Jack In The Box 2015 Annual Report Download - page 65

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Accelerated depreciation — When a long-lived asset will be replaced or otherwise disposed of prior to the end of its estimated useful life, the useful life of
the asset is adjusted based on the estimated disposal date and accelerated depreciation is recognized. Accelerated depreciation primarily relates to expenses
at our Jack in the Box company restaurants for the replacement of technology and beverage equipment in 2015, and restaurant facility enhancements in 2014
and 2013. In 2015, we recognized a $3.6 million charge related to the replacement of our beverage equipment at Jack in the Box company restaurants and a
$1.5 million charge related to projects designed to upgrade outdoor lighting and certain technology at our restaurants.
Restaurant closing costs consist of future lease commitments, net of anticipated sublease rentals and expected ancillary costs. Total accrued restaurant
closing costs, included in accrued liabilities and other long-term liabilities, changed as follows during fiscal year 2015 (in thousands):
Balance at beginning of year
$ 13,173
Adjustments (1)
2,653
Cash payments
(6,119)
Balance at end of year
$ 9,707
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(1) Adjustments relate primarily to certain sublease and cost assumptions. The estimates we make related to our future lease obligations, primarily the sublease income we
anticipate, 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.
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. Our
obligations under the leases included in the above table expire at various dates between fiscal 2016 and 2029.
Disposition of property and equipment — Losses on the disposition of property and equipment were offset by gains from the resolution of one and four
eminent domain matters involving Jack in the Box restaurants in 2015 and 2013, respectively, with related gains of $0.9 million and $2.8 million,
recognized in each respective year.
Restaurant impairment charges — When events and circumstances indicate that our long-lived assets might be impaired and their carrying amount is greater
than the undiscounted cash flows we expect to generate from such assets, we recognize an impairment loss as the amount by which the carrying value exceeds
the fair value of the assets. Impairment charges in fiscal 2015, 2014 and 2013 primarily represent charges to write down the carrying value of
underperforming Jack in the Box restaurants and Jack in the Box restaurants we intend to or have closed.
Restructuring costs — Since the beginning of 2012, we have been engaged in a comprehensive review of our organization structure, including evaluating
opportunities to decrease general and administrative expenses, as well as improve profitability across both brands. The following is a summary of the costs
incurred in connection with these activities during each fiscal year (in thousands):
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Severance costs
$ 29
$ 2,141
$ 2,821
Other
—
6,480
630
$ 29
$ 8,621
$ 3,451
In 2014, other represents an impairment charge recognized related to a restaurant software asset we no longer planned to place in service as we integrate
certain systems across both our brands. In addition to the costs summarized in the table above, in fiscal 2012 we incurred restructuring charges of $15.5
million. We may incur additional charges related to our restructuring activities; however, we are unable to make a reasonable estimate at this time.
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