Note 7 - Closures and Impairments Expense
 3 Months Ended
Aug. 30, 2016
Notes to Financial Statements  
Asset Impairment Charges [Text Block]
7. Closures and Impairments Expense
 
Closures and impairments, net include the following (in thousands):
 
   
Thirteen weeks ended
    
 
 
August 30, 2016
 
 
September 1, 2015
 
 
Property impairments
 
$
6,580
 
 
$
2,577
 
 
Closed restaurant lease reserves
 
 
17,728
 
 
 
604
 
 
Inventory
write-off
    
2,754
      
–
    
Severance
benefits
    
1,
760
      
18
    
Other closing expense
 
 
1,427
 
 
 
103
 
 
Gain on sale of surplus properties
 
 
(
57
)
 
 
(590
)
 
Closures and impairments, net
 
$
30,192
 
 
$
2,712
 
 
 
During the 13 weeks ended August 30, 2016, we closed
99 Company-owned restaurants, 95 of which were closed in connection with an asset rationalization plan announced on August 11, 2016. The plan was formulated in response to a comprehensive review of our property portfolio through the planned closure of restaurants with perceived limited upside due to market concentration, challenged trade areas, or other factors. Included within Closures and impairments, net for the 13 weeks ended August 30, 2016 are closed restaurant lease reserves, inventory write-off, severance benefits, and other closing expense of $24.7 million related to these closures.
 
A rollforward of our future lease obligations associated with closed restaurants is as follows (in thousands):
 
 
 
Reserve for
Lease Obligations
 
Balance at
May 31, 2016
 
$
6,270
 
Closing expense including rent and other lease charges
 
 
17,728
 
Payments
 
 
(
1,393
)
Adjustments to deferred escalating minimum rent
 
 
9,283
 
Balance at August 30, 2016
 
$
31,888
 
 
The amounts comprising future lease obligations in the table above are estimated using certain assumptions, including the period of time it will take to settle the lease with the landlord or find a suitable sublease tenant, and the amount of actual future cash payments could differ from our recorded lease obligations. Of the total future lease obligations included in the table above,
$27.9 million is included within Accrued liabilities – Rent and other, $3.5 million is included within Deferred escalating minimum rent, and $0.5 million is included within Other deferred liabilities in our Condensed Consolidated Balance Sheet as of August 30, 2016. For the remainder of fiscal year 2017 and beyond, our focus will be on obtaining settlements, or subleases as necessary, on as many of these leases as possible and these settlements could be higher or lower than the amounts recorded. The actual amount of any cash payments made by the
 
Company for lease contract termination costs will be dependent upon ongoing negotiations with the landlords of the leased restaurant properties.