Acquisitions

In 2012, as part of an acquisition of restaurants from Burger King Corporation ("BKC"), the Company was assigned BKC's right of first refusal on franchisee restaurant sales in 20 states (the "ROFR"). Since the beginning of 2016, the Company has acquired an aggregate of 99 restaurants from other franchisees in the following transactions:



Closing Date		Number of Restaurants	Purchase Price		Number of Fee-Owned Restaurants (1)	Market Location
2016 Acquisitions:
February 23, 2016	(2)	12	$	7,127		Scranton/Wilkes-Barre, Pennsylvania
May 25, 2016		6	12,080		5	Detroit, Michigan
July 14, 2016	(2)	4	5,445		3	Detroit, Michigan
August 23, 2016		7	8,755		6	Portland, Maine
October 4, 2016		3	1,623			Raleigh, North Carolina
November 15, 2016		17	7,251			Pittsburgh and Johnstown, Pennsylvania
December 1, 2016		7	5,807		1	Columbus, Ohio
		56	48,088		15
2017 Acquisitions:
February 28, 2017		43	20,373			Cincinnati, Ohio
Total 2016 and 2017 Acquisitions		99	$	68,461	15


(1)	The 2016 acquisitions included the purchase of 15 fee-owned restaurants, of which 14 were sold in sale-leaseback transactions during 2016 for net proceeds of $19.1 million.


(2)	Acquisitions resulting from the exercise of the ROFR.

The Company allocated the aggregate purchase price to the net tangible and intangible assets acquired in the acquisitions at their estimated fair values. The following table summarizes the allocation of the aggregate purchase price for the 2017 acquisition:



Inventory	$	373
Restaurant equipment	2,076
Restaurant equipment - subject to capital lease	79
Leasehold improvements	709
Franchise fees	997
Franchise rights (Note 3)	9,856
Favorable leases (Note 3)	720
Deferred income taxes	692
Goodwill (Note 3)	7,603
Capital lease obligations for restaurant equipment	(94		)
Unfavorable leases (Note 3)	(2,518		)
Other liabilities	(120		)
Net assets acquired	$	20,373

Goodwill recorded in connection with this acquisition represents costs in excess of fair values assigned to the underlying net assets of acquired restaurants. Acquired goodwill that is expected to be deductible for income tax purposes was $6.5 million in the first three months of 2017. Deferred income tax assets are due primarily to the book and tax bases difference of net favorable and unfavorable leases.

The restaurants acquired in 2016 and 2017 contributed restaurant sales of $20.7 million and $1.8 million in the three months ended April 2, 2017 and April 3, 2016, respectively. It is impracticable to disclose net earnings for the post-acquisition period for the acquired restaurants as net earnings of these restaurants were not tracked on a collective basis due to the integration of administrative functions, including field supervision.

The unaudited pro forma impact on the results of operations for the restaurants acquired in 2017 and 2016 for the three months ended April 2, 2017 and April 3, 2016 is included below. The unaudited 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 any future consolidated operating results. The following table summarizes the Company's unaudited pro forma operating results:



	Three Months Ended
	April 2, 2017			April 3, 2016
Restaurant sales	$	247,141		$	248,333
Net income (loss)	$	(5,051	)	$	3,322
Basic and diluted net income (loss) per share	$	(0.14	)	$	0.07

This unaudited pro forma financial information does not give effect to any anticipated synergies, operating efficiencies or cost savings or any integration costs related to the acquired restaurants. The unaudited pro forma financial results exclude transaction costs recorded as general and administrative expenses of $0.7 million and $0.4 million during the three months ended April 2, 2017 and April 3, 2016, respectively.