Note 7. Goodwill and Other Intangibles

3 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Note 7. Goodwill and Other Intangibles

Goodwill

Goodwill consists of the excess of the purchase price over the fair value of the net assets acquired in connection with business acquisitions.

A reconciliation of the change in the carrying value of goodwill is as follows.

	Restaurants	Other	Total
Goodwill at December 31, 2014 .............................................................................	28,251	11,913	40,164
Acquisitions during first quarter 2015..................................................................	-	-	-
Goodwill at March 31, 2015 ...................................................................................	$        28,251	$          11,913	$      40,164

We are required to assess goodwill and any indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The analysis of potential impairment of goodwill requires a two-step approach. The first is the estimation of fair value of each reporting unit. If step one indicates that impairment potentially exists, the second step is performed to measure the amount of impairment, if any. Goodwill impairment occurs when the estimated fair value of goodwill is less than its carrying value.

The valuation methodology and underlying financial information included in our determination of fair value require significant management judgments. We use both market and income approaches to derive fair value. The judgments in these two approaches include, but are not limited to, comparable market multiples, long-term projections of future financial performance, and the selection of appropriate discount rates used to determine the present value of future cash flows. Changes in such estimates or the application of alternative assumptions could produce significantly different results. No impairment charges for goodwill were recorded in the first quarter of 2015 or 2014.

Other Intangibles

Other intangibles are composed of the following.

	March 31, 2015			December 31, 2014
	Gross carrying amount	Accumulated amortization	Total	Gross carrying amount	Accumulated amortization	Total
Franchise agreement ............................	$     5,310	$           (2,655)	$     2,655	$     5,310	$       (2,523)	$     2,787
Other ...................................................	810	(634)	176	810	(624)	186
Total ....................................................	6,120	(3,289)	2,831	6,120	(3,147)	2,973
Intangible assets with indefinite lives:
Trade names ........................................	15,876	-	15,876	15,876	-	15,876
Other assets with indefinite lives.........	3,907	-	3,907	3,907	-	3,907
Total intangible assets  ........................	$   25,903	$           (3,289)	$   22,614	$   25,903	$       (3,147)	$   22,756

Intangible assets subject to amortization consist of franchise agreements connected with the purchase of Western as well as rights to favorable leases related to prior acquisitions. These intangible assets are being amortized over their estimated weighted average of useful lives ranging from eight to twelve years.

Amortization expense for the first quarter of 2015 and 2014 was $142 and $172, respectively. Total annual amortization expense for each of the next five years will approximate $563.

The Company acquired Maxim and First Guard during first quarter of 2014. Portions of the purchase prices were allocated to intangible assets with indefinite lives.

Intangible assets with indefinite lives consist of trade names, franchise rights as well as lease rights.