Jack In The Box 2014 Annual Report Download - page 57

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

The loss in fiscal 2014 includes $0.9 million related to insurance settlements and $0.3 million for lease adjustments. The losses in fiscal 2013 and 2012
include costs incurred to exit the distribution business consisting of $1.9 million and $6.0 million, respectively, 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) and $0.7 million, respectively, for future
lease commitments, $1.2 million and $1.1 million, respectively, primarily related to costs incurred to terminate certain vendor contracts, and in fiscal 2013,
$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 changed as follows during each fiscal year (in thousands):


Balance at beginning of year
$ 1,318
$ 697
Additions
—
1,846
Adjustments
285
119
Cash payments
(1,055)
(1,344)
Balance at end of year
$ 548
$ 1,318
Adjustments in 2014 relate to the termination of a lease agreement and the execution of a sublease agreement. Adjustments in 2013 primarily represent
revisions to certain sublease and cost assumptions due to changes in market conditions. The balance at September 28, 2014 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 ASC 205, Presentation of Financial Statements, the results of operations for these restaurants are reported as
discontinued operations for all periods presented.
The following is a summary of the results related to the 2013 Qdoba Closures for each fiscal year (in thousands):


Company restaurant sales
$ —
$ 28,036
$ 35,731
Asset impairments
$ (2,170)
$ (22,239)
$ —
Future lease commitments (1)
(4,536)
(10,301)
—
Brokers commissions
(652)
—
—
Other exit costs
(889)
(3,075)
—
Operating losses
—
(8,961)
(8,327)
Loss before income tax benefit
$ (8,247)
$ (44,576)
$ (8,327)
___________________________________________
(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.
F-13