Intangible Assets And Goodwill

12 Months Ended

Dec. 27, 2016

Intangible Assets And Goodwill [Abstract]

(3) Intangible Assets and Goodwill

The components of intangible assets and goodwill consist of the following:



	December 27,		December 29,
	2016		2015
	(in thousands)
Amortized intangible assets:
Gross carrying amount:
Favorable leasehold interests	$	848	$	848
Licensing and development rights		1,077		1,077
Other		540		494
		2,465		2,419
Accumulated amortization:
Favorable leasehold interests		(848)		(840)
Licensing and development rights		(663)		(597)
Other		(133)		(105)
		(1,644)		(1,542)
Net amortized intangible assets		821		877
Unamortized intangible assets:
Goodwill		75,365		75,365
Trade names		35,493		34,893
Liquor license permits		1,095		1,095
	$	111,953	$	111,353

Licensing contract rights and favorable lease rights are being amortized using the straight-line method over the estimated lives of the related contracts and agreements, which are 7 to 9 years for favorable leasehold interest and 17 years for licensing contract rights. Liquor licenses that are transferable are carried at cost. Such licenses are reviewed for impairment on an annual basis.

Goodwill is allocated to the Del Frisco’s and Sullivan’s reporting units, as follows: $43.9 million and $31.4 million at December 27, 2016 and December 29, 2015, respectively.

We have estimated that annual amortization expense will amount to approximately $0.1 million for 2017, $0.1 million for 2018, $0.1 million for 2019, $0.1 million for 2020, and $0.1 million for 2021.

Amortization expense was $0.1 million, $0.1 million, and $0.2 million for the years ended December 27, 2016, December 29, 2015 and December 30, 2014, respectively.

We performed the annual test for impairment of goodwill and indefinite-lived intangible assets and concluded that no impairment existed as of December 27, 2016, December 29, 2015 or December 30, 2014, and accordingly, no impairment losses were recorded.

On February 1, 2012, we entered into an agreement to terminate a license agreement with the licensee operating a Del Frisco’s in Orlando, Florida effective June 1, 2013. The original licensing agreement has been amortized over the expected term of the agreement, and has a remaining book value of $0.5 million as of December 27, 2016. Under the agreement, in exchange for us surrendering our right to receive licensing fees from January 1, 2012 through June 1, 2013 and making a one-time $25,000 payment to the licensee, we received the rights to open and operate any of our restaurants in the three counties that make up the Orlando metropolitan area no earlier than January 1, 2015. We accounted for this as an exchange of non-monetary assets, for which we have concluded that the fair value of the asset surrendered approximates its book value and therefore no gain or loss has been recorded on the exchange. To determine the fair value of the asset surrendered, we utilized a discounted cash flow method that applied a discount rate of 11.5%, our weighted-average cost of capital, to the future estimated cash flows to be received over the remaining term, including expected renewal, of the license agreement.

On March 17, 2016, we entered into an agreement to obtain and clarify ownership of all naming rights for Del Frisco’s in certain counties of Kentucky, Indiana and Ohio for aggregate consideration of $0.6 million. Under the terms of the agreement, we made a payments totaling $0.5 million in 2016, with the remaining $0.1 million to be paid on August 1, 2017. This intangible asset has been recorded as a trade name with an indefinite life.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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