Other Charges (Gains), net |
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| Other Charges (Gains), net |
4. Other Charges (Gains), net
Other charges consist of the following (in thousands):
Asset Impairment
During 2023, the Company recognized non-cash impairment charges of $9.1 million, primarily related to the impairment of the long-lived assets at 19 underperforming locations and quota state liquor licenses at three locations.
During 2022, the Company recognized non-cash impairment charges of $38.5 million, primarily related to impairments of long-lived assets at 46 underperforming locations and quota state liquor licenses at six locations.
During 2021, the Company recognized non-cash impairment charges of $7.1 million, primarily related to impairments of long-lived assets at 10 underperforming locations and quota state liquor licenses at seven locations.
Gain on Sale of Restaurant Property
During 2023, the Company sold 18 restaurant properties for aggregate net proceeds of $58.8 million in sale-leaseback transactions that resulted in a gain, net of expenses of $29.4 million. In addition, during 2023, the Company sold one restaurant property for total proceeds of $1.6 million which resulted in a gain, net of expenses of $0.1 million. The net proceeds are included within cash flows from investing activities on the Consolidated Statements of Cash Flows for the year ended December 31, 2023.
During 2022 the Company closed on an agreement to sell a restaurant property that the Company owned and leased back on a short-term basis. The Company collected initial net proceeds from the purchaser-lessor of $3.9 million in the second quarter of 2022, which represented a portion of the total consideration received from the sale. During the third quarter of 2022, the Company received the remaining proceeds, upon which the lease terminated and the sale transaction was completed, and recognized a $9.2 million gain on the sale of the restaurant property. The initial net proceeds of $3.9 million are included within cash flows from financing activities and the final proceeds received of $8.5 million are included within cash flows from investing activities on the Consolidated Statements of Cash Flows for the year ended December 25, 2022.
Severance and Executive Transition
During 2023 and 2022, the Company incurred severance and executive transition costs primarily related to a reduction in force of Team Members and costs associated with changes in leadership positions. See Note 7. Accrued Payroll and Payroll-Related Liabilities, and Accrued Liabilities and Other Current Liabilities.
Other Financing Costs
Other financing costs include fees related to the entry by the Company into the new Credit Agreement (as defined below) on March 4, 2022 that were not capitalized with the closing of the Credit Facility. See Note 8. Borrowings.
Restaurant Closure Costs, net
Restaurant closure costs (gains) include the ongoing restaurant operating costs for closed Company-owned restaurants and closed restaurant lease termination gains or losses.
Closed Corporate Office Costs, Net of Sublease Income
Closed corporate office, net of sublease income relates to a corporate office facility that was vacated in 2022, and subleased in 2023.
Litigation Contingencies
In 2023, 2022 and 2021, the Company recorded reserves associated with litigation contingencies. See Note 12. Commitments and Contingencies, for further discussion.
Asset Disposal and Other
Asset disposals and other relate primarily to lease terminations and closures at Company-owned restaurants in 2023. The costs in 2022 and 2021 primarily relate to COVID-19 costs, including the cost of personal protective equipment for restaurant Team Members and Guests and providing emergency sick pay to restaurant Team Members during the pandemic.
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