(11) DISCONTINUED OPERATIONS

On December 14, 2015, we entered into an agreement to sell seven Chicago-area restaurants (the “Chicago Restaurants”) to Windy City Restaurant Holdings LLC and its affiliate. The transaction closed on March 1, 2016 and resulted in our complete exit from the Chicago market.

On November 1, 2017, we entered into agreements to sell eight restaurants in Maryland and Virginia (the “Mid-Atlantic Restaurants”) to Commonwealth Blue Ribbon Restaurants LLC and Capital Blue Ribbon Restaurants LLC (the “Mid-Atlantic Purchasers”). Pursuant to the first agreement (“Seven Restaurants Agreement”), the contract purchase price was $2,350,000 and included a repairs and maintenance credit of $750,000, which must be exhausted within one year. Also pursuant to the Seven Restaurants Agreement, we and the Mid-Atlantic Purchasers entered into a line of credit agreement in the amount of $750,000 (the “LOC Agreement”) on which the Mid-Atlantic Purchasers can draw funds to pay for necessary repairs and maintenance work. The LOC Agreement has a four year term with interest payable at a rate of 4.25% per annum.

Pursuant to the second agreement (the “Frederick Agreement”) to effect the sale of our Frederick, Maryland (“Frederick”) restaurant to Capital Blue Ribbon Restaurants, LLC, the contract purchase price for Frederick shall be an amount equal to (i) 50% of the rent, fees, charges, taxes and other amounts payable to the landlord or another third party pursuant to the lease agreement, plus (ii) 50% of that portion of Frederick’s EBITDA (as defined in the Frederick APA) attributable to Frederick that exceeds $25,000 in any 12-month period and $37,500 in any 18-month period; however, the Company has guaranteed the 12-month and 18-month EBITDA performance of Frederick. We expect to recognize a liability and corresponding expense related to this guarantee based on the amount that we would owe to the Mid-Atlantic Purchasers in the event that the restaurant was closed. As of December 31, 2017, we had reserved $21,000 related to this guarantee.

The Mid-Atlantic Purchasers also purchased the inventory and petty cash on hand of the Mid-Atlantic Restaurants as of the closing date. The transaction resulted in our complete exit from the Mid-Atlantic market.

The following table provides certain information from our consolidated statements of operations related to the Chicago Restaurants and the Mid-Atlantic Restaurants:


	Year Ended
(in thousands)	December 31, 2017		January 1, 2017
Restaurant sales, net	$	18,831	$	24,920
Cost of sales		(16,998)		(22,662)
General and administrative expenses		(149)		(222)
Depreciation and amortization		(611)		(819)
Operating income		1,073		1,217
Gain (loss) on disposal attributable to discontinued operations		(3,419)		1,170
Income (loss) attributable to discontinued operations, before tax		(2,346)		2,387
Income (loss) attributable to discontinued operations, tax effect		889		(713)
Income (loss) attributable to discontinued operations, net of tax	$	(1,457)	$	1,674

The following table provides certain information from our consolidated balance sheets related to discontinued operations:


(in thousands)	December 31, 2017		January 1, 2017
Accounts receivable, net	$	—	$	176
Inventories		—		399
Prepaid expenses and other current assets		—		60
Total current assets		—		635
Other assets		—		52
Property, equipment and leasehold improvements, net		—		6,663
Total assets	$	—	$	7,350

Accrued compensation and benefits (current)		—		142
Other current liabilities		—		139
Other liabilities (non-current)		—		2,371
Total liabilities	$	—	$	2,652