Note 8. Goodwill and Other Intangibles

12 Months Ended

Sep. 24, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Note 8. 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 September 26, 2012 ...............................................................................	$        27,529	$                 -	$      27,529
Acquisitions during 2013 ..........................................................................................	722	-	722
Goodwill at September 25, 2013 ...............................................................................	28,251	-	28,251
Acquisitions during 2014 .......................................................................................	-	11,913	11,913
Goodwill at September 24, 2014 ............................................................................	$        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 fiscal years 2014, 2013 or 2012.

Other Intangibles

Other intangibles are composed of the following:

	2014			2013
	Gross carrying amount	Accumulated amortization	Total	Gross carrying amount	Accumulated amortization	Total
Right to operate ............................................	$    1,480	$         (1,471)	$          9	$    1,480	$      (1,353)	$      127
Franchise agreement ......................................	5,310	(2,390)	2,920	5,310	(1,859)	3,451
Other .............................................................	810	(615)	195	810	(574)	236
Total ..............................................................	7,600	(4,476)	3,124	7,600	(3,786)	3,814
Intangible assets with indefinite lives:
Trade names ..................................................	15,876	-	15,876	-	-	-
Other assets with indefinite lives...................	3,907	-	3,907	3,907	-	3,907
Total intangible assets  ..................................	$  27,383	$         (4,476)	$ 22,907	$  11,507	$      (3,786)	$   7,721

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 fiscal years 2014, 2013, and 2012 was $690, $690 and $702, respectively. Total annual amortization expense for each of the next five years will approximate $567.

The Company acquired Maxim and First Guard during fiscal year 2014 and lease rights during fiscal year 2013. 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. During fiscal year 2013, the Company recorded an impairment loss for an intangible asset of $1,244 in selling, general and administrative. This number represents the trade name of Western’s company-operated stores, which we decided not to use any longer. The calculation of fair value for the trade name was determined primarily by using a discounted cash flow analysis.