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.

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 $2.6 million.

The Company 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 refranchised markets for which the Company had signed letters of intent, which were excluded from the proposed sale.

On July 14, 2015, the Company sold substantially all of the assets of 29 bakery-cafes in the Boston market to an existing franchisee for a purchase price of approximately $19.6 million, including $0.5 million for inventory on hand, with $2.0 million held in escrow for certain holdbacks, and recognized a loss on sale of $0.6 million. The holdback amount is primarily to satisfy any indemnification obligations of the Company and will be held in escrow until July 14, 2017, the two-year anniversary of the transaction closing date, with the remaining balance of the holdback amount reverting to the Company.

As of September 29, 2015, the Company classified as held for sale the assets and certain liabilities of 53 Company-owned bakery-cafes the Company expects to sell during the next 12 months. During the thirteen and thirty-nine weeks ended September 29, 2015, the Company recorded losses on assets held for sale of $1.0 million and $8.9 million, respectively. 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 following summarizes the financial statement carrying amounts of assets and liabilities associated with the bakery-cafes classified as held for sale (in thousands):



	September 29, 2015
Inventories	$	1,005
Property and equipment, net	35,381
Goodwill	1,871
Assets held for sale	$	38,257

Deferred rent	$	4,065
Asset retirement obligation	1,070
Liabilities associated with assets held for sale	$	5,135

Assets held for sale were valued using Level 3 inputs, primarily 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 in the Company's Consolidated Balance Sheets.

The following summarizes activity associated with the refranchising initiative recorded in the caption entitled Refranchising loss in the Consolidated Statements of Income for the periods indicated (in thousands):



	For the 13 Weeks Ended		For the 39 Weeks Ended
	September 29, 2015		September 29, 2015
Loss on assets held for sale (1)	$	1,000	$	8,941
Impairment of long-lived assets (1)	—		3,837
Professional fees and severance	596		946
Loss (gain) on sale of bakery-cafes (1)	578		(1,992		)
Refranchising loss	$	2,174	$	11,732


(1)	Amounts for the thirty-nine weeks ended September 29, 2015 are included in the caption entitled Refranchising loss in the Consolidated Statements of Cash Flows as a non-cash adjustment to reconcile net income to net cash provided by operating activities.

On October 7, 2015, the Company sold substantially all of the assets of 45 bakery-cafes in the Seattle and Northern California markets to a new franchisee for a purchase price of approximately $26.7 million, including $0.9 million for inventory on hand. Assets and liabilities associated with these bakery-cafes were classified as held for sale as of September 29, 2015.