Goodwill and Intangible Assets, Net

12 Months Ended

Dec. 28, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets, Net:

The following table presents changes in the carrying value of goodwill for the periods ended January 3, 2016 and December 28, 2014:



	Successor
	January 3, 2016		December 28, 2014
	(in thousands)
Balance at beginning of period	$	483,444	$	—
Goodwill assigned in connection with Merger ⁽¹⁾	—		432,058
Goodwill assigned in acquisition of Peter Piper Pizza ^{(2) (3)}	432		50,982
Other additions ⁽⁴⁾	—		404
Balance at end of period	$	483,876	$	483,444

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(1)	See Note 2 “Acquisition of CEC Entertainment, Inc.” for a discussion of goodwill recorded in connection with Merger.


(2)	See Note 3 “Acquisition of Peter Piper Pizza” for a discussion of goodwill recorded in connection with the PPP Acquisition.

(3)

During Fiscal 2015, we recorded certain adjustments to the initial PPP purchase price allocation related to the final settlement of net working capital, the valuation of favorable and unfavorable lease interests, the valuation of PPP’s tradename and the valuation of net operating losses acquired and other tax positions that resulted in a net increase to goodwill of $0.4 million. See Note 3 “Acquisition of Peter Piper Pizza” for a discussion of the measurement period adjustments.


(4)	Other additions for the 317 day period ended December 28, 2014 represents goodwill related to a franchise the Company acquired in the second quarter of 2014.

The following table presents our indefinite and definite-lived intangible assets at January 3, 2016 and December 28, 2014:



		Successor
		January 3, 2016							December 28, 2014
	Weighted Average Life (Years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
		(in thousands)
Chuck E. Cheese's tradename	Indefinite	$	400,000	$	—		$	400,000	$	400,000	$	—		$	400,000
Peter Piper Pizza tradename ⁽²⁾	Indefinite	26,700		—			26,700		24,800		—			24,800
Favorable lease agreements ⁽¹⁾ ⁽²⁾	10	14,880		(3,686		)	11,194		16,000		(1,679		)	14,321
Franchise agreements	25	53,300		(3,099		)	50,201		53,300		(1,021		)	52,279
		$	494,880	$	(6,785	)	$	488,095	$	494,100	$	(2,700	)	$	491,400

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(1)

In connection with the Merger and the PPP Acquisition, we also recorded unfavorable lease liabilities of $10.2 million and $3.9 million, respectively, which are included in “Other current liabilities” and “Other noncurrent liabilities” in our Consolidated Balance Sheets. Such amounts are being amortized over a weighted average life of 10 years, and are included in “Rent expense” in our Consolidated Statements of Earnings for the Successor periods.


(2)	During Fiscal 2015 we recorded adjustments related to the valuation of the favorable lease agreements intangible asset and PPP’s tradename of $(1.1) million and $1.9 million, respectively, recorded in connection with the PPP Acquisition. See Note 3 “Acquisition of Peter Piper Pizza” for a discussion of these adjustments.

Our estimated future amortization expense related to the favorable lease agreements and franchise agreements is set forth as follows (in thousands):



	Favorable Lease Agreements		Franchise Agreements
Fiscal 2016	$	1,938	$	2,049
Fiscal 2017	1,659		2,049
Fiscal 2018	1,246		2,049
Fiscal 2019	1,102		2,049
Fiscal 2020	1,050		2,088
Thereafter	4,199		39,917
	$11,194		$50,201

Amortization expense related to favorable lease agreements was $2.0 million and $1.7 million, respectively, for Fiscal 2015 and the 317 day period ended December 28, 2014, and is included in “Rent expense” in our Consolidated Statements of Earnings. Amortization expense related to franchise agreements was $2.0 million and $1.0 million, respectively, for Fiscal 2015 and the 317 day period ended December 28, 2014, and is included in “General and administrative expenses” in our Consolidated Statements of Earnings. As we did not have any intangible assets related to favorable lease agreements or franchise agreements prior to the Merger, we did not incur any amortization expense related to favorable lease agreements for the 47 day period ended February 14, 2014 and Fiscal 2013.

- 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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