Divestitures

Refranchising Initiative

In February 2015, the Company announced a plan to refranchise approximately 50 to 150 Company-owned bakery-cafes by December 29, 2015, the end of fiscal 2015. As of March 31, 2015, the Company classified as held for sale the assets and certain liabilities of 73 Company-owned bakery-cafes the Company expects to sell during the next 12 months. During the thirteen weeks ended March 31, 2015, the Company recorded a loss on assets held for sale of $7.6 million. The Company classifies assets as held for sale and ceases depreciation of the assets when those assets meet the held for sale criteria, as defined in GAAP. The Company also recognized impairment losses of $3.8 million during the thirteen weeks ended March 31, 2015 related to certain under-performing bakery-cafes in one of the markets for which the Company has signed letters of intent, which have been excluded from the proposed sale. The following summarizes the financial statement carrying amounts of assets and liabilities associated with the bakery-cafes classified as held for sale as of March 31, 2015 (in thousands):



	March 31, 2015
Inventories	$	1,391
Property and equipment, net	52,358
Assets held for sale	$	53,749

Deferred rent	$	6,756
Asset retirement obligation	1,307
Liabilities associated with assets held for sale	$	8,063

Assets held for sale were valued using Level 3 inputs, representing information obtained from signed letters of intent. Costs to sell are considered in the estimates of fair value for those assets included in Assets held for sale on our Consolidated Balance Sheets.

On March 3, 2015, the Company sold substantially all of the assets of one bakery-cafe to an existing franchisee for cash proceeds of approximately $3.2 million, which resulted in a gain on sale of approximately $2.5 million.

The aforementioned loss on assets held for sale, impairment charges and gain on sale have been aggregated in a single caption entitled “Refranchising loss” in the Consolidated Statements of Comprehensive Income for the thirteen weeks ended March 31, 2015.