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System Optimization (Losses) Gains, Net (Tables)
 9 Months Ended
Oct. 01, 2017
Property, Plant and Equipment  
Summary of DavCo and NPC Transactions
The following is a summary of the activity recorded as a result of the DavCo and NPC transactions:
 
Nine Months Ended
 
October 1,
2017
Acquisition (a)
 
Total consideration paid
$
86,788

Identifiable assets and liabilities assumed:
 
Net assets held for sale
70,688

Capital lease assets
49,360

Deferred taxes
27,639

Capital lease obligations
(97,046
)
Net unfavorable leases (b)
(22,330
)
Other liabilities (c)
(6,999
)
Total identifiable net assets
21,312

Goodwill (d)
$
65,476

 
 
Disposition
 
Proceeds
$
70,688

Net assets sold
(70,688
)
Goodwill (d)
(65,476
)
Net favorable leases (e)
24,034

Other (f)
(1,692
)
Loss on DavCo and NPC transactions
$
(43,134
)
_______________

(a)
The fair values of the identifiable intangible assets and taxes related to the acquisition are provisional amounts as of October 1, 2017, pending final valuations and purchase accounting adjustments. The Company utilized management estimates and consultation with an independent third-party valuation firm to assist in the valuation process. For the three months ended October 1, 2017, the Company recorded adjustments to the fair value of deferred taxes and net unfavorable leases, resulting in a decrease in goodwill of $27.

(b)
Includes favorable lease assets of $1,229 and unfavorable lease liabilities of $23,559.

(c)
Includes a supplemental purchase price estimated at $6,344 to be paid to DavCo for the resolution of certain lease-related matters, which is included in “Accrued expenses and other current liabilities.”

(d)
Includes tax deductible goodwill of $21,870.

(e)
The Company recorded favorable lease assets of $30,068 and unfavorable lease liabilities of $6,034 as a result of subleasing land, buildings and leasehold improvements to NPC.

(f)
Includes cash payments for selling and other costs associated with the transaction. For the three and nine months ended October 1, 2017, the Company recorded additional selling and other costs of $12.
Summary of Disposition Activity
The following is a summary of the disposition activity recorded as a result of our system optimization initiative:
 
Three Months Ended
 
Nine Months Ended
 
October 1, 2017
 
October 2,
2016
 
October 1,
2017
 
October 2,
2016
Number of restaurants sold to franchisees
—

 
156

 
—

 
211

 
 
 
 
 
 
 
 
Proceeds from sales of restaurants
$
—

 
$
124,765

 
$
—

 
$
164,380

Net assets sold (a)
—

 
(58,227
)
 
—

 
(75,282
)
Goodwill related to sales of restaurants
—

 
(24,254
)
 
—

 
(30,630
)
Net unfavorable leases (b)
—

 
(6,225
)
 
—

 
(11,131
)
Other
—

 
(726
)
 
—

 
(1,521
)
 
—

 
35,333

 
—

 
45,816

Post-closing adjustments on sales of restaurants (c)
418

 
(120
)
 
1,345

 
(1,710
)
Gain on sales of restaurants, net
418

 
35,213

 
1,345

 
44,106

 
 
 
 
 
 
 
 
(Loss) gain on sales of other assets, net (d)
(539
)
 
2,543

 
2,040

 
4,000

Gain (loss) on DavCo and NPC transactions
15

 
—

 
(43,134
)
 
—

System optimization (losses) gains, net
$
(106
)
 
$
37,756

 
$
(39,749
)
 
$
48,106

_______________

(a)
Net assets sold consisted primarily of equipment.

(b)
During the three and nine months ended October 2, 2016, the Company recorded favorable lease assets of $2,114 and $2,297, respectively, and unfavorable lease liabilities of $8,339 and $13,428, respectively, as a result of leasing and/or subleasing land, buildings and/or leasehold improvements to franchisees in connection with sales of restaurants.

(c)
The three and nine months ended October 1, 2017 includes cash payments, net of proceeds received, of $333 and $33, respectively, related to post-closing reconciliations with franchisees. The nine months ended October 1, 2017 also includes the recognition of a deferred gain of $312 as a result of the resolution of certain contingencies related to the extension of lease terms for a Canadian restaurant.

(d)
During the three and nine months ended October 1, 2017, the Company received cash proceeds of $2,411 and $9,403, respectively, primarily from the sale of surplus properties. The nine months ended October 1, 2017 also includes the recognition of a deferred gain of $375 related to the sale of a share in an aircraft. During the three and nine months ended October 2, 2016, the Company received cash proceeds of $4,006 and $9,469, respectively, primarily from the sale of surplus properties.