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Note 6 - Notes Receivable
 12 Months Ended
Nov. 26, 2011
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]
6. Notes Receivable

Notes receivable consists of the following:

   
November 26, 2011
   
November 27, 2010
 
Notes receivable
  $ 6,017     $ 14,914  
Allowance for doubtful accounts
               
and discounts on notes receivable
    (4,140 )     (6,748 )
Notes receivable, net
    1,877       8,166  
Less: current portion of notes receivable
    (75 )     (658 )
Long term notes receivable
  $ 1,802     $ 7,508  

Our notes receivable, which bear interest at rates ranging from 2% to 6%, consist primarily of amounts due from our licensees from loans made by the Company to help licensees fund their operations.  Approximately 43% and 61% of our notes receivable represent conversions of past due accounts receivable at November 26, 2011 and November 27, 2010, respectively.  We have discontinued these conversions and have no plans to resume this practice. At the inception of the note receivable, we determined whether the note carried a market rate of interest. A discount on the note was recorded if we determined that the note carried an interest rate below the market rate.  We amortize the related note discount over the contractual term of the note and cease amortizing the discount to interest income when the present value of expected future cash flows is less than the carrying value of the note.   Interest income on the notes receivable, which is included in other income (loss), net, was as follows:

   
2011
   
2010
   
2009
 
Interest income
  $ 129     $ 463     $ 681  

The initial carrying value of the notes receivable was determined using present value techniques which consider the fair market rate of interest based on the licensee’s risk profile and estimated cash flows to be received. The estimated fair value of our notes receivable portfolio was $1,877 at November 26, 2011 and $8,212 at November 27, 2010.  The inputs into these fair value calculations reflect our market assumptions and are not observable.  Consequently, the inputs are considered to be Level 3 as specified in the fair value hierarchy in ASC Topic 820, Fair Value Measurements and Disclosures.  See Note 8.

Substantially all of our notes receivable comprise a single portfolio segment of financing receivables consisting of notes receivable from current and former licensees. These notes receivable are evaluated in three classes – those due from current licensees, those due from former licensees which are secured by real estate, and those due from former licensees which are unsecured. On a quarterly basis, we examine these notes receivable for evidence of impairment. With respect to current licensees,  we consider factors such as licensee capitalization, projected operating performance, the viability of the market in which the licensee operates and the licensee’s operating history, including our cash receipts from the licensee, licensee sales and any underlying collateral.  Our evaluation of former licensees is primarily based upon payment history and an evaluation of the underlying collateral. After considering these factors, should we believe that all or a portion of the expected cash flows attributable to the note receivable will not be received, we record an impairment charge on the note by estimating future cash flows and discounting them at the effective interest rate.  Any difference between the estimated discounted cash flows and the carrying value of the note is recorded as an increase to the allowance for doubtful accounts.  Notes receivable are charged off if they are deemed to be uncollectible with no recoverable collateral value. Each note within a class is evaluated individually using the criteria described above as applicable to its respective class.

These notes receivable, as well as our accounts receivable, are generally secured by the filing of security statements in accordance with the Uniform Commercial Code and/or real estate owned by the maker of the note and in some cases, personal guarantees by our licensees.

Our investment in notes receivable and related allowances, disaggregated by class, are as follows at November 26, 2011:

         
Allowance for
       
   
Gross
   
Doubtful Accounts
   
Notes Receivable
 
   
Notes Receivable
   
and Discounts
   
Net
 
                   
                   
Due from current licensees
  $ 1,529     $ (1,529 )   $ -  
Due from former licensees:
                       
Secured by real estate
    2,657       (975 )     1,682  
Unsecured
    1,636       (1,636 )     -  
Other notes
    195       -       195  
                         
Balance at November 26, 2011
  $ 6,017     $ (4,140 )   $ 1,877  

The notes receivable shown above by class include impaired notes and related allowances as of November 26, 2011 as follows:

         
Allowance for
       
   
Gross
   
Doubtful Accounts
   
Notes Receivable
 
   
Notes Receivable
   
and Discounts
   
Net
 
                   
                   
Due from current licensees
  $ 1,529     $ (1,529 )   $ -  
Due from former licensees:
                       
Secured by real estate
    1,558       (975 )     583  
Unsecured
    1,636       (1,636 )     -  
                         
Balance at November 26, 2011
  $ 4,723     $ (4,140 )   $ 583  

The average recorded investment in the impaired loans by class for the year ended November 26, 2011 was as follows:

Due from current licensees
  $ 843  
Due from former licensees:
       
Secured by real estate
    733  
Unsecured
    86  
Total average recorded investment in impaired loans
  $ 1,662  

The aging of our investment in notes receivable by class, based on scheduled principal due dates, is as follows at November 26, 2011:

         
30-90 Days
   
Over 90 Days
       
   
Current
   
Past Due
   
Past Due
   
Total
 
                         
Due from current licensees
  $ 1,400 (1)   $ 11     $ 118     $ 1,529  
Due from former licensees:
                               
Secured by real estate
    1,032       29       1,596 (2)     2,657  
Unsecured
    -       -       1,636 (2)     1,636  
Other notes
    195       -       -       195  
                                 
Balance at November 26, 2011
  $ 2,627     $ 40     $ 3,350     $ 6,017  

    (1) Current balance includes principal of $625 on notes which currently require payments of interest only.
    (2) Balance over 90 days past due represents notes in default.
       

The change in our allowance for doubtful accounts and discounts for the years ended November 26, 2011 (disaggregated by class) and November 27, 2010, was as follows:

   
2011 Activity by Class
             
         
Due from Former Licensees
                   
   
Due from
Current
Licensees
   
Secured by Real
Estate
   
Unsecured
   
Other Notes
   
2011
Total
   
2010
Total
 
                           
 
       
Balance at beginning of the year
  $ 4,825     $ 575     $ 1,348     $ -     $ 6,748     $ 8,950  
Additions charged to expense
    4,024       400       288       -       4,712       1,896  
Write-offs and other deductions
    (7,292 )     -       -       -       (7,292 )     (4,027 )
Amortization of discounts
    (28 )     -       -       -       (28 )     (71 )
Balance at end of the year
  $ 1,529     $ 975     $ 1,636     $ -     $ 4,140     $ 6,748