Jack In The Box 2015 Annual Report Download - page 31

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(Losses) gains on the sale of company-operated restaurants to franchisees, net are detailed in the following table (dollars in thousands):
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Number of restaurants sold to franchisees
21
37
81
(Losses) gains on the sale of company-operated restaurants
$ (3,139)
$ (1,692)
$ 4,640
Loss on the anticipated sale of a Jack in the Box market
—
(1,856)
—
Total (losses) gains on the sale of company-operated restaurants
$ (3,139)
$ (3,548)
$ 4,640
Gains and losses are impacted by the number of restaurants sold and changes in average gains or losses recognized, which relate to specific sales and cash
flows of those restaurants. In 2015, 2014 and 2013, (losses) gains on the sale of company-operated restaurants include additional gains of $1.5 million, $2.1
million and $3.3 million, respectively, recognized upon the extension of the underlying franchise and lease agreements related to Jack in the Box restaurants
sold in previous years. In 2014, the loss on the anticipated sale of a Jack in the Box market relates to 25 company-operated restaurants of which we sold 20,
and closed the remaining five in the second quarter of fiscal 2015. For additional detail, refer to Note 3, Summary of Refranchisings, Franchisee Development
and Acquisitions, of the notes to the consolidated financial statements.
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Interest expense, net is comprised of the following (in thousands):
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Interest expense
$ 19,180
$ 16,531
$ 16,471
Interest income
(377)
(853)
(1,220)
Interest expense, net
$ 18,803
$ 15,678
$ 15,251
Interest expense, net increased $3.1 million in 2015 as compared to a year ago due to higher average borrowings, partially offset by a charge in 2014 to
write-off deferred financing fees in connection with the refinancing of our credit facility. In 2014, interest expense, net increased $0.4 million compared with
the respective prior year due to a decrease in interest income attributable to a decline in notes receivable related to refranchising transactions. Both 2014 and
2013 include the write-off of deferred finance fees of $0.8 million and $0.9 million, respectively, recorded in connection with refinancing of our credit
facility in each year.
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The income tax provisions reflect effective tax rates of 36.9%, 35.3% and 32.8% of pretax earnings from continuing operations in 2015, 2014 and 2013,
respectively. In 2015, the major component of the year-over-year change in tax rates was a decrease in the market performance of insurance products used to
fund certain non-qualified retirement plans which are excluded from taxable income. The tax rate increase in 2014 versus 2013 is primarily related to the
expiration of the Work Opportunity Tax Credit offset by the release of a valuation allowance on California tax credits due to a change in state tax law, and a
decrease in the market performance of insurance products used to fund certain non-qualified retirement plans which are excluded from taxable income.
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Earnings from continuing operations were $112.6 million, or $2.95 per diluted share, in 2015; $94.8 million, or $2.26 per diluted share, in 2014; and
$82.6 million, or $1.84 per diluted share, in 2013.
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The losses from our distribution business and the 2013 Qdoba Closures have been reported as discontinued operations for all periods presented. Refer to
Note 2, Discontinued Operations, in the notes to our consolidated financial statements for further information regarding our discontinued operations.
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