Jack In The Box 2014 Annual Report Download - page 58

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

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 each fiscal year (in thousands):


Balance at beginning of year
$ 10,712
$ —
Additions
—
14,072
Adjustments
4,536
530
Cash payments
(9,511)
(3,890)
Balance at end of year
$ 5,737
$ 10,712
In 2014, adjustments primarily relate to revisions to certain sublease and cost assumptions due to changes in market conditions as well as charges to
terminate 19 lease agreements. These amounts were partially offset by favorable adjustments for locations that we have subleased. The balance at September
28,2014 relates to five locations subleased at a loss and 26 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.

Refranchisings and franchisee development — The following is a summary of the number of restaurants sold to franchisees, the number of restaurants
developed by franchisees and the related gains (losses) and fees recognized (dollars in thousands):



Restaurants sold to franchisees
37
81
97
New restaurants opened by franchisees
33
45
50
Initial franchise fees
$ 1,886
$ 4,017
$ 5,535
Proceeds from the sale of company-operated restaurants:
Cash (1)
$ 10,536
$ 30,619
$ 47,115
Notes receivable
—
—
1,200
10,536
30,619
48,315
Net assets sold (primarily property and equipment)
(5,558)
(15,680)
(16,833)
Goodwill related to the sale of company-operated restaurants
(170)
(629)
(1,334)
Other (2)
(6,500)
(9,670)
(1,003)
Gains (losses) on the sale of company-operated restaurants
(1,692)
4,640
29,145
Loss on anticipated sale of a Jack in the Box company-operated market
(1,856)
—
—
Gains (losses) on the sale of company-operated restaurants
$ (3,548)
$ 4,640
$ 29,145
____________________________
(1) Amounts in 2014, 2013 and 2012 include additional proceeds of $2.1 million, $3.3 million and $2.3 million, respectively, recognized upon the extension of the underlying
franchise and lease agreements related to restaurants sold in a prior year.
(2) Amounts in all years presented primarily represent impairment and lease commitment charges related to restaurants closed in connection with the sale of the related markets,
and in 2014 and 2013, charges for operating restaurant leases with lease commitments in excess of our sublease rental income.
In 2014, loss on anticipated sale of a Jack in the Box company-operated market relates to restaurants held for sale for which we have a signed letter of intent.
Franchise acquisitions — We repurchased four Jack in the Box franchise restaurants in 2014 and one in 2013. In 2013 and 2012, we acquired 13 and 46
Qdoba franchise restaurants, respectively. We account for the acquisition of franchised restaurants using the acquisition method of accounting for business
combinations. The purchase price allocations were based on fair value estimates determined using significant unobservable inputs (Level 3). The goodwill
recorded primarily relates to the sales growth potential of the markets acquired and is expected to be deductible for income tax purposes. The following table
provides detail of the combined acquisitions in each year (dollars in thousands):
F-14