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GOODWILL, BRANDS, AND OTHER INTANGIBLE ASSETS, NET

12 Months Ended

Dec. 31, 2011

GOODWILL, BRANDS, AND OTHER INTANGIBLE ASSETS, NET

GOODWILL, BRANDS, AND OTHER INTANGIBLE ASSETS, NET

NOTE 5. GOODWILL, BRANDS, AND OTHER INTANGIBLE ASSETS, NET

For each of the years ended December 31, 2011, 2010 and 2009, the Company acquired 30, 24 and 53 franchise stores, respectively. These acquisitions are accounted for utilizing the purchase method of accounting, and the Company records the acquired inventory, fixed assets, franchise rights and goodwill, with an applicable reduction to receivables and cash. For the years ended December 31, 2011, 2010 and 2009, the total purchase prices associated with these acquisitions was $3.4 million, $2.5 million and $9.3 million, respectively, of which $1.6 million, $0.6 million and $2.5 million, respectively, was paid in cash.

On August 31, 2011, the Company acquired substantially all of the assets and assumed certain liabilities of LuckyVitamin.com, which was accounted for as a business combination. The total purchase price for this acquisition was approximately $19.8 million. Of the purchase price, $11.5 million was allocated to goodwill, $9.6 million to amortizable intangible assets, $2.6 million to current assets acquired, $0.7 million to property and equipment acquired and $3.9 million to net assumed current liabilities.

The Company's acquisition of LuckyVitamin.com did not have a material impact on the Company's consolidated financial statements, and therefore pro forma disclosures have not been presented.

The following table summarizes the Company's goodwill activity:

	Retail		Franchising		Manufacturing/ Wholesale		Total

	(in thousands)
Balance at December 31. 2009	$	304,609	$	117,303	$	202,841	$	624,753

Acquired franchise stores		488		—		—		488

Balance at December 31, 2010	$	305,097	$	117,303	$	202,841	$	625,241

Acquired franchise stores		1,169		—		—		1,169
Acquisition of LuckyVitamin.com		11,467		—		—		11,467

Balance at December 31, 2011	$	317,733	$	117,303	$	202,841	$	637,877

Intangible assets other than goodwill consisted of the following:

	Gold Card			Retail Brand		Franchise Brand		Operating Agreements			Other Intangibles			Total

	(in thousands)
Balance at December 31, 2009	$	375		$	500,000	$	220,000	$	152,276		$	1,719		$	874,370

Acquired franchise stores		—			—		—		—			641			641
Amortization expense		(375	)		—		—		(6,653	)		(759	)		(7,787	)

Balance at December 31, 2010	$	—		$	500,000	$	220,000	$	145,623		$	1,601		$	867,224

Acquired franchise stores		—			—		—		—			731			731
Acquisition of LuckyVitamin.com		—			—		—		—			9,600			9,600
Amortization expense		—			—		—		(6,653	)		(1,313	)		(7,966	)

Balance at December 31, 2011	$	—		$	500,000	$	220,000	$	138,970		$	10,619		$	869,589

The following table represents the gross carrying amount and accumulated amortization for each major intangible asset:

			December 31,

			2011							2010
	Estimated Life in years		Cost		Accumulated Amortization			Carrying Amount		Cost		Accumulated Amortization			Carrying Amount
			(in thousands)
Brands—retail		—	$	500,000	$	—		$	500,000	$	500,000	$	—		$	500,000
Brands—franchise		—		220,000		—			220,000		220,000		—			220,000
Retail agreements		25-35		31,000		(5,196	)		25,804		31,000		(4,143	)		26,857
Franchise agreements		25		70,000		(13,417	)		56,583		70,000		(10,617	)		59,383
Manufacturing agreements		25		70,000		(13,417	)		56,583		70,000		(10,617	)		59,383
Other intangibles		5-15		10,600		(938	)		9,662		1,150		(550	)		600
Franchise rights		1-5		4,433		(3,476	)		957		3,702		(2,701	)		1,001

Total			$	906,033	$	(36,444	)	$	869,589	$	895,852	$	(28,628	)	$	867,224

The following table represents future estimated amortization expense of intangible assets with finite lives:

Year ending December 31,	Estimated amortization expense

	(in thousands)
2012	$	10,493
2013		10,525
2014		10,395
2015		10,473
2016		10,301
Thereafter		97,402

Total	$	149,589

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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