Impairments

We measure certain assets and liabilities at fair value on a nonrecurring basis, including, long-lived assets that have been reduced to fair value when they are held for sale and long-lived assets that are written down to fair value when they are impaired.

We evaluate the carrying amount of long-lived assets held and used in the business periodically and when events and circumstances warrant such a review to ascertain if any assets have been impaired. A long-lived asset group is considered impaired when the carrying value of the asset group exceeds its fair value. The impairment loss recognized is the excess of carrying value above its fair value. The estimation of fair value requires significant estimates of factors in future restaurant performance and real estate appraisals. To estimate fair value for locations where we own the land and building, we obtain quoted appraisals from third party real estate valuation firms. We use discounted future cash flows to estimate fair value for leased locations. Our weighted average cost of capital is used as the discount rate in our fair value measurements for leased locations, which is considered a Level 3 measurement. A reasonable change in this discount rate would not have a significant impact on these fair value measurements.

In the six months ended October 24, 2014, we incurred noncash asset impairment losses of $1,319 in the Bob Evans Restaurant segment, a result of adverse performance in the first quarter and a reassessment of expected future cash flows and fair value at five restaurant locations. We did not incur noncash asset impairment losses for the three months ended October 24, 2014. These impairment losses are recorded in the S,G&A line on the Consolidated Statements of Net Income. An additional $258 noncash asset impairment loss was recorded in the Bob Evans Restaurants segment on the "Impairment of assets held for sale" line on the Consolidated Statements of Net Income. This charge related to one nonoperating location.

In the first quarter of fiscal 2014, we reached an agreement to sell 29 locations, resulting in a pretax noncash assets held for sale impairment charge in the Bob Evans Restaurants segment of $8,609. In the second quarter of the prior year, we closed on the sale of 27 of the 29 properties and recorded an additional impairment charge of $771 related to the two remaining properties. We closed on the sale of 28 of the 29 nonoperating properties at the end of the prior year. The remaining property was moved out of held for sale assets during the fourth quarter of fiscal 2014 and we resumed depreciation for this location. We recorded an additional noncash asset impairment charge in the Bob Evans Restaurants reporting segment of $1,184 on one operating property in the three months ended October 25, 2013. The charge was recorded in the S,G&A line in the Consolidated Statements of Net Income.

In the second quarter of fiscal 2014, we announced our plans to close our food production plant in Richardson, Texas. Based on the estimated value of the facility, we recorded a pretax noncash assets held for sale impairment charge in the BEF Foods segment of $3,000 during the three months ended October 25, 2013. The long-lived asset group related to this plant is included at its fair value in the “Current assets held for sale” line in the consolidated balance sheet, as of October 24, 2014. Upon being classified as held for sale, depreciation ceased for these assets.

The following table represents noncash asset impairment charges for those assets remeasured to fair value on a non-recurring basis during the three months and six months ended October 24, 2014, and October 25, 2013 (in thousands):



	Three Months Ended					Six Months Ended
	October 24, 2014		October 25, 2013			October 24, 2014			October 25, 2013
Bob Evans Restaurants
Assets held and used	$	—	$	1,184	⁽³⁾	$	1,319	⁽¹⁾	$	2,364	⁽⁶⁾
Assets held for sale	—		771		⁽⁴⁾	258		⁽²⁾	9,380		⁽⁷⁾
BEF Foods
Assets held for sale	—		3,000		⁽⁵⁾	—			3,000		⁽⁵⁾

⁽¹⁾ $1,319 relates to impairment of five operating locations

⁽²⁾ $258 relates to impairment of one nonoperating location

⁽³⁾ $1,184 relates to impairment of one operating location

⁽⁴⁾ $771 relates to impairment of two nonoperating locations

⁽⁵⁾ $3,000 relates to impairment of one nonoperating location

⁽⁶⁾ $2,364 relates to impairment of two operating locations

⁽⁷⁾ $9,380 relates to impairment of 29 nonoperating location

To be consistent with current period presentation, we have reclassified the assets for two Bob Evans Restaurants' nonoperating locations to the “Long-term assets held for sale” line in the Consolidated Balance Sheets as of April 25, 2014.