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Franchise Rights Acquired, Goodwill and Other Intangible Assets
12 Months Ended
Dec. 28, 2019
Goodwill And Intangible Assets Disclosure [Abstract]  
Franchise Rights Acquired, Goodwill and Other Intangible Assets

7.

Franchise Rights Acquired, Goodwill and Other Intangible Assets

The Company performed its annual impairment review of goodwill and other indefinite-lived intangible assets for fiscal 2019 and fiscal 2018 on May 5, 2019 and May 6, 2018, respectively.

For the Company’s Brazil reporting unit only, given the then-challenging economic environment, the negative performance trends and the Company’s reduced expectations regarding the future impact of its business growth strategies in the country at December 30, 2017, the Company performed an interim goodwill impairment analysis at such time. In performing the interim goodwill impairment analysis for its Brazil reporting unit, the Company recorded a $13,323 impairment charge at December 30, 2017.

In performing its annual impairment analysis as of May 5, 2019 and May 6, 2018, the Company determined that the carrying amounts of its goodwill reporting units and franchise rights acquired with indefinite lives units of account did not exceed their respective fair values and therefore, no impairment existed.

Franchise rights acquired are due to acquisitions of the Company’s franchised territories as well as the acquisition of franchise promotion agreements and other factors associated with the acquired franchise territories. For the fiscal year ended December 28, 2019, the change in the carrying value of franchise rights acquired is due to the franchisee acquisition as described in Note 6 and the effect of exchange rate changes.

Goodwill primarily relates to the acquisition of the Company by The Kraft Heinz Company (successor to H.J. Heinz Company) in 1978 and the Company’s acquisitions of WW.com, Inc. (formerly known as WeightWatchers.com, Inc.) in 2005, the Company’s franchised territories and the majority interest in Vigilantes do Peso Marketing Ltda. See Note 6 for additional information about acquisitions by the Company. For the fiscal year ended December 28, 2019, the change in the carrying amount of goodwill was due to a franchise acquisition and the effect of exchange rate changes as follows: 

 

 

 

North

 

 

Continental

 

 

United

 

 

 

 

 

 

 

 

 

 

 

America

 

 

Europe

 

 

Kingdom

 

 

Other

 

 

Total

 

Balance as of December 29, 2018

 

$

138,156

 

 

$

7,242

 

 

$

1,178

 

 

$

5,943

 

 

$

152,519

 

Goodwill acquired during the period

 

 

4,111

 

 

 

0

 

 

 

0

 

 

 

0

 

 

 

4,111

 

Effect of exchange rate changes

 

 

1,673

 

 

 

(227

)

 

 

35

 

 

 

(195

)

 

 

1,286

 

Balance as of December 28, 2019

 

$

143,940

 

 

$

7,015

 

 

$

1,213

 

 

$

5,748

 

 

$

157,916

 

 

Finite-lived Intangible Assets

The below table reflects the carrying values of finite-lived intangible assets as of December 28, 2019 and December 29, 2018:

 

 

 

December 28, 2019

 

 

December 29, 2018

 

 

 

Gross

 

 

 

 

 

 

Gross

 

 

 

 

 

 

 

Carrying

 

 

Accumulated

 

 

Carrying

 

 

Accumulated

 

 

 

Amount

 

 

Amortization

 

 

Amount

 

 

Amortization

 

Capitalized software costs

 

$

119,537

 

 

$

97,588

 

 

$

121,508

 

 

$

102,659

 

Website development costs

 

 

77,823

 

 

 

50,748

 

 

 

105,710

 

 

 

77,825

 

Trademarks

 

 

11,869

 

 

 

11,228

 

 

 

11,620

 

 

 

11,010

 

Other

 

 

14,003

 

 

 

4,637

 

 

 

13,967

 

 

 

4,149

 

Trademarks and other intangible assets

 

$

223,232

 

 

$

164,201

 

 

$

252,805

 

 

$

195,643

 

Franchise rights acquired

 

 

8,180

 

 

 

4,618

 

 

 

8,110

 

 

 

4,319

 

Total finite-lived intangible assets

 

$

231,412

 

 

$

168,819

 

 

$

260,915

 

 

$

199,962

 

 

Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of $29,330, $28,995 and $36,040, for the fiscal years ended December 28, 2019, December 29, 2018 and December 30, 2017, respectively. The franchise rights acquired related to the South Carolina Acquisition will be amortized ratably over an 18 year period. The franchise rights acquired related to the Las Vegas Acquisition were fully amortized in fiscal 2019.

Estimated amortization expense of existing finite-lived intangible assets for the next five fiscal years and thereafter is as follows:

 

Fiscal 2020

 

$

25,042

 

Fiscal 2021

 

$

17,802

 

Fiscal 2022

 

$

7,754

 

Fiscal 2023

 

$

1,413

 

Fiscal 2024 and thereafter

 

$

10,582