JMBA Jamba, Inc. (delisted)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with our financial statements and related notes included elsewhere in this report. Except for historical information, the discussion in this report contains certain forward-looking statements that involve risks and uncertainties. We have based these forward-looking statements on our current expectations and assumptions about future events. In some cases, you can identify forward-looking statements by terminology, such as “may,” “should,” “could,” “predict,” “potential,” “continue,” “expect,” “anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” “forecast” and similar expressions (or the negative of such expressions). Forward-looking statements include, but are not limited to, statements concerning projected new store openings, revenue growth rates, and capital expenditures. Forward-looking statements are based on our beliefs as well as assumptions based on information currently available to us, including financial and operational information, the volatility of our stock price, and current competitive conditions. As a result, these statements are subject to various risks and uncertainties. For a discussion of material risks and uncertainties that the Company faces, see the discussion titled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 29, 2015.

JAMBA, INC. OVERVIEW

Jamba, Inc. through its wholly-owned subsidiary, Jamba Juice Company, is a healthy, active lifestyle brand with a robust global business driven by a portfolio of franchised and company-owned Jamba Juice ^® stores and licensed JambaGO ^® and Jamba Juice Express™ formats. The Jamba ^® brand includes innovative product platforms and both licensed and company driven consumer packaged goods. We are a leading restaurant retailer of “better-for-you” specialty beverage and food offerings which include great tasting, whole fruit smoothies, fresh squeezed juices and juice blends, Energy Bowls™, and a variety of food items including, hot oatmeal, breakfast wraps, sandwiches, Artisan Flatbreads™, baked goods, and snacks. Jamba Juice Company continues to expand the Jamba brand by direct selling of CPG products, and by licensing its trademarks for CPG products sold through retail channels such as grocery stores, warehouse clubs, and convenience stores.

Jamba, Inc. was incorporated in January 2005, and went public through an initial public offering later that year. In November 2006, the Company completed its acquisition of Jamba Juice Company, which first began operations in 1990. As of June 28, 2016, there were 885 Jamba Juice stores globally, consisting of 68 Company Stores, 751 Franchise Stores in the United States, and 66 International Stores.

All references to store counts, including data for new store openings, are reported net of related store closures, unless otherwise noted.

EXECUTIVE OVERVIEW

Key Overall Strategies      

During the second quarter we announced the planned relocation of the Jamba Support Center from Emeryville, California to Frisco, Texas, currently scheduled to occur at the end of the fiscal year. The move will provide several advantages to Jamba, including lower overhead costs, access to a strong pool of restaurant talent, and a more central location to our franchisees as we continue to build markets in the eastern U.S.. The move and recent transition in leadership provide a clear opportunity to reset the organization with unwavering focus on our five key strategies:

2016 Second Quarter Financial Summary

Fiscal 2016 Second Quarter Business Highlights

Build an Iconic Brand

During the second quarter, our brand-building efforts included the introduction of innovative smoothie, juice and bowl options that have been well received by our guests. Limited time only products featuring refreshing tropical flavors and seasonal fruit are two of the platforms we leveraged in order to drive customers into our stores. We also amplified our local marketing efforts, focusing on both established and emerging markets with strong activation with local schools, businesses and community groups. We improved our consumer messaging through our “Make it Real” campaign that reminds and educates guests that our products are hand-crafted and made from real fruits, vegetables, and other good stuff. Also in the second quarter, we gave consumers more reasons to celebrate Cinco de Mayo and the Summer Solstice with promotional offers designed to drive traffic.

We continued to maintain our heritage as a strong supporter of the communities we serve. Through our corporate social responsibility initiatives under the banner of “Team Up For a Healthy Whirl’d”, we increased our focus in local markets on fundraising, hiring, local sponsorships and supporting youth sports. In partnership with DonorsChoose.org, we provided funding for school athletic equipment in several Jamba markets, and we ran our annual garden grant program through our association with KidsGardening.

To further enhance the customer experience in our stores, we expanded programs with strategic partners in the digital and social media space, including Spendgo, Fishbowl, Google, and others. Membership in our Jamba Insider Rewards (“JIR”) program continues to add to the more than three million existing loyalty members.

Establish a Customer and Store-Centric Operating Environment

During the second quarter, we continued our transition toward becoming a top tier franchisor by improving our support to our stores and to our customers. During our 2016 Franchise Leadership Conference held in March, we emphasized that focus with all of our partners and team members and reinforce our commitment to a store-centric operating philosophy. In addition to our great-tasting products, we have an ongoing mission to provide customers with an enhanced in-store experience. Also, in the second quarter, we successfully executed an update to the Jamba Juice mobile application (“app”) that was launched in the second half of 2015. Among the new options, Jamba guests now have access to regionalized menus and can customize smoothies, juices and bowls as part of their enhanced order ahead experience.

Driving Sales and Transactions through Innovation

Our commitment to the ongoing development of better-for-you beverage and food options for consumers continues to drive traffic into our stores with the introduction in the second quarter of our new, refreshing “Island Getaway Smoothies”, Gotta Guava™ Smoothie and tropical Sunburst™ Smoothie. We also introduced our line of Protein Smoothies in our California stores to satisfy customers’ needs for replenishment after workouts and for meal replacements and Strawberry Fruit Refresher juice for healthy summer refreshment. Protein Smoothies will launch in all remaining stores in August.

Jamba continues to be the number one smoothie brand in the country. In addition, our made-to-order, fresh fruit and vegetable juice platform is now available in over 550 locations, making Jamba the leading retailer of fresh-squeezed, made-to-order juices. This platform is comprised of made-to-order juices and smoothies blended with fresh, whole fruits and vegetables like kale, apples, cucumbers, ginger and chia seeds. We have also expanded our line of made-to-order bowls to include a Pitaya Energy offering, which are now available in stores nationwide. Jamba Energy Bowls, served in convenient portable servings, are a nutritious blend of real, whole fruit and soymilk or fresh Greek yogurt, topped with an assortment of dry toppings and fresh fruits.

Our product development will continue to be guided by our commitment to providing consumers with fresh, nutritional ingredients, great-tasting beverages and food, at affordable prices. We are confident that our pipeline of new product remains strong for the remainder of 2016 and beyond. We expect our new products will continue to drive new and existing customers into our stores and will help franchise profitability through increased transactions. Our on-trend, better-for-you positioning continues to make Jamba a leading healthy lifestyle brand.

Improve Store Profitability through Simplification

With the completion of our move to a franchise business model, we are highly focused on improving franchisee profitability and 4-wall store margins. During the second quarter of 2016, we continued to operationalize several key initiatives that were launched in 2015, which make a significant positive impact on costs of goods and labor. Continuous improvements in speed of service are helping to offset minimum wage increases to help manage labor costs and improve customer satisfaction. Our supply chain optimization efforts have significantly aided in offsetting the inflationary impact of commodity price increases.

In addition, during the second quarter of 2016, we continued with the rollout of our new and improved BlendTec blenders. The new blender technology improves the quality of our finished products, improves the speed of service and reduces the noise levels within our stores. This rollout will continue across the system for the balance of 2016.

Expand Our Global Footprint

As of June 28, 2016, there were 885 Jamba Juice ^® stores globally, represented by 68 Company Stores and 751 Franchise Stores, of which 43 were Jamba Juice Express™ in the United States, and 66 International Stores. The system is comprised of approximately 92% Franchise and International Store locations and 8% Company Store locations. As of June 28, 2016, we had approximately 2,000 JambaGO ^® units in operation nationwide.

In July 2016 we celebrated the grand opening of the Jamba Juice Innovation Bar at our newly remodeled Pasadena, CA location. The one-of-a-kind concept store will feature innovative beverage and food offerings unique to the space and serve as a learning lab where we can create and test new beverage and food concepts.

A primary growth driver of our enterprise will be global new unit development. During the quarter, we opened 10 U.S. locations, including one co-branded pilot location with Bruegger’s and one Jamba Juice Express™ unit. At the end of the second quarter of 2016, we had international master development agreements with partners in Indonesia, Thailand, South Korea, the Philippines, Mexico and the countries of the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates). During the second quarter, we opened two new locations in the U.A.E. and South Korea. We expect that our new international franchisees in Indonesia and Thailand will open stores before the end of fiscal 2016.

In July 2016 we entered into a development agreement with an industry franchising leader to develop 20 locations in the greater Detroit market. The agreement includes an accelerated growth plan over the first three years of the eight year agreement.

Our shift to an asset-light business model means the Jamba system is now comprised of greater than 90% franchise-locations, up from 70% in 2014 following the completion of our refranchising initiatives in 2015. This transition in our core business model will continue to facilitate a more streamlined cost structure enabling faster execution and an enhanced focus on our franchisees and our growth initiatives.

Support Center Relocation

On May 4, 2016, we announced the relocation of our corporate headquarters from Emeryville, California to Frisco, Texas, a suburb of Dallas. We expect to complete the relocation in the next six months. The move is intended to, among other things, reduce costs, attract and retain talent and provide a more central location for our market expansion plans. In connection with this relocation, we expect to incur charges of approximately $7.8 million, associated with personnel relocation, employee attrition, retention, severance and replacement, office relocation and other costs. These charges are expected to be incurred from the second quarter of fiscal year 2016 through the first quarter of 2017.

On July 19, 2016, we announced the hiring of our Chief Marketing Officer, Rachel Phillips-Luther who will start in August 2016. With the hire of Rachel Phillips-Luther, our Executive Team will be fully in place for our relocation to Frisco, Texas.

Total revenue is comprised of revenue from Company Stores, royalties and fees from Franchise Stores in the U.S. and from International Stores, income from JambaGO ^® locations, license income from sales of Jamba-branded CPG products and direct sales of CPG products. Total revenue for the 13-week period ended June 28, 2016 was $21.5 million, a decrease of $32.6 million, or 60.2%, compared to $54.1 million for the 13-week period ended June 30, 2015. The decrease in total revenue was primarily due to a decrease in Company Stores for the quarter compared to the prior year. For the quarter ended June 28, 2016 we had 68 Company Stores compared to 206 in the prior year.

Company Store revenue

Company Store revenue for the 13-week period ended June 28, 2016 was $13.9 million, a decrease of $34.5 million or 71.3%, compared to Company Store revenue of $48.4 million for the 13-week period ended June 30, 2015. The decrease in Company Store revenue was primarily due to a decrease in the number of Company Stores primarily as a result of our refranchising activities, partially offset by an increase in Company Store comparable sales as illustrated by the following table:

Company Store comparable sales increased $0.7 million for the 13-week period ended June 28, 2016, or 5.7%, attributable to an increase of 4.3% in average check and an increase in transaction count of 1.4% as compared to the same period in the prior year. Company Store comparable sales represents the change in year-over-year sales for all Company Stores opened for at least a full fiscal year. As of June 28, 2016, 98.5% of our Company Stores had been open for at least one full year.

Franchise and other revenue

Franchise and other revenue was $7.7 million, an increase of $1.9 million or 33.0% for the 13-week period ended June 28, 2016 compared to $5.8 million for the 13-week period ended June 30, 2015. The increase was primarily due to the increase in royalties associated with the net increase in the number of Franchise and International Stores in addition to the Franchise Store comparable store sales increase of 4.0%.

The aggregate number of Franchise and International Stores as of June 28, 2016 and June 30, 2015 was 817 and 669, respectively.

Cost of Sales

Cost of sales is mostly comprised of fruit, dairy, and other products used to make smoothies and juices, paper products, and delivery fees at Company Stores. As a percentage of Company Store revenue, cost of sales slightly increased to 23.9% for the 13-week period ended June 28, 2016, compared to 23.7% for the 13-week period ended June 30, 2015. The increase in cost of sales as a percentage of Company Store revenue was primarily due to higher product mix shift related to the expanded bowl menu (approximately 0.9%) offset by a decrease related to price increases taken in 2015 (0.7%). Cost of sales for the 13-week period ended June 28, 2016 was $3.3 million, a decrease of $8.2 million, or 71.1%, compared to $11.5 million for the 13-week period ended June 30, 2015, primarily related to the lower Company Store base as a result of refranchising initiatives.

Labor

Labor costs are comprised of store management salaries and bonuses, hourly team member payroll, training costs and other associated fringe benefits. As a percentage of Company Store revenue, labor costs were 33.6% for the 13-week period ended June 28, 2016 compared to 30.8% for the 13-week period ended June 30, 2015. The increase was primarily attributable to an increase in California wage rate effective January 1, 2016 (approximately 1.7%) along with a shift in the store portfolio mix, resulting from refranchising activities, to Chicago stores with a higher labor percentage driven by lower sales volume (approximately 0.5%), and higher compensation incentive payout and fringe benefits (approximately 1.9%). This increase was partially offset by improved efficiencies in California stores, primarily driven by leverage on increased same-store sales (approximately 1.3%). Labor costs for the 13-week period ended June 28, 2016 were $4.7 million, a decrease of $10.2 million, or 68.6%, compared to $14.9 million for the 13-week period ended June 30, 2015, which is primarily due to the decrease in number of Company Stores as a result of our refranchising activities.

Occupancy

Occupancy costs include both fixed and variable portions of rent, common area maintenance charges, property taxes, licenses and property insurance for all Company Store locations. As a percentage of Company Store revenue, occupancy costs increased to 13.7% for the 13-week period ended June 28, 2016, compared to 12.7% for the 13-week period ended June 30, 2015. The increase in occupancy costs as a percentage of Company Store revenue was primarily due to the refranchising of Company Stores that carried a lower rent as a percentage of Company Store revenue. Occupancy costs for the 13-week period ended June 28, 2016 were $1.9 million, a decrease of $4.2 million, or 69.0%, compared to $6.1 million for the 13-week period ended June 30, 2015, which is primarily due to the decrease in number of Company Stores as a result of our refranchising activities.

Store Operating

Store operating expenses consist primarily of various store-level costs such as utilities, marketing, repairs and maintenance, credit card fees and other store operating expenses. As a percentage of Company Store revenue, total store operating expenses decreased to 16.4% for the 13-week period ended June 28, 2016, compared to 16.7% for the 13-week period ended June 30, 2015. The decrease in total store operating expenses as a percentage of Company Store revenue was primarily due to lower local store marketing costs as a result of timing differences (approximately 0.5%), lower donations (approximately 0.3%) and lower utilities (approximately 0.2%) partially offset by increased credit card usage and bank charges (approximately 0.7%). Store operating expenses for the 13-week period ended June 28, 2016 were $2.3 million, a decrease of $5.8 million or 71.8%, compared to $8.1 million for the 13-week period ended June 30, 2015.

Depreciation and Amortization

Depreciation and amortization expenses include the depreciation of fixed assets and the amortization of intangible assets. As a percentage of total revenue, depreciation and amortization increased to 7.8% for the 13-week period ended June 28, 2016, compared to 2.5% for the 13-week period ended June 30, 2015. The increase in depreciation and amortization as a percentage of total revenue was primarily due to the discontinuation of depreciation relating to stores in assets held for sale prior to their refranchising in the prior year and an increase in depreciation relating to capitalized information technology corporate programs and JambaGO ^® equipment in the current year. Depreciation and amortization for the 13-week period ended June 28, 2016 was $1.7 million, an increase of $0.3 million, or 24.6%, compared to $1.3 million for the 13-week period ended June 30, 2015.

General and Administrative

General and administrative (G&A) expenses include costs associated with our corporate headquarters (in Emeryville, CA & Frisco, TX), field supervision, performance related incentives, outside and contract services, accounting and legal fees, travel and travel-related expenses, share-based compensation and other G&A expenses. Also included in G&A are non-recurring costs related to the move of the support center to Frisco, Texas, settlement, legal, and other transitional charges. Total G&A expenses for the 13-week period ended June 28, 2016 were $9.4 million, an increase of $1.0 million, or 11.8%, compared to $8.4 million for the 13-week period ended June 30, 2015. The increase in total G&A expenses was primarily due to transition costs relating to the relocation of the headquarters to Frisco, Texas. Payroll & payroll related expenses increased due to severance and retention bonuses (approximately $1.1 million) and professional fees associated with litigation and temporary help (approximately $0.5 million) offset by a decrease in share-based compensation expense (approximately $0.6 million).

Loss (gain) on Disposal of Assets

Loss or (gain) on disposal of assets includes losses from disposal of assets and gains from the refranchising of Company Stores and sales of related furniture, fixtures and equipment. For the 13-week period ended June 28, 2016, loss on disposal of assets was $0.2 million compared to a $4.5 million gain for the 13-week period ended June 30, 2015, a change of $4.7 million. The change was primarily due to the gain on refranchising of Company Stores in the second quarter of 2015 relating to our refranchising initiative. The refranchising initiative was completed in the fourth quarter of fiscal 2015.

Store Pre-Opening

For the 13-week period ended June 28, 2016, store pre-opening expense was $0.3 million compared to $0.2 million for the 13-week period ended June 30, 2015, an increase of approximately $0.2 million. The increase was primarily due to the rent associated with a store closed for remodeling (approximately $0.2 million).

Impairment of Long-Lived Assets

For the 13-week period ended June 28, 2016 impairment of long-lived assets was $0.1 million compared to $0.3 million for the 13-week period ended June 30, 2015.

Store Lease Termination and Closure

For the 13-week period ended June 28, 2016, store lease termination and closure costs were a reversal of $0.1 million compared to less than $0.1 million for the 13-week period ended June 30, 2015.

Other Operating, Net

Other operating, net consists primarily of income from jambacard breakage, jambacard-related fees, franchise expense, international expense, gain/loss on investments, bad debt expense, and CPG and JambaGO ^® activities. For the 13-week period ended June 28, 2016, other operating, net was $0.2 million compared to $1.3 million for the 13-week period ended June 30, 2015. Changes in the components of other operating, net include a decrease in bad debt (approximately $0.8 million), increase in franchise sublease income due to increase in subleased franchise stores (approximately $0.2 million), a decrease in CPG and JambaGO ^® direct expense (approximately $0.1 million), and an increase in other income (approximately $0.2 million), partially offset by an increase in jambacard expense (approximately $0.1 million) and an increase in franchise other expense (approximately $0.1 million).

Income Tax Expense

We have recorded income tax benefit and expense for the 13-week periods ended June 28, 2016 and June 30, 2015, respectively. Our effective income tax rates were 2.5% and 1.0% for the 13-week periods ended June 28, 2016 and June 30, 2015, respectively. For the 13-week periods ended June 28, 2016 and June 30, 2015, the effective tax rates were primarily affected by pre-tax loss, foreign withholding and the U.S. alternative minimum taxes in the respective periods.

Total revenue is comprised of revenue from Company Stores, royalties and fees from Franchise Stores in the U.S. and from International Stores, income from JambaGO ^® locations, license income from sales of Jamba-branded CPG products and direct sales of CPG products. Total revenue for the 26-week period ended June 28, 2016 was $40.3 million, a decrease of $66.3 million, or 62.2%, compared to $106.6 million for the 26-week period ended June 30, 2015. The decrease in total revenue was primarily due to a decrease in Company Stores for the year compared to the prior year. As of June 28, 2016 we had 68 Company Stores compared to 206 in the prior year.

Company Store revenue

Company Store revenue for the 26-week period ended June 28, 2016 was $25.8 million, a decrease of $70.3 million or 73.1%, compared to Company Store revenue of $96.1 million for the 26-week period ended June 30, 2015. The decrease in Company Store revenue was primarily due to a decrease in the number of Company Stores primarily as a result of our refranchising activities, partially offset by an increase in Company Store comparable sales as illustrated by the following table:

Company Store comparable sales increased $0.8 million for the 26-week period ended June 28, 2016, or 3.0%, attributable to an increase of 4.6% in average check offset by a decrease in transaction count of (1.6)% as compared to the same period in the prior year. Company Store comparable sales represents the change in year-over-year sales for all Company Stores opened for at least a full fiscal year. As of June 28, 2016, 98.5% of our Company Stores had been open for at least one full year.

Franchise and other revenue

Franchise and other revenue was $14.5 million, an increase of $3.9 million or 37.2% for the 26-week period ended June 28, 2016 compared to $10.5 million for the 26-week period ended June 30, 2015. The increase was primarily due to the increase in royalties associated with the net increase in the number of Franchise and International Stores in addition to the Franchise Store comparable store sales increase of 1.1%.

The aggregate number of Franchise and International Stores as of June 28, 2016 and June 30, 2015 was 817 and 669, respectively.

Cost of Sales

Cost of sales is mostly comprised of fruit, dairy, and other products used to make smoothies and juices, paper products, and delivery fees at Company Stores. As a percentage of Company Store revenue, cost of sales decreased to 24.3% for the 26-week period ended June 28, 2016, compared to 24.9% for the 26-week period ended June 30, 2015. The decrease in cost of sales as a percentage of Company Store revenue was primarily due to retail price increase (approximately 0.8%) combined with lower discounting (approximately 0.1%), partially offset by higher product mix shift related to the expanded bowl offerings (approximately 0.4%). Cost of sales for the 26-week period ended June 28, 2016 was $6.3 million, a decrease of $17.6 million, or 73.7%, compared to $23.9 million for the 26-week period ended June 30, 2015, primarily related to the lower Company Store base as a result of refranchising initiatives.

Labor

Labor costs are comprised of store management salaries and bonuses, hourly team member payroll, training costs and other associated fringe benefits. As a percentage of Company Store revenue, labor costs were 34.2% for the 26-week period ended June 28, 2016 compared to 32.2% for the 26-week period ended June 30, 2015. The increase was primarily attributable to an increase in California wage rate effective January 1, 2016 (approximately 1.5%) along with a shift in the store portfolio mix, resulting from refranchising activities, to Chicago stores with a higher labor percentage driven by lower sales volume (approximately 0.5%), and higher compensation incentive payout and fringe benefits (approximately 0.9%). This increase was partially offset by improved efficiencies in California stores, primarily driven by leverage on increased same-store sales (approximately 0.8%). Labor costs for the 26-week period ended June 28, 2016 were $8.8 million, a decrease of $22.1 million, or 71.5%, compared to $31.0 million for the 26-week period ended June 30, 2015, which is primarily due to the decrease in number of Company Stores as a result of our refranchising activities.

Occupancy

Occupancy costs include both fixed and variable portions of rent, common area maintenance charges, property taxes, licenses and property insurance for all Company Store locations. As a percentage of Company Store revenue, occupancy costs increased to 15.2% for the 26-week period ended June 28, 2016, compared to 13.5% for the 26-week period ended June 30, 2015. The increase in occupancy costs as a percentage of Company Store revenue was primarily due to the refranchising of Company Stores that carried a lower rent as a percentage of Company Store revenue. Occupancy costs for the 26-week period ended June 28, 2016 were $3.9 million, a decrease of $9.0 million, or 69.6%, compared to $13.0 million for the 26-week period ended June 30, 2015, which is primarily due to the decrease in number of Company Stores as a result of our refranchising activities.

Store Operating

Store operating expenses consist primarily of various store-level costs such as utilities, marketing, repairs and maintenance, credit card fees and other store operating expenses. As a percentage of Company Store revenue, total store operating expenses increased to 17.9% for the 26-week period ended June 28, 2016, compared to16.7% for the 26-week period ended June 30, 2015. The increase in total store operating expenses as a percentage of Company Store revenue was primarily due to higher utility costs (approximately 0.5%) and higher software/hardware expenses (approximately 0.6%). Total store operating expenses for the 26-week period ended June 28, 2016 were $4.6 million, a decrease of $11.5 million, or 71.2%, compared to $16.1 million for the 26-week period ended June 30, 2015.

Depreciation and Amortization

Depreciation and amortization expenses include the depreciation of fixed assets and the amortization of intangible assets. As a percentage of total revenue, depreciation and amortization increased to 7.9% for the 26-week period ended June 28, 2016, compared to 3.0% for the 26-week period ended June 30, 2015. The increase in depreciation and amortization as a percentage of total revenue was primarily due to the discontinuation of depreciation relating to stores in assets held for sale prior to their refranchising in the prior year and an increase in depreciation relating to capitalized information technology corporate programs and JambaGO ^® equipment in the current year . Depreciation and amortization was $3.2 million for the 26-week periods ended June 28, 2016 and June 30, 2015. The expense remained relatively flat primarily due to lower Company Store base as a result of refranchising initiatives, offset by an increase in information technology corporate programs and JambaGO ^® equipment.

General and Administrative

General and administrative (G&A) expenses include costs associated with our corporate headquarters (in Emeryville, CA & Frisco, TX), field supervision, performance related incentives, outside and contract services, accounting and legal fees, travel and travel-related expenses, share-based compensation and other G&A expenses. Also included in G&A are non-recurring costs related to the move of the support center to Frisco, Texas, settlement, legal, and other transitional charges. Total G&A expenses for the 26-week period ended June 28, 2016 were $17.0 million, a decrease of $0.4 million, or 2.1%, compared to $17.4 million for the 26-week period ended June 30, 2015. The decrease of total G&A expenses was primarily due to a decrease in share-based compensation expense (approximately $0.9 million), and lower payroll and payroll related expenses (approximately $0.2 million), partially offset by an increase of legal and accounting fees (approximately $0.6 million) and recruiting fees (approximately $0.3 million) relating to the relocation of the headquarters to Frisco, Texas.

Loss (gain) on Disposal of Assets

Loss or (gain) on disposal of assets includes losses from disposal of assets and gains from the refranchising of Company Stores and sales of related furniture, fixtures and equipment. For the 26-week period ended June 28, 2016, loss on disposal of assets was $0.3 million compared to a $5.3 million gain for the 26-week period ended June 30, 2015, a change of $5.6 million. The change was primarily due to the gain on refranchising of Company Stores in the second quarter of 2015 relating to our refranchising initiative. The refranchising initiative was completed in the fourth quarter of fiscal 2015.

Store Pre-Opening

For the 26-week period ended June 28, 2016, store pre-opening expense was $0.7 million compared to $0.2 million for the 26-week period ended June 30, 2015, an increase of $0.5 million. The increase was primarily due to an increase in the number of Franchise stores being opened this year (approximately $0.2 million), and the rent associated with a store closed for remodeling (approximately $0.3 million).

Impairment of Long-Lived Assets

For the 26-week period ended June 28, 2016 impairment of long-lived assets was $0.1 million compared to $0.3 million for the 26-week period ended June 30, 2015.

Store Lease Termination and Closure

For the 26-week periods ended June 28, 2016, and June 30, 2015, store lease termination and closure costs was $0.1 million.

Other Operating, Net

Other operating, net consists primarily of income from jambacard breakage, jambacard-related fees, franchise expense, international expense, gain/loss on investments, bad debt expense, and CPG and JambaGO ^® activities. For the 26-week period ended June 28, 2016, other operating, net was $0.5 million compared to $2.0 million for the 26-week period ended June 30, 2015. Changes in the components of other operating, net include a decrease in bad debt (approximately $0.8 million), an increase in franchise sublease income due to increase in subleased franchise stores (approximately $0.4 million), a decrease in equity loss of an investment (approximately $0.2 million), a decrease in franchise other expense relating to one-time expenses in prior year (approximately $0.2 million), and an increase in other income (approximately $0.3 million), a decrease in franchise discount expense (approximately $0.1 million), a decrease in CPG and JambaGO ^® direct expense (approximately $0.1 million), partially offset by a decrease in jambacard breakage income (approximately $0.4 million) and an increase in jambacard expense (approximately $0.2 million).

Income Tax Expense

We have recorded income tax expense for both the 26-week periods ended June 28, 2016 and June 30, 2015, respectively. Our effective income tax rates were (1.5%) and 1.7% for the 26-week periods ended June 28, 2016 and June 30, 2015, respectively. For the 26-week periods ended June 28, 2016 and June 30, 2015, the effective tax rates were primarily affected by pre-tax loss, foreign withholding and the U.S. alternative minimum taxes in the respective periods.

KEY FINANCIAL METRICS AND NON-GAAP MEASURES

We review and discuss our operations based on both financial and non-financial metrics. Among the key financial metrics upon which management focuses is reviewing our performance based on our consolidated GAAP results, including Company Store comparable sales. We also use certain supplemental, non-GAAP financial metrics in evaluating financial results, including Franchise Store comparable sales and system-wide comparable sales.

Company Store comparable sales represents the change in year-over-year sales for all Company Stores opened for at least one full year. Franchise Store comparable sales, a non-GAAP financial measure, represents the change in year-over-year sales for all Franchise Stores opened for at least one full year, as reported by franchisees and excludes International Stores. System-wide comparable store sales, a non-GAAP financial measure, represents the change in year-over-year sales for all Company and Franchise Stores opened for at least one full year and is based on sales by both company-owned and domestic franchise-operated stores, as reported by franchisees, which are in the store base. System-wide comparable store sales do not include International Stores, JambaGO ^® units and Jamba Juice Express™. Comparable store sales exclude closed locations.

We review the increase or decrease in Company Store comparable sales, Franchise Store comparable sales and system-wide comparable sales compared with the same period in the prior year to assess business trends and make certain business decisions. We believe that Franchise Store comparable sales and system-wide comparable sales data, non-GAAP financial measures, are useful in assessing the overall performance of the Jamba brand and, ultimately, the performance of the Company.

The following table sets forth operating data that do not otherwise appear in our condensed consolidated financial statements as of, and for, the 13-week and 26-week periods ended June 28, 2016 and the 13-week and 26-week periods ended June 30, 2015:

The following table sets forth certain data relating to Company Stores, Franchise and International Stores for the periods indicated:

Liquidity

As of June 28, 2016, we had cash and cash equivalents of $15.8 million compared to $19.7 million as of December 29, 2015. As of June 28, 2016 and December 29, 2015, we had no short term or long term debt. Our primary sources of liquidity are cash flows provided by operating activities.

We expect that our cash on hand and future cash flows provided by operating activities and our refranchising initiative will be sufficient to fund our working capital and general corporate needs and the non-discretionary capital expenditures for the foreseeable future. Our primary liquidity and capital requirements are for working capital and general corporate needs and the planned fiscal 2016 capital expenditures of $4 to $5 million. The use of cash to fund discretionary capital expenditures will be based on the need to conserve our capital. Additionally, we expect to incur approximately $7.8 million in personnel relocation, employee attrition, retention, severance and replacement, office relocation and other costs related to our relocation of our corporate headquarters, and approximately $2.0 million in capital costs related to the buildout of our corporate headquarters and data center migration.

On July 22, 2016, the Company’s Credit Facility with Wells Fargo expired. Since the inception of the line of credit, the Company did not borrow on the facility and utilized it primarily for collateral against letters of credit. The existing letters of credit balance of $0.4 million will be collateralized by cash. The Company is currently evaluating replacement alternatives to the Revolver Credit Facility with other banks.

The adequacy of our available funds will depend on many factors, including the macroeconomic environment, the operating performance of our Company Stores, the successful expansion of our franchise and licensing programs and the successful rollout and consumer acceptance of our new beverage and food initiatives. Given these factors, our foremost priorities for the near term continue to be preserving and generating cash sufficient to fund our liquidity needs.

Operating Activities

Net cash used in operating activities was $2.4 million for the 26-week period ended June 28, 2016, compared to $5.2 million for the 26-week period ended June 30, 2015, reflecting a net decrease in cash flows used in operating activities of $2.9 million. This decrease in cash used in operating activities was primarily due to a net decrease in cash used in operating assets and liabilities (approximately $7.4 million), partially offset by a net increase in net loss after adjustment for noncash items (approximately $4.6 million).

The amount of cash provided by our operating activities during any particular fiscal year is highly subject to variations in the seasons. The first and fourth quarters of the fiscal year encompass the winter and holiday seasons when we traditionally generate our lowest revenue, and our second and third quarters of the fiscal year encompass the warmer seasons where a significant portion of our revenue and cash flows are realized. For more information on seasonality, refer to the section below entitled “ Seasonality and Quarterly Results .” We also expect to have increased expenditures during the first part of the current fiscal year as we invest in product development and domestic expansion with the goal to have new products released and new stores open by mid-year to take advantage of the busier summer months.

Investing Activities

Net cash used in investing activities was $2.0 million for the 26-week period ended June 28, 2016, compared to net cash provided by investing activities of $10.1 million for the 26-week period ended June 30, 2015. The $12.1 million change in net cash used in investing activities during the 26-week period ended June 28, 2016 was primarily due to a decrease in proceeds from disposal of fixed assets (approximately $12.2 million) due to refranchising activity that occurred in the first half of fiscal year 2015.

In fiscal 2016, we expect capital expenditures to be approximately $4 to $5 million depending on our liquidity needs, which includes store refreshes and redesigns to facilitate fresh-squeezed juice and whole food nutrition offerings in the Chicago market, investing in improvements to our technology infrastructure as well as maintenance capital.

Financing Activities

Net cash provided by financing activities was $0.4 million for the 26-week period ended June 28, 2016, compared to net cash used in financing activities of $8.7 million for the 26-week period ended June 30, 2015. The $9.1 million change in net cash provided by financing activities was primarily due to the repurchase of the shares of the Company's common stock (approximately $9.8 million) under the stock repurchase plan approved by our Board of Directors in 2014 that occurred in the second quarter of fiscal 2015, partially offset by a decrease in receipts from our stock issuance plans, including from the exercise of stock options (approximately $0.8 million).

Contractual Obligations

There have been no significant changes to our contractual obligations table as disclosed in our Annual Report on Form 10-K for the year ended December 29, 2015.

COMMODITY PRICES, AVAILABILITY AND GENERAL RISK CONDITIONS

We contract for significant amounts of individually quick frozen fruit, fruit concentrate and dairy products to support the needs of both our Company Stores and Franchise Stores. The price and availability of these commodities directly impact our results of operations and can be expected to impact our future results of operations.

SEASONALITY AND QUARTERLY RESULTS

Our business is subject to seasonal fluctuations. We expect to realize significant portions of our revenue during the second and third quarters of the fiscal year, which align with the warmer summer season. In addition, quarterly results are affected by the timing of the opening of new stores and weather conditions. However, geographic diversification of our store locations may conceal or diminish the financial statement impact of such seasonal influences. Because of the seasonality of our business, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year or any subsequent quarter.  

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to adopt accounting policies and make significant judgments and estimates to develop amounts reflected and disclosed in the financial statements. In many cases, there are alternative policies or estimation techniques that could be used. We maintain a process to review the application of our accounting policies and to evaluate the appropriateness of the many estimates that we are required to make in order to prepare the financial statements. However, even under optimal circumstances, estimates routinely require adjustment based on changing circumstances and the receipt of new or better information. There have been no significant changes to the policies and estimates as discussed in our Annual Report on Form 10-K for the year ended December 29, 2015.

Recent Accounting Pronouncements

See Recent Accounting Pronouncements section of Note 2 to our Notes to Condensed Consolidated Financial Statements for information about new accounting standards.