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Discontinued Operations | 4 Months Ended
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Jan. 21, 2018
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued Operations | DISCONTINUED OPERATIONS Distribution business — During fiscal 2012, we entered into an agreement with a third party distribution service provider pursuant to a plan approved by our Board of Directors to sell our Jack in the Box distribution business. During fiscal 2013, we completed the transition of our distribution centers. The operations and cash flows of the business have been eliminated, and in accordance with the provisions of the FASB authoritative guidance on the presentation of financial statements, the results are reported as discontinued operations for all periods presented. In 2018 and 2017, the results of discontinued operations related to our distribution business were immaterial to our condensed consolidated results of operations. Our liability for lease commitments related to our distribution centers is immaterial to our condensed consolidated balance sheet as of October 1, 2017, and relates to one distribution center lease that expired in July 2017. Qdoba — On December 19, 2017, we entered into a stock purchase agreement (the “Qdoba Purchase Agreement”) with Quidditch Acquisition, Inc., a Delaware corporation and affiliate of certain funds managed by affiliates of Apollo Global Management, LLC (the “Buyer”). Pursuant to the Qdoba Purchase Agreement, the Buyer has agreed to purchase from the Company all issued and outstanding shares of Qdoba (the “Shares”) for an aggregate purchase price of approximately $305.0 million in cash, subject to customary closing conditions and adjustments set forth in the Qdoba Purchase Agreement (the “Qdoba Sale”). Our Board of Directors unanimously approved the Qdoba Purchase Agreement after its comprehensive evaluation of potential alternatives with respect to Qdoba, which began in 2017. The Buyer has obtained guarantees with respect to its obligations under the Qdoba Purchase Agreement. The closing of the Qdoba Sale is anticipated to occur by April 2018, subject to customary closing conditions set forth in the Qdoba Purchase Agreement. In addition to the purchase of the Shares, the Company and the Buyer will enter into a Transition Services Agreement pursuant to which the Buyer will receive certain services (the “Services”) to enable it to operate the Qdoba business from and after the closing of the Qdoba Sale. The Services will include information technology, finance and accounting, human resources, supply chain and other corporate support services. The Services will be provided at a cost for a period of up to 12 months, with two 3 month extensions available for certain services. The Company and the Buyer will also enter into an Employee Agreement pursuant to which the Company will continue to employ all Qdoba employees who will transfer employment to the Buyer (the “Qdoba Employees”) from the closing of the Qdoba Sale through the earlier of: (a) following 30 days written notice from the Buyer of termination of the Employee Agreement, or (b) nine months following the closing of the Qdoba Sale. Upon termination of the Employee Agreement, the Qdoba employees will effectively become employees of the Buyer. During the term of the Employee Agreement, the Company will pay all wages and benefits of the Qdoba Employees and will receive reimbursement of these costs from the Buyer. As the Qdoba Sale represents a strategic shift that will have a major effect on our operations and financial results, in accordance with the provisions of FASB authoritative guidance on the presentation of financial statements, Qdoba results are classified as discontinued operations in our condensed consolidated statements of earnings and our condensed consolidated statements of cash flows for all periods presented. Prior year results have been recast to conform with the current presentation. In 2018, we recognized deferred tax benefits of $0.5 million on the excess of the tax basis over the book basis in our investment in Qdoba as a result of its pending disposition as it is probable that the temporary difference will reverse in the foreseeable future. The following table summarizes the Qdoba results for each period (in thousands, except per share data):
| Sixteen Weeks Ended
| January 21, 2018 |  | January 22, 2017
Company restaurant sales | $ | 125,770 |  |  | $ | 128,699 |
Franchise revenues | 5,986 |  |  | 6,053 |
Company restaurant costs (excluding depreciation and amortization) | (108,618 | ) |  | (105,716 | )
Franchise costs (excluding depreciation and amortization) | (1,408 | ) |  | (1,173 | )
Selling, general and administrative expenses | (12,264 | ) |  | (12,429 | )
Depreciation and amortization | (5,012 | ) |  | (6,695 | )
Impairment and other charges, net | (1,669 | ) |  | (3,904 | )
Interest expense, net | (3,212 | ) |  | (2,515 | )
(Losses) earnings from discontinued operations before income taxes | (427 | ) |  | 2,320 |
Income taxes | (205 | ) |  | (876 | )
(Losses) earnings from discontinued operations, net of income taxes | $ | (632 | ) |  | $ | 1,444 |
Net (losses) earnings per share from discontinued operations: |  |  |
Basic | $ | (0.02 | ) |  | $ | 0.05 |
Diluted | $ | (0.02 | ) |  | $ | 0.05 |
Selling, general and administrative expenses include corporate costs directly in support of Qdoba operations. All other corporate costs are classified in results of continuing operations. Our credit facility requires us to make a mandatory prepayment on our borrowings upon closing of the Qdoba Sale. In accordance with FASB authoritative guidance on financial statement presentation, interest expense associated with our credit facility has been allocated to discontinued operations based on our estimate of the mandatory prepayment that will be made upon closing of the Qdoba Sale. The following is a summary of the unaudited quarterly results of Qdoba operations for fiscal 2017 (in thousands, except per share data):
| Sixteen Weeks Ended |  | Twelve Weeks Ended
| January 22, 2017 |  | April 16, 2017 |  | July 9, 2017 |  | October 1, 2017
Company restaurant sales | $ | 128,699 |  |  | $ | 98,793 |  |  | $ | 107,067 |  |  | $ | 102,000 |
Franchise revenues | 6,053 |  |  | 4,711 |  |  | 4,678 |  |  | 4,622 |
Company restaurant costs (excluding depreciation and amortization) | (105,716 | ) |  | (80,713 | ) |  | (84,747 | ) |  | (86,194 | )
Franchise costs (excluding depreciation and amortization) | (1,173 | ) |  | (910 | ) |  | (879 | ) |  | (2,031 | )
Selling, general and administrative expenses | (12,429 | ) |  | (7,956 | ) |  | (8,232 | ) |  | (8,089 | )
Depreciation and amortization | (6,695 | ) |  | (5,057 | ) |  | (5,023 | ) |  | (4,725 | )
Impairment and other charges, net | (3,904 | ) |  | (3,811 | ) |  | (1,815 | ) |  | (5,531 | )
Interest expense, net | (2,515 | ) |  | (2,044 | ) |  | (2,229 | ) |  | (2,237 | )
(Losses) earnings from discontinued operations before income taxes | 2,320 |  |  | 3,013 |  |  | 8,820 |  |  | (2,185 | )
Income taxes | (876 | ) |  | (1,181 | ) |  | (3,398 | ) |  | 937 |
(Losses) earnings from discontinued operations, net of income taxes | $ | 1,444 |  |  | $ | 1,832 |  |  | $ | 5,422 |  |  | $ | (1,248 | )
Net (losses) earnings per share from discontinued operations: |  |  |  |  |  |  |
Basic | $ | 0.05 |  |  | $ | 0.06 |  |  | $ | 0.18 |  |  | $ | (0.04 | )
Diluted | $ | 0.05 |  |  | $ | 0.06 |  |  | $ | 0.18 |  |  | $ | (0.04 | )
Assets being sold and liabilities being assumed by the Buyer in the Qdoba Sale include substantially all assets and liabilities associated with Qdoba, and are classified as held for sale on our condensed consolidated balance sheets. Prior year balances have been recast to conform with the current presentation. Upon classification of the Qdoba assets as held for sale, in accordance with the FASB authoritative guidance on financial statement presentation, the assets are no longer depreciated. The following table summarizes the major categories of assets and liabilities classified as held for sale in our condensed consolidated balance sheets as of the end of each period (in thousands):
| January 21, 2018 |  | October 1, 2017
Cash | $ | 3,942 |  |  | $ | 3,175 |
Accounts receivable, net | 8,529 |  |  | 9,086 |
Inventories | 3,168 |  |  | 3,202 |
Prepaid expenses and other current assets | 5,144 |  |  | 8,802 |
Property and equipment, net | 161,643 |  |  | 148,715 |
Intangible assets, net | 12,517 |  |  | 12,660 |
Goodwill | 117,636 |  |  | 117,636 |
Other assets, net | 1,735 |  |  | 1,785 |
Total assets classified as held for sale (1) | $ | 314,314 |  |  | $ | 305,061 |
Accounts payable | $ | 5,903 |  |  | $ | 8,936 |
Accrued liabilities | 24,472 |  |  | 25,251 |
Current maturities of long-term debt | 175 |  |  | 158 |
Straight-line rent accrual | 14,319 |  |  | 13,347 |
Deferred income tax liability (2) | 5,444 |  |  | 6,421 |
Other long-term liabilities | 11,208 |  |  | 12,310 |
Total liabilities classified as held for sale | $ | 61,521 |  |  | $ | 66,423 |
____________________________
(1) | Current assets held for sale on our condensed consolidated balance sheets include Jack in the Box assets held for sale of $18.0 million and $18.5 million as of January 21, 2018 and October 1, 2017, respectively.
(2) | Prior to held for sale presentation, Qdoba’s deferred income tax liability as of January 22, 2017 was netted against the Jack in the Box deferred income tax assets in other assets, net on our condensed consolidated balance sheet.
Our liability for Qdoba lease commitments is included in current liabilities held for sale as of January 21, 2018 and is included in current and non-current liabilities held for sale as of October 1, 2017 in the accompanying condensed consolidated balance sheets and has changed as follows in 2018 (in thousands):
Balance as of October 1, 2017 | $ | 2,473 |
Adjustments (1) | 193 |
Cash payments | (800 | )
Balance as of January 21, 2018 (2) | $ | 1,866 |
____________________________
(1) | Adjustments relate to revisions to certain sublease assumptions due to changes in market conditions and includes interest expense.
(2) | The weighted average remaining lease term related to these commitments is approximately 2 years.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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