Note 7 - Property and Equipment, Intangible Assets and Goodwill

6 Months Ended

Feb. 12, 2014

Property Equipment Intangible Assets And Goodwill Disclosure [Abstract]

Property Equipment Intangible Assets And Goodwill Disclosure [Text Block]

Note 7. Property and Equipment, Intangible Assets and Goodwill

The cost, net of impairment, and accumulated depreciation of property and equipment at February 12, 2014 and August 28, 2013, together with the related estimated useful lives used in computing depreciation and amortization, were as follows:

	February 12, 2014			August 28, 2013			Estimated Useful Lives (years)
	(In thousands)
Land	$	65,463		$	62,191				—
Restaurant equipment and furnishings		125,953			116,655			1	to	15
Buildings		178,022			172,342			20	to	33
Leasehold and leasehold improvements		39,178			39,108			Lesser of lease term or estimated useful life
Office furniture and equipment		8,021			7,466			3	to	10
Construction in progress		5,762			7,814
		422,399			405,576
Less accumulated depreciation and amortization		(222,756	)		(215,066	)
Property and equipment, net	$	199,643		$	190,510
Intangible assets, net	$	24,810		$	25,517			15	to	21
Goodwill	$	1,755		$	2,169

Intangible assets, net consist of the Fuddruckers trade name and franchise agreements and will be amortized. The Company believes the Fuddruckers trade name has an expected accounting life of 21 years from the date of acquisition based on the expected use of its assets and the restaurant environment in which it is being used. The trade name represents a respected brand with customer loyalty and the Company intends to cultivate and protect the use of the trade name. The franchise agreements, after considering renewal periods, have an estimated accounting life of 21 years from the date of acquisition and will be amortized over this period of time. The Company recorded $5.0 million of accumulated amortization as of February 12, 2014 and $4.5 million of accumulated amortization as of August 28, 2013.

Intangible assets, net also includes the license agreement and trade name related to Cheeseburger in Paradise and the value of the acquired licenses and permits allowing the sale of beverages with alcohol. These assets have an expected accounting life of 15 years from the date of acquisition December 6, 2012. The Company recorded accumulated amortization of $25 thousand as of February 12, 2014 and approximately $12 thousand of accumulated amortization as of August 28, 2013.

The Company recorded an intangible asset for goodwill in the amount of $0.2 million related to the acquisition of substantially all of the assets of Fuddruckers. The Company also recorded an intangible asset for goodwill in the amount of $2.0 million related to the acquisition of the membership units of Paradise Restaurant Group, LLC. Goodwill is considered to have an indefinite useful life and is not amortized. Goodwill was $1.8 million as of February 12, 2014 and $2.2 million as of August 28, 2013 and relates to our Company-owned restaurants reportable segment.

Generally accepted accounting principles in the United States require the Company to perform a goodwill impairment test annually and more frequently when negative conditions or a triggering event arise. In September 2011, the FASB issued amended guidance that simplified how entities test goodwill for impairment. After an assessment of certain qualitative factors, if it is determined to be more likely than not that the fair value of a reporting unit is less than its carrying amount, entities must perform the quantitative analysis of the goodwill impairment test. Otherwise, the quantitative test(s) become optional. For the annual analysis in fiscal year 2014, the Company has elected to bypass the qualitative assessment and proceed directly to performing the first step of the goodwill impairment test. In future periods, the Company may determine that facts and circumstances indicate use of the qualitative assessment may be the most reasonable approach; however, management has determined that goodwill resulting from the Cheeseburger in Paradise acquisition will be evaluated using the quantitative approach for fiscal 2014. Management will be performing it’s formal annual assessment as of the second quarter each fiscal year, and will formally perform on an interim basis if an event occurs or circumstances exist that indicate that it is more likely than not that a goodwill impairment exists. The company considers each of its restaurants to be a reporting unit. Management has therefore performed valuations using a discounted cash flow analysis for each of its restaurants to determine the fair value of each reporting unit for comparison with the reporting unit’s carrying value.

Management determined that $0.4 million in impairment losses related to goodwill which was recognized in full in the second quarter ended February 12, 2014.