 2014 versus 2013 due primarily to an increase in restructuring costs incurred in
connection with the comprehensive review of our organizational structure, partially offset by declines in restaurant impairment and accelerated depreciation
charges. Restructuring costs increased $5.2 million due to a charge related to a restaurant software asset we no longer plan to place in service. Restaurant
impairment charges decreased $3.3 million due to charges in 2013 to write down the carrying value underperforming Jack in the Box restaurants and Jack in
the Box restaurants we closed. Accelerated depreciation decreased $1.4 million due to a decrease in restaurant enhancement activity in 2014.
Losses on the disposition of property and equipment, net included income of $0.9 million in 2015 and $2.8 million in 2013 from the resolution of
eminent domain matters involving Jack in the Box restaurants. For additional detail, refer to Note 9, Impairment and Other Charges, Net, of the notes to the
consolidated financial statements.
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