Discontinued Operations

12 Months Ended

May 29, 2012

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

On May 16, 2012, the Company closed on the sale of its Golden Corral restaurant operations to Golden Corral Corporation, from which the Company had previously been granted licenses to operate the 29 restaurants that comprised the assets that were sold in the transaction. The Company recorded a pretax loss on the sale of $5,590,000 ($5,257,000 in the fourth quarter) during the year ended May 29, 2012. The results of Golden Corral are presented as discontinued operations for all periods presented in the consolidated financial statements, and segment information is no longer reported.

The Company had previously closed six under performing Golden Corral restaurants in August 2011. As a result, a non-cash pretax asset impairment charge (with related closing costs) of $4,000,000 was recorded in the first quarter of fiscal year 2012, which ended September 20, 2011. The impairment charge lowered the carrying values of the six restaurant properties (all owned in fee simple) to their estimated fair values, which in the aggregate amounted to approximately $6,909,000. The total impairment charge included $69,000 for impaired intangible assets and $180,000 for certain other costs. Additional non-cash pretax impairment charges of $388,000 were subsequently recorded during fiscal year 2012: a) $94,000 in the third quarter ended March 6, 2012 based on a contract that was accepted for less than the original estimate of fair value and b) $294,000 in the fourth quarter to reflect revised opinions of value from real estate brokers.

The impairments of long lived assets were recorded as significant unobservable inputs (level 3 under the fair value hierarchy), which are summarized below (also see Impairment of Long-Lived Assets along with Real Estate Held for Sale in NOTE A – ACCOUNTING POLICIES):

	Fair Value Measurements Using
	(in thousands)
	Level 1		Level 2		Level 3		Gains (Losses)
Six former Golden Corral restaurants	$	—	$	—	$	6,486	$	(4,388	)

Results of discontinued operations are shown below:

				(in thousands)
	2012 (50 weeks)			2011 (52 weeks)		2010 (52 weeks)
Sales	$	92,227		$	101,824	$	101,263
Food and paper	35,420			39,135		37,895
Payroll and related	26,605			29,576		29,230
Other operating costs	24,027			26,978		26,825
	86,052			95,689		93,950
Gross profit	6,175			6,135		7,313
Administrative and advertising	2,580			2,767		2,384
(Gain) loss on sale of assets	(22		)	—		—
Loss on sale of Golden Corral	5,590			—		—
Impairment of long-lived assets	4,388			—		—
(Loss) earnings from discontinued operations before income taxes	(6,361		)	3,368		4,929
Income taxes	(2,708		)	1,000		1,675
(Loss) earnings from discontinued operations, net of tax	$	(3,653	)	$	2,368	$	3,254

Assets and liabilities related to discontinued operations consisted of:

	(in thousands)
	2012		2011
Assets
Cash and equivalents	$	—	$	134
Trade and other receivables	190		—
Inventories	—		778
Prepaid expenses and sundry deposits	—		162
Prepaid and deferred income taxes	—		161
Total current assets	190		1,235
Net property and equipment	—		66,265
Other intangible assets	—		445
Assets of discontinued operations	$	190	$	67,945
Liabilities
Accounts payable	$	47	$	182
Accrued expenses	636		1,304
Total current liabilities	683		1,486
Deferred other	—		647
Deferred income taxes	—		2,720
Liabilities of discontinued operations	$	683	$	4,853

In addition, four of the six Golden Corral restaurants that closed in August 2011 have yet to be sold. The aggregate fair value of the four restaurants ($4,136,000) is carried in the consolidated balance sheet as "Property held for sale" as of May 29, 2012 (See "Property Held for Sale" in NOTE A – ACCOUNTING POLICIES.)