Popeye's 2015 Annual Report Download - page 31

openings, net of closings, was $12.4 million in 2015 compared to 2014, $15.3 million in 2014 compared to 2013,
$14.9 million in 2013 compared to 2012, and $5.5 million in 2012 compared to 2011.
(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 $2.950 billion in 2015, $2.640 billion in 2014, $2.358 billion in 2013, $2.189 billion in
2012, and $1.932 billion in 2011.
(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 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 reduced rent from franchised
restaurants by $0.6 million in 2015 compared to 2014 and $0.6 million 2013 compared to 2012.
(5) Factors that impact the comparability of other expenses (income), net for the years presented include:
a. The Company incurred $0.5 million and $2.0 million in executive transition expense in 2015 and 2014, respectively.
b. In 2015, the Company recovered $0.4 million for claims filed pursuant to the Deepwater Horizon Economic and
Property Damages Settlement Program.
c. The Company recognized a $0.8 million gain from the sale of four properties to franchisees in 2014.
d. 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.
e. During 2011, the Company recognized a gain of $0.5 million on the sale of properties to a franchisee.
f. The Company recognized $0.8 million in expense for the corporate support center relocation in 2011.
g. During 2015, 2014, 2013, 2012, and 2011, net loss from disposals of fixed assets were approximately $0.1 million,
$0.2 million, $0.4 million, $0.3 million, and $0.5 million, respectively.
(6) Factors that impact the comparability of interest expense, net for the years presented include:
a. During 2015, we expensed $2.7 million in interest expense on debt compared to $1.6 million in 2014. This increase
was primarily due to a higher outstanding debt balance under the 2013 Revolving Credit Facility during 2015 and
higher effective interest rates under our credit facility after consideration of the impacts from interest rate swap
agreements.
b. During 2014, we expensed $1.6 million in interest expense on debt compared to $2.4 million in 2013. This decrease
was primarily due to the lower effective interest rate under the 2013 Revolving Credit Facility.
c. During 2015 and 2014, we reclassified $0.2 million and $0.8 million, respectively, from accumulated other
comprehensive income for derivative losses from terminated interest rate swap agreements.
d. During 2013, we expensed $0.4 million 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 Revolving Credit Facility.
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