Sale and Leaseback Transaction

6 Months Ended

Oct. 23, 2015

In the second quarter of fiscal 2016, we entered into an agreement pursuant to which we sold our BEF Foods industrial properties located in Lima, Ohio, and Sulphur Springs, Texas, for $51,600. We received net proceeds of $50,017, after consideration of closing and other transaction costs. In conjunction with the sale, assets with a net book value of $22,415 and $29,142 for the Lima and Sulphur Springs properties, respectively, were retired. The transaction resulted in a deferred gain of $2,305 for the Lima facility which is recorded in the deferred rent and other line on the Consolidated Balance Sheets, and a pretax loss on disposal of $3,432, recognized in the three months ended October 23, 2015, for the Sulphur Springs facility, which is recorded within the S,G&A line on the Consolidated Statements of Net Income and in the BEF Foods segment. Concurrent with the sale, the Company also entered into a master lease agreement with the same party that purchased the assets, pursuant to which we leased both the Lima and Sulphur Springs properties for an initial 20-year term at an annual, straight-line rent expense of $4,127, inclusive of the amortized deferred gain for the Lima property. The master lease agreement provides for two ten-year renewal options. Refer to the table below for a summary of the sale and leaseback transaction:



(in thousands)	Lima, Ohio			Sulphur Springs, Texas
Selling price	$	25,284		$	26,316
Direct transaction costs	564			606
Net book value of assets sold	22,415			29,142
Net gain (loss) on sale	$	2,305	(1)	$	(3,432	)

⁽¹⁾ The gain on the sale of our Lima facility is deferred and will be recognized over the lease term