Acquisitions and Divestitures

12 Months Ended

Dec. 27, 2015

Acquisitions and Divestitures

Acquisitions and Divestitures

7.  Acquisitions and Divestitures

Acquisitions

We acquired restaurants from our domestic franchisees in 2015 and 2014 (none in 2013), which are summarized as follows:

	2015		2014
Number of restaurants acquired	7		13
Location of restaurants acquired	North Carolina, Missouri and Colorado		Georgia, North Carolina, Illinois and Texas
Purchase price (in thousands):
Cash payment	$	922	$	4,773
Cancellation of accounts and notes receivable	—		412
Total purchase price	$	922	$	5,185
Fair value allocation of purchase price (in thousands):
Property and equipment	$	648	$	555
Reacquired franchise right	113		844
Goodwill	152		3,661
Other, including cash	9		125
Total purchase price	$	922	$	5,185

The restaurant acquisitions described above were accounted for by the purchase method of accounting, whereby operating results subsequent to the acquisition date are included in our consolidated financial results. The excess of the purchase price over the aggregate fair value of net assets acquired was allocated to goodwill for the Domestic Company-owned restaurants segment and is eligible for deduction over 15 years under U.S. tax regulations.

On January 25, 2016, the Company purchased 19 domestic franchised Papa John’s restaurants in Alabama and Florida for approximately $11.0 million.

Planned Divestiture

In September 2015, the Company decided to refranchise the China Company-owned market and is planning a sale of its existing China operations, consisting of 45 Company-owned restaurants and a commissary.  We expect to sell the business during 2016; upon completion of the sale, the Company will not have any Company-owned international restaurants. We have classified the assets as held for sale within the consolidated balance sheet. Upon the classification of these assets to held for sale, no loss was recognized as their fair value exceeded their carrying value.

The following summarizes the associated assets that are classified as held for sale (in thousands):

	December 27,  2015
Inventories	$	667
Prepaid expenses	672
Net property and equipment	5,571
Goodwill	1,690
Other assets	699
Total assets held for sale	$	9,299

The Company-owned China operations have incurred losses before income taxes of $1.2 million in 2015, $3.4 million in 2014, and $2.7 million in 2013. The loss in 2014 includes an impairment and disposition charge of $1.0 million for eleven Company-owned restaurants in China. These results are reported in our International segment.