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Impairment of Long-Lived Assets, Store Closings, Discontinued Operations and Property Held for Sale
 12 Months Ended
Aug. 25, 2021
Discontinued Operations and Disposal Groups [Abstract]  
Impairment of Long-Lived Assets, Store Closings, Discontinued Operations and Property Held for Sale Impairment of Long-Lived Assets, Store Closings, Discontinued Operations and Property Held for Sale
Impairment of Long-Lived Assets and Store Closings
Under the going concern basis of accounting, we periodically evaluated long-lived assets held for use and held for sale whenever events or changes in circumstances indicated that the carrying amount of those assets may not be recoverable. We analyzed historical cash flows of operating locations and compared results of poorer performing locations to more profitable locations. We also analyzed lease terms, condition of the assets and related need for capital expenditures or repairs, as well as construction activity and the economic and market conditions in the surrounding area.
We periodically evaluated our intangible assets, primarily the Fuddruckers trademarks and franchise agreements, to determine if events or changes in circumstances such as economic or market conditions indicated that the carrying amount of the assets may not be recoverable. We analyzed historical cash flows of operating locations to determine trends that would indicate a need for impairment. We also analyzed royalties and collectability from our franchisees to determine if there are trends that would indicate a need for impairment. Due to the effects of the COVID-19 pandemic on our operations, we identified a triggering event in the third quarter of fiscal 2020 and determined that no impairment provision was necessary.
For assets held for use, we estimated future cash flows using assumptions based on possible outcomes of the areas analyzed. If the estimated undiscounted future cash flows were less than the carrying value of the location’s assets, we recorded an impairment loss based on an estimate of discounted cash flows. The estimates of future cash flows, based on reasonable and supportable assumptions and projections, required management’s subjective judgments. Assumptions and estimates used included operating results, changes in working capital, discount rate, growth rate, anticipated net proceeds from disposition of the property and if applicable, lease terms. The span of time for which future cash flows are estimated was often lengthy, increasing the sensitivity to assumptions made. The time span is longer and could be 20 to 25 years for newer properties, but only 5 to 10 years for older properties. Depending on the assumptions and estimates used, the estimated future cash flows projected in the evaluation of long-lived assets could vary within a wide range of outcomes. We considered the likelihood of possible outcomes in determining the best estimate of future cash flows. The measurement for such an impairment loss was then based on the fair value of the asset as determined by discounted cash flows.
The Company recognized the following impairment charges and gains on asset disposals to income from operations:
 12 Week Period Ended
Fiscal Year Ended
 November 18, 2020August 26, 2020
 (In thousands, except per share data)
Net provision for (gain on) asset impairments and restaurant closings$(85)$10,193 
Net loss (gain) on disposition of property and equipment117 (11,557)
Total$32 $(1,364)
Effect on EPS:  
Basic$— $0.05 
Assuming dilution$— $0.05 

The $0.1 million gain on asset impairments and restaurant closings in the 12 week period ended November 18, 2020 is primarily related to the $0.7 million net gain on the termination of seven leases for locations where we permanently ceased operations and negotiated buyouts of the leases. partially offset by the write off of $0.6 million of right-of-use assets for one of our leased locations where we permanently ceased operations during the period.
The $10.2 million provision for asset impairments and restaurant closings in fiscal 2020 is primarily related to the write off of $5.4 million of right-of-use assets for 24 of our leased locations where we permanently ceased operations during the period, impairment losses of $4.8 million on 24 of our restaurant locations and $0.3 million on the remaining goodwill related to our Cheeseburger in Paradise brand. $1.2 million for certain surplus equipment written down to fair value, as well as $1.8 million of store closing expenses. These losses were partially offset by $3.3 million net gain on the termination of 17 leases for locations where we permanently ceased operations and negotiated buyouts of the leases. See Abandoned Lease Facilities - Liability for Store Closing section of this Note 15.
The $11.6 million net gain on disposition of property and equipment in fiscal 2020 is primarily related to $8.4 million gains on the sales of seven previously held for sale properties and $3.9 million gains on two previously held for use properties, partially offset by routine asset retirements.
Discontinued Operations
As a result of the first quarter fiscal 2010 adoption of the Company’s Cash Flow Improvement and Capital Redeployment Plan, the Company reclassified 24 Luby’s cafeterias to discontinued operations. Under the going concern basis of accounting, one location remained held for sale at November 18, 2020.
The following table sets forth the assets and liabilities for all discontinued operations:  
 August 26,
2020
 
Property and equipment$1,715 
Assets related to discontinued operations—non-current$1,715 
Accrued expenses and other liabilities17 
Liabilities related to discontinued operations—current$17 
Under the going concern basis of accounting, losses from discontinued operations for the 12 week period ended November 18, 2020 and the fiscal year ended August 26, 2020 were not significant.
Property Held for Sale
Under the going concern basis of accounting, property held for sale was accounted for as discussed below. Under the liquidation basis of accounting, all of our property is held for sale and is recorded on the consolidated statement of net assets in liquidation at the amount of their estimated cash proceeds or other consideration from liquidation.
Under the going concern basis of accounting, property held for sale included unimproved land, closed restaurant properties and related equipment for locations not classified as discontinued operations. The specific assets were valued at the lower of net depreciable value or net realizable value.
At August 26, 2020, the Company had 10 owned properties recorded at $11.2 million in property held for sale.
Abandoned Leased Facilities - Liability for Store Closing
As of August 25, 2021 and August 26, 2020, we classified seven and 18 leased restaurants locations as abandoned. Although we remain obligated under the terms of the leases for the rent and other costs that may be associated with the leases, we decided to cease operations and we have no foreseeable plans to occupy the spaces as a company restaurant in the future. The total liability represents the present value of the total amount of rent and other direct costs (such as common area costs, property taxes, and insurance allocated by the landlord) for the remaining lease term less the present value of any sublease income expected to be collected. During fiscal 2021 we settled and terminated 11 abandoned leases.
The liability for our abandoned leases were as follows (in thousands):
August 25, 2021August 26, 2020
(Liquidation Basis)(Going Concern Basis)
Short-term lease liabilityN/A$365 
Long-term lease liabilityN/A2,348 
Operating lease liabilities$1,656 2,713 
Accrued expenses and other liabilities1,381 2,088 
Total$3,037 $4,801