Popeye's 2014 Annual Report Download - page 33

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15
of $15.3 million in 2014 compared to 2013, $14.9 million in 2013 compared to 2012, $5.5 million in 2012 compared
to 2011, and $1.3 million in 2011 compared to 2010.
(3) Factors that impact franchise royalties and fees include:
(a) Franchise revenues are principally composed of royalty payments from franchisees that are are generally 5% of franchise
net restaurant sales. While franchise sales are not recorded as revenue by the Company, management believes they are
important in understanding the Company’s financial performance because these sales are indicative of the Company’s
health, given the Company’s strategic focus on growing its overall business through franchising. Total franchisee sales
were $2.640 billion in 2014, $2.358 billion in 2013, $2.189 billion in 2012, $1.932 billion in 2011, and $1.811 billion
in 2010.
(b) In 2012, the Company completed an acquisition of twenty-seven restaurants in Minnesota and California. The restaurants
were in the trade image of another quick service restaurant concept. Twenty-six of the acquired restaurants were
converted into the Popeyes Louisiana Kitchen image and leased to Popeyes franchisees to operate under our standard
franchise agreement. The remaining restaurant property was sold in 2013. Non-recurring franchise fees associated
with twenty-four conversions completed in 2013 were $5.5 million compared to $0.5 million for two conversions
completed in 2012.
(4) Rent from franchised restaurants are composed of rents and percentage rents associated with properties leased or sub-leased
to franchisees. Percentage rents earned from twenty-six restaurant properties converted and franchised in Minnesota and
California increased rent from franchised restaurants $0.7 million in 2014 compared to 2013 and $1.9 million in 2013
compared to 2012. In the 4th quarter of 2014, the Company recognized $0.9 million in lease termination fees from the sale
of four restaurants leased to franchisees. The assignment of leases to franchisees and lease terminations in 2013 and 2012
reduced rent from franchised restaurants by $0.6 million in 2013 compared to 2012.
(5) Factors that impact the comparability of other expenses (income), net for the years presented include:
a. During 2014, the Company incurred $2.0 million in executive transition expense.
b. The Company recognized a $0.8 million gain from the sale of four properties to franchisees for approximately $2.2
million in 2014.
c. During 2012, other income includes a $0.3 million gain on the sale of real estate to a franchisee and the recognition of
$0.5 million in deferred gains related to seven properties formerly leased to a franchisee.
d. During 2011, the Company sold two properties to a franchisee for approximately $0.7 million and recognized a gain
of $0.5 million.
e. The Company recognized $0.8 million in expense for the corporate support center relocation in 2011.
f. During 2014, 2013, 2012, 2011, and 2010 disposals of fixed assets were approximately $0.2 million, $0.4 million, $0.3
million, $0.5 million, and $0.7 million, respectively.
(6) Factors that impact the comparability of interest expense, net for the years presented include:
a. During 2014, we expensed $1.6 million in interest expense on debt compared to $2.4 million in 2013. This decrease
is primarily due to the lower effective interest rate under the 2013 Credit Facility.
b. During 2014, we expensed $0.8 million for derivative losses on terminated interest rate swap agreements classified in
accumulated other comprehensive loss.
c. During 2013, we expensed $0.4 million as a component of interest expense, net in connection with the re-financing of
our 2013 Credit Facility. See Note 9 to our Consolidated Financial Statements included in this Form 10-K for details
on the 2013 Credit Facility.
d. In 2011, interest from term loans decreased $3.2 million compared to 2010 primarily due to lower interest rates from
the Credit Facility refinanced in 2010. See Note 9 to our Consolidated Financial Statements included in this Form 10-
K for details on the 2010 Credit Facility.
e. During 2010 we expensed $0.6 million as a component of Interest expense, net in connection with the extinguishment
of the 2005 Credit Facility term loan.