Franchise Rights Acquired, Goodwill and Other Intangible Assets

3 Months Ended

Apr. 01, 2017

Franchise Rights Acquired, Goodwill and Other Intangible Assets

5.	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 1, 2017, the change in the carrying value of 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 Vigilantes do Peso Marketing Ltda. (“VPM”) and of Knowplicity, Inc., d/b/a Wello, in fiscal 2014 and the acquisition of Weilos, Inc. in fiscal 2015. For the three months ended April 1, 2017, the change in the carrying amount of goodwill is due to the effect of exchange rate changes as follows:


	North America		United Kingdom		Continental Europe		Other		Total
Balance as of December 31, 2016	$	137,543	$	1,145	$	6,884	$	20,566	$	166,138
Effect of exchange rate changes		456		19		98		683		1,256

Balance as of April 1, 2017	$	137,999	$	1,164	$	6,982	$	21,249	$	167,394

The carrying values of finite-lived intangible assets as of April 1, 2017 and December 31, 2016 were as follows:


	April 1, 2017				December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Capitalized software costs	$	129,023	$	106,261	$	126,737	$	101,316
Website development costs		124,340		93,025		119,971		87,736
Trademarks		11,135		10,698		11,092		10,647
Other		7,961		7,526		7,945		7,434

Trademarks and other intangible assets	$	272,459	$	217,510	$	265,745	$	207,133

Franchise rights acquired		4,612		4,612		4,551		4,551
Total finite-lived intangible assets	$	277,071	$	222,122	$	270,296	$	211,684

Aggregate amortization expense for finite-lived intangible assets was recorded in the amounts of $9,175 and $8,420 for the three months ended April 1, 2017 and April 2, 2016, respectively. The franchise rights acquired related to the VPM acquisition were 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 2017	$	25,188
Fiscal 2018	$	19,061
Fiscal 2019	$	8,175
Fiscal 2020	$	1,923
Fiscal 2021 and thereafter	$	602

- 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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