The following is a summary of the disposition activity recorded as a result of our system optimization initiative:



	Three Months Ended						Six Months Ended
	July 1, 2018			July 2, 2017			July 1, 2018			July 2, 2017
Gain on sale of restaurants, net (a)	$	89		$	—		$	89		$	—
Post-closing adjustments on sales of restaurants (b)	(13		)	27			(225		)	927
Gain (loss) on sales of other assets, net (c)	16			2,072			(342		)	2,579
Loss on DavCo and NPC Transactions (d)	—			(43,149		)	—			(43,149		)
System optimization gains (losses), net	$	92		$	(41,050	)	$	(478	)	$	(39,643	)

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(a)	During the three and six months ended July 1, 2018, the Company received cash proceeds of $1,436 from the sale of three Company-operated restaurants. Net assets sold totaled $1,139 and consisted primarily of equipment. In addition, goodwill of $208 was written off in connection with the sale.

(b)

The six months ended July 1, 2018 includes cash proceeds, net of payments of $6. The three and six months ended July 2, 2017 includes cash proceeds of $300 related to post-closing reconciliations with franchisees. The six months ended July 2, 2017 also includes the recognition of a deferred gain of $312 as a result of the resolution of certain contingencies related to the extension of lease terms for a Canadian restaurant.

(c)

During the three and six months ended July 1, 2018, the Company received cash proceeds, primarily from the sale of surplus properties, of $27 and $372, respectively, and received cash proceeds of $5,342 and $6,992 during the three and six months ended July 2, 2017, respectively. The six months ended July 2, 2017 also includes the recognition of a deferred gain of $375 related to the sale of a share in an aircraft.

(d)

As part of our system optimization initiative, the Company acquired 140 Wendy’s restaurants on May 31, 2017 from DavCo Restaurants, LLC (“DavCo”) for total net cash consideration of $86,788, which were immediately sold to NPC International, Inc. (“NPC”), an existing franchisee of the Company, for cash proceeds of $70,688 (the “DavCo and NPC Transactions”). The acquisition of Wendy’s restaurants from DavCo was not contingent on executing the sale agreement with NPC; as such, the Company accounted for the transactions as an acquisition and subsequent disposition of a business. As part of the transactions, the Company retained leases for purposes of subleasing such properties to NPC.

The total consideration paid to DavCo was allocated to net tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. Refer to the Form 10-K for further information regarding the purchase price allocation. The Company finalized the purchase price allocation during 2018 with no differences from the provisional amounts previously reported. The loss on the DavCo and NPC Transactions was comprised of the write-off of goodwill of $65,503 and selling and other costs of $1,680, partially offset by the recognition of net favorable leases of $24,034.

As part of the DavCo acquisition, the Company recognized a supplemental purchase price liability of $6,269, of which $6,100 was settled during the six months ended July 1, 2018.