Business Combination

9 Months Ended

Sep. 27, 2016

Business Combinations [Abstract]

Business Combination

Business Combination

In January 2016, NPCQB acquired three Wendy’s restaurants, including fee-owned properties, from a Wendy’s franchisee for approximately $8.0 million. During the second quarter of fiscal 2016, the Company sold one of the fee-owned properties for $1.4 million and leased it back and plans to sell and lease back the remaining two fee-owned properties.

On July 25, 2016, NPCQB completed the acquisition of 39 Wendy’s restaurants, including four restaurants that were recently constructed, from a subsidiary of The Wendy’s Company (“Wendy’s”) for approximately $36.8 million, plus amounts for working capital. The units are located in the Raleigh-Durham, North Carolina metropolitan area.

The asset acquisitions were funded with cash on hand. The acquisitions were accounted for using the purchase method of accounting. As a result of these acquisitions, purchase accounting adjustments were made to the underlying assets based upon the valuations. These estimates of fair value are preliminary, and are therefore subject to further refinement. The total purchase price, net of cash acquired, was allocated as follows (in thousands):

Facilities and equipment	$	24,431
Franchise rights	17,385
Goodwill	1,500
Other	1,467
Total purchase price	$	44,783

All of the goodwill recognized will be deductible for income tax purposes. The weighted average amortization period assigned to the acquired franchise rights was approximately 19 years.

The pro forma impact of these Wendy’s asset acquisitions on the results of operations is included in the table below for periods prior to the acquisition dates in which the acquisitions were not previously consolidated. The pro forma results of operations are not necessarily indicative of the results that would have occurred had the acquisitions been consummated at the beginning of the periods presented, nor are they necessarily indicative of future operating results.

	unaudited, (in thousands)
	13 Weeks Ended						39 Weeks Ended
	September 27, 2016			September 29, 2015			September 27, 2016		September 29, 2015
Total sales	$	309,605		$	316,552		$	965,540	$	963,795
Net (loss) income	(4,234		)	(1,982		)	5,321		3,333

The Consolidated Statements of Operations for the 39 weeks ended September 27, 2016 included total sales of $14.6 million related to the Wendy’s units acquired during 2016. It is impracticable to disclose earnings for the post-acquisition period for these acquired units as earnings of such units are not tracked on an individual basis.