Jack In The Box 2009 Annual Report Download - page 51

Table of Contents
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other comprehensive income are classified to earnings in the period the hedged item affects earnings. If the underlying hedge transaction
ceases to exist, any associated amounts reported in other comprehensive income are reclassified to earnings at that time. Any
ineffectiveness is recognized in earnings in the current period. At September 27, 2009, we had two interest rate swaps in effect, no
outstanding commodity derivatives and an immaterial amount of utility derivatives. Refer to Note 5, Fair Value Measurements, and
Note 6, Derivative Instruments, for additional information regarding our derivative instruments.
Contingencies — We recognize liabilities for contingencies when we have an exposure that indicates it is probable that an asset has
been impaired or that a liability has been incurred and the amount of impairment or loss can be reasonably estimated.
Variable interest entities — The FASB authoritative guidance on consolidation requires the primary beneficiary of a variable
interest entity to consolidate that entity. The primary beneficiary of a variable interest entity is the party that absorbs a majority of the
variable interest entity’s expected losses, receives a majority of the entity’s expected residual returns, or both, because of ownership,
contractual or other financial interests in the entity. Refer to Note 15, Variable Interest Entities, for additional information regarding our
variable interest entities.
Segment reporting — An operating segment is defined as a component of an enterprise that engages in business activities from
which it may earn revenues and incur expenses, and about which separate financial information is regularly evaluated by our chief
operating decision makers in deciding how to allocate resources. Similar operating segments can be aggregated into a single operating
segment if the businesses are similar. We operate our business in two operating segments, Jack in the Box and Qdoba. Refer to Note 17,
Segment Reporting, for additional discussion regarding our segments.
Effect of new accounting pronouncements — In June 2009, FASB established the FASB Accounting Standards Codificationtm
(“Codification”) to become the source of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to
be applied by nongovernmental entities, except for SEC rules and interpretive releases, which is also authoritative guidance for SEC
registrants. The Codification does not change GAAP, except in limited circumstances, and the content of the Codification carries the same
level of GAAP authority. The GAAP hierarchy has been modified to include only two levels of GAAP: authoritative and nonauthoritative.
We adopted the Codification in the fourth quarter of fiscal 2009 and as a result, references to legacy GAAP accounting pronouncements in
our financial statement disclosures have been modified to reflect plain English descriptions.
Subsequent events — Subsequent events have been evaluated through November 19, 2009, the date our financial statements were
available to be issued.
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In October 2008, we announced the decision to sell our 61 Quick Stuff convenience stores, which included a major-branded fuel
station developed adjacent to a full-size Jack in the Box restaurant, to maximize the potential of our Jack in the Box and Qdoba brands.
The assets and liabilities associated with Quick Stuff were classified as held for sale in the consolidated balance sheet for the fiscal year
ended September 28, 2008, and the operating results have been classified as discontinued operations for all periods presented.
In the fourth quarter of fiscal 2009, we completed the sale of all 61 locations. We received cash proceeds of $34.4 million and
recorded a loss on disposition of $24.3 million, or $15.0 million net of taxes, included in earnings (losses) from discontinued operations,
net in the accompanying consolidated statement of earnings for fiscal 2009. The loss on disposition includes an impairment charge of
$22.4 million related to building assets retained by us and leased to the buyers as part of the sale agreements. The net assets sold totaled
approximately $25.7 million and consisted primarily of property and equipment of $24.8 million.
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