Franchise Rights Acquired, Goodwill and Other Intangible Assets

9 Months Ended

Oct. 03, 2015

Franchise Rights Acquired, Goodwill and Other Intangible Assets

4.	Franchise Rights Acquired, Goodwill and Other Intangible Assets

Franchise rights acquired are due to acquisitions of the Company’s franchised territories as well as the acquisition of franchise promotion agreements and other factors associated with the acquired franchise territories. For the nine months ended October 3, 2015, the change in the carrying value of indefinite-lived franchise rights acquired is due to the effect of exchange rate changes as follows:


Balance as of January 3, 2015, as restated	$	759,838
Effect of exchange rate changes		(9,939	)

Balance as of October 3, 2015	$	749,899

Goodwill primarily relates to the acquisition of the Company by H.J. Heinz Company in 1978, the acquisition of WeightWatchers.com, Inc. in 2005, the acquisitions of the Company’s franchised territories, the acquisitions of the majority interest in VPM and of Wello in fiscal 2014 and the acquisition of Weilos in fiscal 2015. See Note 3 for further information on the Weilos acquisition. For the nine months ended October 3, 2015, the change in the carrying amount of goodwill is due to the Weilos acquisition and the effect of exchange rate changes as follows:


	North America			United Kingdom			Continental Europe			Other			Total
Balance as of January 3, 2015, as restated	$	134,611		$	1,421		$	7,661		$	24,586		$	168,279
Goodwill acquired during the period		5,588			0			0			0			5,588
Effect of exchange rate changes		(4,727	)		(13	)		(281	)		(7,233	)		(12,254	)

Balance as of October 3, 2015	$	135,472		$	1,408		$	7,380		$	17,353		$	161,613

The carrying values of finite-lived intangible assets as of October 3, 2015 and January 3, 2015 were as follows:


	October 3, 2015				January 3, 2015
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
					(restated)
Capitalized software costs	$	117,905	$	83,403	$	107,581	$	72,590
Website development costs		95,606		64,625		95,717		63,405
Trademarks		10,911		10,379		10,836		10,213
Other		7,004		6,864		7,014		6,825

Trademarks and other intangible assets		231,426		165,271		221,148		153,033
Franchise rights acquired		4,191		3,919		4,735		3,690

Total finite-lived intangible assets	$	235,617	$	169,190	$	225,883	$	156,723

Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of $7,743 and $26,771 for the three and nine months ended October 3, 2015, respectively. Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of $7,518 and $20,697 for the three and nine months ended September 27, 2014, respectively.

Estimated amortization expense of existing finite-lived intangible assets for the next five fiscal years and thereafter is as follows:


Remainder of fiscal 2015	$	8,057
Fiscal 2016	$	29,472
Fiscal 2017	$	22,073
Fiscal 2018	$	5,990
Fiscal 2019 and thereafter	$	835

- 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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