Goodwill and Other Intangibles

9 Months Ended

Jul. 06, 2011

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangibles

12. 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. The carrying value of goodwill decreased from September 29, 2010 by $1,230 due to the final purchase price adjustments relating to the Western acquisition. Refer to Note 2 for detail of the adjustments impacting goodwill.

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 step 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 exists when the estimated fair value of goodwill is less than its carrying value.

During the quarter ended September 29, 2010, we performed our annual assessment of the recoverability of our goodwill related to four reporting units. During the second quarter of fiscal year 2011, we performed our annual assessment of our recoverability of goodwill related to two reporting units. The valuation methodology and underlying financial information included in our determination of fair value require significant judgments to be made by management. 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.

Other Intangibles

Other intangibles are composed of the following:

	July 6, 2011							September 29, 2010
	Gross carrying amount		Accumulated amortization			Total		Gross carrying amount		Accumulated amortization			Total
Right to operate	$        1,480		$           (1,090		)	$        390		$       1,480		$             (999		)	$       481
Franchise agreement		5,310		(664	)		4,646		5,310		(266	)		5,044
Other	810		(465		)	345		1,136		(446		)	690
Total	7,600		(2,219		)	5,381		7,926		(1,711		)	6,215
Intangible assets with indefinite lives	1,744		—			1,744		1,744		—			1,744
Total intangible assets	$        9,344		$           (2,219		)	$     7,125		$       9,670		$          (1,711		)	$    7,959

Intangible assets subject to amortization consist of franchise agreements acquired in connection with the acquisition of Western, a right to operate and favorable leases acquired in connection with prior acquisitions and are being amortized over their estimated weighted average useful lives ranging from eight to twelve years. In connection with the sale of Mustang Capital Management, L.L.C. and Mustang Capital Advisors, L.P. during the third quarter of fiscal year 2011, we wrote off an intangible asset relating to certain customer relationships with a gross carrying value and net basis at the time of disposal of $326 and $266, respectively. Such amount was included in the determination of the net gain on sale of the entities as further discussed in Note 2.

Amortization expense for the twelve weeks ended July 6, 2011 and July 7, 2010 was $186 and $198, respectively. Amortization expense for the forty weeks ended July 6, 2011 and July 7, 2010 was $567 and $302, respectively. Total annual amortization expense for each of the next five years will approximate $650.

Intangible assets with indefinite lives consist of a trade name acquired in connection with the acquisition of Western and reacquired franchise rights acquired in connection with previous acquisitions.