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Franchise Rights Acquired, Goodwill and Other Intangible Assets | 3 Months Ended
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Apr. 02, 2016
Franchise Rights Acquired, Goodwill and Other Intangible Assets |
6. | 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 three months ended April 2, 2016, the change in the carrying value of indefinite-lived franchise rights acquired is due to the effect of exchange rate changes. 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 5 for further information on the Weilos acquisition. For the three months ended April 2, 2016, the change in the carrying amount of goodwill is due to the effect of exchange rate changes as follows:
|  | North |  |  | United |  |  | Continental |  |  |  |  |  |  |
|  | America |  |  | Kingdom |  |  | Europe |  |  | Other |  |  | Total |
Balance as of January 2, 2016 |  | $ | 133,408 |  |  | $ | 1,370 |  |  | $ | 7,260 |  |  | $ | 17,293 |  |  | $ | 159,331 |
Effect of exchange rate changes |  |  | 2,503 |  |  |  | (51 | ) |  |  | 318 |  |  |  | 1,813 |  |  |  | 4,583 |
Balance as of April 2, 2016 |  | $ | 135,911 |  |  | $ | 1,319 |  |  | $ | 7,578 |  |  | $ | 19,106 |  |  | $ | 163,914 |
As a result of a recent decision to adjust the scope and timing of certain business initiatives in the Brazilian market, the Company performed a quantitative impairment assessment, in a manner consistent with its annual approach to testing goodwill impairment, to assess whether the carrying value of this reporting unit exceeds its fair value. Based on the results of this interim test the Company concluded that no impairment exists. However, based on the results of this test, the fair value of the reporting unit exceeds the carrying value by less than 10%, and accordingly a change in the underlying assumptions would cause a change in the results of the impairment assessment and, as such, could result in an impairment of the goodwill related to Brazil, for which the carrying amount is $16,900. The carrying values of finite-lived intangible assets as of April 2, 2016 and January 2, 2016 were as follows:
|  | April 2, 2016 |  |  | January 2, 2016 |
|  | Gross |  |  |  |  |  | Gross |  |  |  |
|  | Carrying |  |  | Accumulated |  |  | Carrying |  |  | Accumulated |
|  | Amount |  |  | Amortization |  |  | Amount |  |  | Amortization |
Capitalized software costs |  | $ | 123,170 |  |  |  | 90,590 |  |  | $ | 119,658 |  |  | $ | 86,134 |
Website development costs |  |  | 105,064 |  |  |  | 72,878 |  |  |  | 100,105 |  |  |  | 68,673 |
Trademarks |  |  | 10,984 |  |  |  | 10,489 |  |  |  | 10,960 |  |  |  | 10,435 |
Other |  |  | 8,027 |  |  |  | 7,219 |  |  |  | 7,976 |  |  |  | 7,118 |
Trademarks and other intangible assets |  | $ | 247,245 |  |  | $ | 181,176 |  |  | $ | 238,699 |  |  | $ | 172,360 |
Franchise rights acquired |  |  | 4,317 |  |  |  | 4,317 |  |  |  | 4,182 |  |  |  | 4,059 |
Total finite-lived intangible assets |  | $ | 251,562 |  |  | $ | 185,493 |  |  | $ | 242,881 |  |  | $ | 176,419 |
Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of $8,420 and $9,218 for the three months ended April 2, 2016 and April 4, 2015, respectively. The franchise rights acquired related to the VPM acquisition are being amortized ratably over a 2 year period. Estimated amortization expense of existing finite-lived intangible assets for the next five fiscal years and thereafter is as follows:
Remainder of fiscal 2016 |  | $ | 25,445 |
Fiscal 2017 |  | $ | 27,428 |
Fiscal 2018 |  | $ | 11,099 |
Fiscal 2019 |  | $ | 2,025 |
Fiscal 2020 and thereafter |  | $ | 72 |

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16373-109275 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16265-109275 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16323-109275 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13816-109267 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13854-109267 + Details
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