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Note 6 - Goodwill and Intangible Assets
12 Months Ended
Sep. 24, 2011
Goodwill and Intangible Assets Disclosure [Text Block]
NOTE F – GOODWILL AND INTANGIBLE ASSETS

Our three reporting units, which are also reportable segments, are Food Service, Retail Supermarket and Frozen Beverages.

The carrying amount of acquired intangible assets for the reportable segments are as follows:

   
September 24, 2011
   
September 25, 2010
 
   
Gross
         
Gross
       
   
Carrying
   
Accumulated
   
Carrying
   
Accumulated
 
   
Amount
   
Amortization
   
Amount
   
Amortization
 
    (in thousands)  
FOOD SERVICE
                       
                         
Indefinite lived intangible assets
                       
Trade Names
  $ 12,880     $ -     $ 12,204     $ -  
                                 
Amortized intangible assets
                               
Non compete agreements
    470       425       470       351  
Customer relationships
    40,024       18,993       40,024       15,160  
License and rights
    3,606       2,425       3,606       2,287  
    $ 56,980     $ 21,843     $ 56,304     $ 17,798  
                                 
RETAIL SUPERMARKETS
                               
                                 
Indefinite lived intangible assets
                               
Trade Names
  $ 3,380     $ -     $ 2,731     $ -  
                                 
Amortized Intangible Assets
                               
Customer relationships
    207       8       -       -  
    $ 3,587     $ 8     $ 2,731     $ -  
                                 
                                 
FROZEN BEVERAGES
                               
                                 
Indefinite lived intangible assets
                               
Trade Names
  $ 9,315     $ -     $ 9,315     $ -  
                                 
Amortized intangible assets
                               
Non compete agreements
    198       189       198       165  
Customer relationships
    6,478       3,540       6,478       2,876  
Licenses and rights
    1,601       574       1,601       504  
    $ 17,592     $ 4,303     $ 17,592     $ 3,545  
                                 
CONSOLIDATED
  $ 78,159     $ 26,154     $ 76,627     $ 21,343  

The gross carrying amount of intangible assets is determined by applying a discounted cash flow model to the future sales and earnings associated with each intangible asset or is set by contract cost.  The amortization period used for definite lived intangible assets is set by contract period or by the period over which the bulk of the discounted cash flow is expected to be generated.  We currently believe that we will receive the benefit from the use of the trade names classified as indefinite lived intangible assets indefinitely and they are therefore not amortized.

Licenses and rights, customer relationships and non compete agreements are being amortized by the straight-line method over periods ranging from 3 to 20 years and amortization expense is reflected throughout operating expenses.

Amortizing intangibles are reviewed for impairment as events or changes in circumstances occur indicating that the carrying amount of the asset may not be recoverable.  Indefinite lived intangibles are reviewed annually for impairment. Cash flow and sales analyses are used to assess impairment. The estimates of future cash flows and sales involve considerable management judgment and are based upon assumptions about expected future operating performance.  Assumptions used in these forecasts are consistent with internal planning. The actual cash flows and sales could differ from management’s estimates due to changes in business conditions, operating performance, economic conditions, competition and consumer preferences.

Intangible assets of $10,796,000 were acquired in the food service segment in the California Churros acquisition in fiscal year 2010.

Intangible assets of $676,000 and $856,000 were acquired in the food service and retail supermarket segments, respectively, in the handhelds acquisition in fiscal year 2011.

Aggregate amortization expense of intangible assets for the fiscal years 2011, 2010 and 2009 was $4,811,000, $4,687,000 and $4,508,000, respectively.

Estimated amortization expense for the next five fiscal years is approximately $4,500,000 in 2012, $4,400,000 in 2013 and 2014, $4,300,000 in 2015 and $4,100,000 in 2016.  The weighted average amortization period of the intangible assets is 10.1 years.

Goodwill

The carrying amounts of goodwill for the reportable segments are as follows:

   
Food
   
Retail
   
Frozen
       
   
Service
   
Supermarkets
   
Beverages
   
Total
 
    (in thousands)  
                         
Balance at September 24, 2011
  $ 34,130     $ -     $ 35,940     $ 70,070  
                                 
Balance at September 25, 2010
  $ 34,130     $ -     $ 35,940     $ 70,070  

The carrying value of goodwill is determined based on the excess of the purchase price of acquisitions over the estimated fair value of tangible and intangible net assets.  Goodwill is not amortized but is evaluated annually by management for impairment.  Our impairment analysis for 2011 is a qualitative assessment in which we have considered historical net cash provided by operating activities and  purchases of property , plant and equipment, their relationship to the carrying value of goodwill, recent fair value calculations of our reporting units and our assessment of the likelihood, based on an assessment of what we know about our Company’s products and markets, costs and general economic conditions, that the relationship of cash flow to the carrying value of goodwill will change significantly in the foreseeable future. Our impairment analysis for 2010 and 2009 was based on a combination of the income approach, which estimates the fair value discounted cash flows, and the market approach, which estimates the fair value based on comparable market prices.  Under the income approach the Company used a discounted cash flow which requires Level 3 inputs such as:  annual growth rates, discount rates based upon the weighted average cost of capital and terminal values based upon our stock market multiples.  There were no impairment charges in 2011, 2010 or 2009.

Goodwill of $9,756,000 was acquired in the food service segment in the California Churros acquisition in fiscal year 2010.