Jack In The Box 2008 Annual Report Download - page 59

2. DISCONTINUED OPERATIONS
In October 2008, we announced the decision to sell our 61 Quick Stuff convenience stores, which include a
major-branded fuel station developed adjacent to a full-size JACK IN THE BOX restaurant. We have decided to sell
Quick Stuff, not including the adjacent restaurant, to maximize the potential of our JACK IN THE BOX and Qdoba
brands. Quick Stuff is not included in either of our restaurant operating segments.
We expect to sell this business within fiscal 2009 and do not expect this sale to have a material impact on
ongoing earnings. The operations and cash flows of the business will be eliminated and in accordance with the
provisions of SFAS 144, Accounting for the Impairment or Disposal of Long-lived Assets, the results of operations
of Quick Stuff for all periods presented have been reported as discontinued operations.
The major classes of assets held for sale in fiscal 2008 and discontinued operations in fiscal 2007 are as follows
(in thousands):
2008 2007
Assets Held for Sale:
Inventories ................................................. $ 6,518 $ 6,188
Property and equipment, net . ................................... 41,827 42,163
Goodwill................................................... 912 912
Other assets, primarily liquor licenses ............................. 399 410
Total assets of discontinued operations ........................... $49,656 $49,673
Revenue and operating income from discontinued operations for fiscal 2008, 2007 and 2006 were as follows
(in thousands):
2008 2007 2006
Revenue.......................................... $461,888 $362,547 $342,359
Operating income................................... 1,749 1,500 2,769
3. GOODWILL AND INTANGIBLE ASSETS, NET
In the third quarter of fiscal 2008, we recorded adjustments to goodwill in connection with the sale of
company-operated restaurants to franchisees from the beginning of fiscal 2003 through the second quarter of fiscal
2008. Historically, we did not write-off goodwill on the sale of company-operated restaurants to franchisees, as we
did not believe it constituted the disposal of a business under the provisions of SFAS 142, Goodwill and Other
Intangible Assets. It has now been interpreted that SFAS 142 requires that a portion of the entity level goodwill be
written-off based on the relative fair values of the restaurants being sold and the remaining value of the entity, in our
case, JACK IN THE BOX. These adjustments did not have a material impact on our consolidated financial statements for
any of the affected reporting periods.
The changes in the carrying amount of goodwill during 2008 and 2007 by operating segment were as follows
(in thousands):
Jack in the Box Qdoba Total
Balance at October 2, 2006 .......................... $59,994 $24,319 $84,313
Acquisition of franchised restaurants.................. — 4,478 4,478
Sale of company-operated restaurants to franchisees ...... (1,170) — (1,170)
Balance at September 30, 2007 ....................... 58,824 28,797 87,621
Sale of company-operated restaurants to franchisees ...... (1,832) — (1,832)
Balance at September 28, 2008 ....................... $56,992 $28,797 $85,789
F-13
JACK IN THE BOX INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)