Acquisitions

On the Acquisition Date, we completed the acquisition of all outstanding interests in Barteca for total cash consideration of $331.2 million, which represents a purchase price of $325 million plus customary adjustments including payments for cash remaining in the business. Barteca owns and operates two restaurant concepts: Barcelona and bartaco. Barcelona and bartaco restaurant concepts are innovative, with a unique vibe, food, drinks and design. Barcelona serves as a neighborhood Spanish tapas bar with an ever-changing selection of tapas, using both local and seasonal ingredients as well as specialties from Spain and the Mediterranean. Barcelona has a superior Spanish wine program and an award winning selection of wines, with 17 locations in 9 states and the District of Columbia. bartaco combines fresh, upscale street food with a coastal vibe in a relaxed environment and is inspired by a healthy, outdoor lifestyle. bartaco has 21 locations across 13 states, as of June 25, 2019.

The following table summarizes the preliminary fair value of identified assets acquired and liabilities assumed at the Acquisition Date:



	As of
(Amounts in thousands)	June 27, 2018
Purchase price	$	331,199

Allocation of purchase price
Cash and cash equivalents	6,006
Accounts receivable	3,311
Inventory	2,068
Prepaid expenses and other assets	3,740
Leasehold improvements	34,919
Buildings and improvements	17,967
Furniture, fixtures, and equipment	13,207
Construction in progress	4,340
Other assets	1,421
Intangible assets	185,080
(Unfavorable) leases	(785		)
Accounts payable and other liabilities	(14,111		)
Financing lease obligations	(13,340		)
Deferred taxes	(28,147		)
Total fair value of net assets acquired:	215,676
Goodwill	$	115,523

Intangible assets acquired primarily include liquor licenses and bartaco and Barcelona trade names. The fair value of the acquired liquor licenses and trade names are $1.1 million and $183.0 million, respectively. Other intangible assets were valued at approximately $0.2 million. Liquor licenses acquired will be amortized over an estimated useful life of each individual license, which is currently estimated to be one year. Trade names represent intangible assets with indefinite life.

As a result of the acquisition, we have recognized approximately $115.5 million of goodwill, of which $104.7 million is deductible for income tax purposes. Goodwill, of which $43.2 million and $72.3 million is attributable to the Barcelona and bartaco reportable segments, respectively, represents the excess of the purchase price over the aggregate fair value of net assets acquired and is related to the benefits expected as a result of the acquisition, including sales, development and growth opportunities. We believe that Barteca's innovative concepts are highly complementary and will provide Del Frisco’s portfolio with significant growth and development opportunities, enabling us to capture market share in the experiential dining segment, while mitigating the effects of seasonality and the risk of economic downturns to our restaurant portfolio.

The purchase accounting is complete, and our estimates and assumptions were subject to change during the measurement period (up to one year from the acquisition date).

Amounts previously estimated have changed during the measurement period. The changes in estimates included an increase of $4.5 million of buildings and improvements, an increase of $2.0 million of financing lease obligations and a decrease of $0.9 million in accounts payable. We recorded the measurement-period adjustments in the fourth quarter of 2018. Depreciation and interest expenses increased by $0.2 million and $0.1 million, respectively as a result of these measurement-period adjustments. Additionally, deferred tax liabilities increased by $3.1 million with a corresponding change to goodwill in the second quarter of 2019.

Pro Forma Results of Operations (unaudited)

The following pro forma results of operations for the 13 weeks ended June 26, 2018 and 26 weeks ended June 26, 2018, have been prepared as though the business acquisition had occurred on January 1, 2017 consistent with the pro forma results of operations prepared for the third quarter and annual filings of fiscal 2018. This pro forma financial information is not indicative of the results of operations that the Company would have attained had the acquisition occurred at the beginning of the period presented, nor is the pro forma financial information indicative of the results of operations that may occur in the future:



	13 Weeks Ended			26 Weeks Ended
(Amounts in thousands)	June 26, 2018			June 26, 2018
Revenues	$	112,655		$	217,281
Net loss	(5,556		)	(8,165		)
Net loss per average common share
Basic	$	(0.27	)	$	(0.40	)
Diluted	$	(0.27	)	$	(0.40	)

The above pro forma information includes Barteca's actual revenues and net loss of $36.9 million and $6.7 million for the 13 weeks ended June 26, 2018 and $68.2 million and $5.7 million for the 26 weeks ended June 26, 2018, respectively. The combined companies incurred $7.0 million and $13.9 million of interest expense based on financing related to the transaction for the 13 weeks ended June 26, 2018 and 26 weeks ended June 26, 2018, respectively and was reflected in pro forma net loss. Pro forma revenues exclude Sullivan’s results of operation as these amounts are reflected as discontinued operations in the Consolidated Statements of Operations. See Note 3, Dispositions in the notes to our condensed consolidated financial statements for information regarding discontinued operations.