Divestitures

Refranchising Initiative

In February 2015, the Company announced a plan to refranchise approximately 50 to 150 Company-owned bakery-cafes. As of June 28, 2016, the Company had completed the sale of 90 Company-owned bakery-cafes.

During the thirteen weeks ended March 29, 2016, 20 Company-owned bakery-cafes that the Company concluded no longer met all of the criteria required to be classified as held for sale were reclassified to held and used at their fair value.

On May 3, 2016, the Company sold substantially all of the assets of 15 bakery-cafes in the Portland, Oregon market to an existing franchisee for a purchase price of approximately $15.2 million, which resulted in a gain on sale of approximately $0.5 million.

The Company classified as held for sale the assets and certain liabilities of 12 and 35 Company-owned bakery-cafes as of June 28, 2016 and December 29, 2015, respectively. The Company classifies assets as held for sale and ceases depreciation of the assets when those assets meet the held for sale criteria, as defined in GAAP. The following summarizes the financial statement carrying amounts of assets and liabilities associated with the bakery-cafes classified as held for sale (in thousands):



	June 28, 2016		December 29, 2015
Inventories	$	248	$	738
Property and equipment, net	5,620		26,462
Goodwill	—		1,499
Assets held for sale	$	5,868	$	28,699

Deferred rent	$	707	$	2,410
Asset retirement obligation	217		535
Liabilities associated with assets held for sale	$	924	$	2,945

Assets held for sale were valued using Level 3 inputs, primarily representing information obtained from signed letters of intent. Costs to sell are considered in the estimates of fair value for those assets included in Assets held for sale in the Company's Consolidated Balance Sheets.

The Company recognized an impairment loss of $1.1 million during the thirteen weeks ended June 28, 2016 related to an under-performing bakery-cafe in a market targeted for refranchising, which has been excluded from the proposed sale.

The following summarizes activity associated with the refranchising initiative recorded in the caption entitled Refranchising loss in the Consolidated Statements of Income for the periods indicated (in thousands):



	For the 13 Weeks Ended					For the 26 Weeks Ended
	June 28, 2016			June 30, 2015		June 28, 2016			June 30, 2015
Loss on assets held for sale (1)	$	6,112		$	317	$	6,112		$	7,941
Lease termination costs and impairment of long-lived assets (1)	1,953			—		2,858			3,837
Professional fees, severance, and other	298			350		464			350
Loss (gain) on sale of bakery-cafes (1)	(491		)	—		(491		)	(2,570		)
Refranchising loss	$	7,872		$	667	$	8,943		$	9,558


(1)	Certain of the amounts for the twenty-six weeks ended June 28, 2016 and June 30, 2015 are included in the caption entitled Refranchising loss in the Consolidated Statements of Cash Flows as a non-cash adjustment to reconcile net income to net cash provided by operating activities.