Discontinued Operations

12 Months Ended

Sep. 27, 2015

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

DISCONTINUED OPERATIONS

Distribution business — During fiscal 2012, we entered into an agreement with a third party distribution service provider pursuant to a plan approved by our board of directors to sell our Jack in the Box distribution business. During the first quarter of fiscal 2013, we completed the transition of our distribution centers. The operations and cash flows of the business have been eliminated and in accordance with the provisions of the FASB authoritative guidance on the presentation of financial statements, the results are reported as discontinued operations for all periods presented.

The following table summarizes our distribution business results, which are included in discontinued operations for each fiscal year (in thousands):

	2015			2014			2013
Revenue	$	—		$	—		$	37,743
Loss before income tax benefit	$	(703	)	$	(1,276	)	$	(6,446	)

In 2015 and 2014, the loss includes $0.5 million and $0.9 million, respectively, related to insurance and other settlements and $0.2 million and $0.3 million, respectively, related to our lease commitments. The loss in fiscal 2013 includes costs incurred to exit the distribution business consisting of $1.9 million for accelerated depreciation of a long-lived asset disposed of upon completion of the transaction, $1.6 million (net of reversals for deferred rent of $0.4 million) for future lease commitments, $1.2 million primarily related to costs incurred to terminate certain vendor contracts, and $1.3 million related to distribution center specific workers’ compensation claims. The loss on the sale of the distribution business was not material to our results of operations.

Our liability for lease commitments related to our distribution centers is included in accrued liabilities and other long-term liabilities in the accompanying consolidated balance sheets and was $0.2 million and $0.5 million as of September 27, 2015 and September 28, 2104, respectively. The lease commitment balance as of September 27, 2015 relates to one distribution center subleased at a loss. The future minimum lease payments and receipts for the next five fiscal years and thereafter are included in the amounts disclosed in Note 8, Leases.

2013 Qdoba Closures — During the third quarter of fiscal 2013, we closed 62 Qdoba restaurants. The decision to close these restaurants was based on a comprehensive analysis that took into consideration levels of return on investment and other key operating performance metrics. Since the closed restaurants were not predominantly located near those remaining in operation, we did not expect the majority of cash flows and sales lost from these closures to be recovered. In addition, we did not anticipate any ongoing involvement or significant direct cash flows from the closed stores. Therefore, in accordance with the provisions of the FASB authoritative guidance on the presentation of financial statements, the results of operations for these restaurants are reported as discontinued operations for all periods presented.

The following table summarizes the results related to the 2013 Qdoba Closures for each fiscal year (in thousands):

	2015			2014			2013
Company restaurant sales	$	—		$	—		$	28,036
Asset impairments	$	—		$	(2,170	)	$	(22,239	)
Future lease commitments (1)	(4,594		)	(4,536		)	(10,301		)
Bad debt expense	(366		)	—			—
Brokers commissions	(234		)	(652		)	—
Other exit costs	(302		)	(889		)	(3,075		)
Operating losses	—			—			(8,961		)
Loss before income tax benefit	$	(5,496	)	$	(8,247	)	$	(44,576	)

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(1) Future lease commitments in 2013 are shown net of reversals for deferred rent and tenant improvement allowances of $4.3 million.

We do not expect the remaining costs to be incurred related to the closures to be material; however, the estimates we make related to our future lease obligations, primarily sublease income, are subject to a high degree of judgment and may differ from actual sublease income due to changes in economic conditions, desirability of the sites and other factors.

Our liability for lease commitments related to the 2013 Qdoba closures is included in accrued liabilities and other long-term liabilities in the accompanying consolidated balance sheets and has changed as follows during fiscal year 2015 (in thousands):

Balance at September 28, 2014	$	5,737
Adjustments	4,594
Cash payments	(6,075		)
Balance at September 27, 2015	$	4,256

In 2015, adjustments primarily relate to revisions to certain sublease and cost assumptions due to changes in market conditions as well as charges to terminate five lease agreements. These amounts were partially offset by favorable adjustments for locations that we have subleased. The balance at September 27, 2015 relates to six locations subleased at a loss and 15 locations we are marketing for sublease. The future minimum lease payments and receipts for the next five fiscal years and thereafter are included in the amounts disclosed in Note 8, Leases.