Goodwill And Other Intangible Assets

9 Months Ended

Dec. 03, 2011

Goodwill And Other Intangible Assets [Abstract]

3. Goodwill and Other Intangible Assets

The carrying values of our finite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. Our intangible assets that have finite useful lives are amortized over their estimated useful lives. Goodwill and other intangibles with indefinite useful lives that are not subject to amortization are tested for impairment in the fourth quarter of each fiscal year, or more frequently whenever events or changes in circumstances indicate that impairment may have occurred. The latest impairment assessment of goodwill and indefinite lived intangible assets was completed in the fourth quarter of fiscal 2010 for all of our reporting units in our reportable segments. This assessment concluded that there was no impairment.

Goodwill

We considered whether there have been any triggering events requiring an interim impairment test in the third quarter of fiscal 2011 and concluded that an impairment analysis was not required. We continue to anticipate that expected savings from the recently negotiated C&S supply agreement and the recently Modified Collective Bargaining Agreements ("Modified CBAs", refer to Note 22 – Commitment and Contingencies for additional information) will improve future cash flows at the reporting units to a level that will exceed the related carrying value of the assets. We will continue to monitor actual results against our expectations from these events, and if we experience negative results, we will assess the related impact as part of our annual impairment assessment in the fourth quarter of fiscal 2011.

We believe that our estimates are appropriate based on our current trends and recently negotiated contracts. However, we can provide no assurance that we will not be required to make adjustment to goodwill in the future due to market conditions or other factors related to our performance, including a decline in our forecasted results resulting from changes in projected on-going profitability, our capital investment budgets or change in our interest rates.

The carrying amount of our goodwill was $110.4 million at December 3, 2011 and February 26, 2011, respectively. Our goodwill allocation by segment at December 3, 2011 and February 26, 2011 was as follows:


		Fresh			Gourmet		Other		Total
Goodwill	$	116,032		$	12,110	$	5,974	$	134,116
Accumulated impairment losses		(23,704	)		-		-		(23,704	)
Goodwill at February 26, 2011 and December 3, 2011	$	92,328		$	12,110	$	5,974	$	110,412

Intangible Assets, net

We considered for the Pathmark intangible assets whether there have been any triggering events requiring an interim impairment test in the third quarter of fiscal 2011 and concluded that an impairment analysis was not required. We continue to anticipate that expected savings from the recently negotiated C&S supply agreement and the recently Modified CBAs will improve future cash flows at the Pathmark reporting unit to a level that will exceed the related carrying value of the assets. We will continue to monitor actual results against our expectations from these events, and if we experience negative results, we will assess the related impact as part of our annual impairment assessment in the fourth quarter of fiscal 2011.

We believe that our estimates are appropriate based on our current trends and recently negotiated contracts. However, we can provide no assurance that we will not be required to make adjustment to intangible assets in the future due to market conditions or other factors related to our performance, including a decline in our forecasted results resulting from changes in projected on-going profitability, our capital investment budgets or change in our interest rates.

During the third quarter of fiscal 2010, we determined that there was an interim impairment triggering event requiring us to evaluate the intangible assets of the Pathmark reporting unit for possible impairment. We evaluated the fair value of the Pathmark trademark using the relief-from-royalty method. As a result of lowered revenue expectations, the carrying value exceeded the indicated fair value of the Pathmark trademark, resulting in an impairment of $12.7 million during the third quarter of fiscal 2010, which we recorded within "Goodwill, trademark, and long-lived asset impairment" in our Consolidated Statements of Operations. During the third quarter of fiscal 2010, we also determined that we had a triggering event requiring us to evaluate the recoverability of our amortizable intangible assets for possible impairment. We evaluated the expected undiscounted cash flows of the Pathmark reporting unit compared to the book value of all long-lived assets, including intangible assets other than goodwill, noting no impairment of our amortizable intangible assets.

Intangible assets acquired as part of our acquisition of Pathmark in December 2007 consisted of the following:


	Weighted Average		Gross		Accumulated		Accumulated
	Amortization		Carrying		Amortization at		Amortization at
	Period (Years)		Amount		December 3, 2011		Feb. 26, 2011
Loyalty card customer relationships	5	$	19,200	$	15,061	$	11,815
In-store advertiser relationships	20		14,720		2,944		2,378
Pharmacy payor relationships	13		75,000		23,077		18,639
Pathmark trademark, net of impairment
of $12.7 million	Indefinite		48,200		-		-
Total		$	157,120	$	41,082	$	32,832

Amortization expense relating to our intangible assets for the 12 weeks ended December 3, 2011 and December 4, 2010 was $2.5 million during each period. Amortization expense relating to our intangible assets for the 40 weeks ended December 3, 2011 and December 4, 2010 was $8.3 million during each period.

The following table summarizes the estimated future amortization expense for our finite-lived intangible assets:


2011	$	2,475
2012		9,670
2013		6,505
2014		6,505
2015		6,505
Thereafter		36,178

- 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+ Details