Interest expense, net was $0.9 million compared to $0.9 million last year.
Income tax expense was $3.9 million at an effective tax rate of 37.1%, compared to an effective tax rate of 36.8% in the prior year. The effective tax rates differ from statutory rates due to tax credits and permanent differences between reported income before income taxes and taxable income for tax purposes.
Reported net income grew to $6.6 million, or $0.27 per diluted share, compared to $5.5 million, or $0.22 per diluted share, in 2011. Adjusted earnings per diluted share were $0.27 compared to $0.23 last year. This improvement was primarily due to stronger same-store sales, higher average new restaurant sales and stronger restaurant operating profit. Adjusted earnings per diluted share is a supplemental non-GAAP measure of performance. See the heading entitled “Management’s Use of Non-GAAP Financial Measures.”
Free Cash Flow through the second quarter was $18.2 million which included $0.1 million of other expense compared to $14.7 million in 2011 which included $0.3 million of other income. Free cash flow is a supplemental non-GAAP measure of performance. See the heading entitled “Management’s Use of Non-GAAP Financial Measures.”
During the second quarter, the Company repurchased approximately 269,000 shares of its common stock for approximately $5.3 million. Through August 15, 2012, the Company has repurchased approximately 600,000 shares of common stock for approximately $11.5 million. These purchases were made in accordance with the Company’s previous share repurchase guidance of $15.0 million for 2012. Approximately $5.2 million remains under the Company’s current share repurchase program.
The Popeyes system opened 25 new restaurants in the second quarter, which included 13 domestic and 12 international restaurants, compared to 30 openings last year. The Company permanently closed 16 restaurants, resulting in 9 net openings compared to 5 net openings in the second quarter of 2011. The 16 closures in the second quarter included 1 domestic and 15 international restaurants.