Goodwill and Other Intangible Assets

12 Months Ended

Jan. 03, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in the carrying amount of goodwill for the fifty-three weeks ended January 3, 2017 (Successor) are as follows (in thousands):




	Goodwill
Balance as of December 29, 2015 (Successor)	$	318,275
Adjustment to purchase price allocation	781
Acquisition of franchise-operated restaurants	969
Balance as of January 3, 2017 (Successor)	$	320,025

The increase in goodwill was due to an adjustment of $0.8 million to the purchase price allocation as described in more detail in Note 3 and $1.0 million related to the acquisition of six franchise-operated restaurants during the fifty-three weeks ended January 3, 2017 (Successor), as described in more detail in Note 6.

The carrying value of trademarks was $220.3 million at both January 3, 2017 (Successor) and December 29, 2015 (Successor).

The Company’s other intangible assets at January 3, 2017 (Successor) and December 29, 2015 (Successor) consisted of the following (in thousands):



	Successor
	January 3, 2017							December 29, 2015
	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Favorable lease assets	$	14,176	$	(2,996	)	$	11,180	$	14,207	$	(1,020	)	$	13,187
Franchise rights	15,489		(2,038		)	13,451		15,897		(711		)	15,186
Reacquired franchise rights	161		(10		)	151		—		—			—
Total amortized other intangible assets	$	29,826	$	(5,044	)	$	24,782	$	30,104	$	(1,731	)	$	28,373

Goodwill and intangible assets at January 3, 2017 (Successor) are based on the final purchase price allocation of DTH, which is based on valuations performed to determine the fair value of the acquired assets as of the acquisition date. See Note 3 for further discussion of the acquisition of DTH. During the fifty-three weeks ended January 3, 2017 (Successor), the Company wrote-off $0.2 million of franchise rights associated with the closure of four franchise locations and reclassified $0.2 million of franchise rights as reacquired franchise rights from the acquisition of six franchise locations. Two franchise locations closed during the fourth quarter of fiscal 2015 and accordingly, the Company wrote-off $3,000 of franchise rights during the twenty-six weeks ended December 29, 2015 (Successor). Additionally, the Company recorded the fair value of other intangible assets as part of the purchase price allocation related to its investment in four public partnerships, which were liquidated and dissolved in December 2015, as discussed in Note 2. Accordingly, the Company wrote-off the net carrying value of the intangible assets of $0.1 million at December 29, 2015 (Successor).

Favorable lease assets are related to below-market leasing arrangements. Favorable lease assets are amortized on a lease-by-lease basis using the straight-line method over the remaining lease terms of the underlying leases. Franchise rights are amortized using the straight-line method over the remaining life of the franchise agreements or 40 years, whichever is less. The weighted-average amortization periods as of January 3, 2017 (Successor) for favorable lease assets and franchise rights equaled 8.0 years and 13.9 years, respectively.

Amortization expense for amortizable intangible assets totaled $3.6 million, $1.7 million, $1.0 million and $2.7 million for the fifty-three weeks ended January 3, 2017 (Successor), twenty-six weeks ended December 29, 2015 (Successor), twenty-six weeks ended June 30, 2015 (Predecessor) and fifty-two weeks ended December 30, 2014 (Predecessor), respectively, and includes amortization of favorable lease assets of $2.0 million, $1.0 million, $0.3 million and $0.8 million for the fifty-three weeks ended January 3, 2017 (Successor), twenty-six weeks ended December 29, 2015 (Successor), twenty-six weeks ended June 30, 2015 (Predecessor) and fifty-two weeks ended December 30, 2014 (Predecessor), respectively, and amortization of franchise rights of $1.6 million, $0.7 million, $0.7 million and $1.9 million for the fifty-three weeks ended January 3, 2017 (Successor), twenty-six weeks ended December 29, 2015 (Successor), twenty-six weeks ended June 30, 2015 (Predecessor) and fifty-two weeks ended December 30, 2014 (Predecessor), respectively. The estimated future amortization for favorable lease assets and franchise rights for the next five fiscal years is as follows (in thousands):



	Favorable Lease Assets		Franchise Rights
2017	$	1,878	$	1,346
2018	1,722		1,307
2019	1,447		1,269
2020	1,171		1,200
2021	1,005		1,085

- 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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