Note F - Goodwill and Intangible Assets

12 Months Ended

Sep. 28, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

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 28, 2013				September 29, 2012
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(in thousands)
FOOD SERVICE
Indefinite lived intangible assets
Trade Names	$	12,880	$	-	$	12,880	$	-
Amortized intangible assets
Non compete agreements		545		478		545		456
Customer relationships		40,187		26,187		40,187		22,582
License and rights		3,606		2,614		3,606		2,519
	$	57,218	$	29,279	$	57,218	$	25,557
RETAIL SUPERMARKETS
Indefinite lived intangible assets
Trade Names	$	4,006	$	-	$	4,006	$	-
Amortized Intangible Assets
Customer relationships		279		62		279		31
	$	4,285	$	62	$	4,285	$	31
FROZEN BEVERAGES
Indefinite lived intangible assets
Trade Names	$	9,315	$	-	$	9,315	$	-
Amortized intangible assets
Non compete agreements		198		198		198		198
Customer relationships		6,478		4,830		6,478		4,201
Licenses and rights		1,601		714		1,601		644
	$	17,592	$	5,742	$	17,592	$	5,043
CONSOLIDATED	$	79,095	$	35,083	$	79,095	$	30,631

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 which include Level 3 inputs such as annual growth rates and discount rates.  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 $198,000 and $238,000 were acquired in the food service and retail supermarket segments, respectively, in the Kim and Scott’s acquisition in fiscal year 2012.

Separately, an intangible asset of $500,000 was purchased in the retail supermarket segment in fiscal year 2012.

There were no intangible assets acquired in fiscal year 2013.

Aggregate amortization expense of intangible assets for the fiscal years 2013, 2012 and 2011 was $4,452,000, $4,477,000 and $4,811,000, respectively.

Estimated amortization expense for the next five fiscal years is approximately $4,400,000 in 2014 and 2015, $4,200,000 in 2016, $1,700,000 in 2017 and $900,000 in 2018. 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 Service		Retail Supermarkets		Frozen Beverages		Total
Balance at September 28, 2013	$	39,115	$	1,844	$	35,940	$	76,899
Balance at September 29, 2012	$	39,115	$	1,844	$	35,940	$	76,899

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 2013 and 2012 was based on a combination of the income approach, which estimates the fair value of 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. Our impairment analysis for 2011 was 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.   There were no impairment charges in 2013, 2012 or 2011.

Goodwill of $6,829,000 was acquired in the Kim and Scott’s acquisition in fiscal year 2012 which was allocated $4,985,000 to the food service segment and $1,844,000 to the retail supermarkets segment. No goodwill was acquired in fiscal year 2013.