Note F - Goodwill and Intangible Assets

12 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Text Block]

NOTE C

– INVESTMENT SECURITIES (continued)

Our

three

reporting units, which are also reportable segments, are Food Service, Retail Supermarket and Frozen Beverages.

The carrying amount of acquired intangible assets for the reportable segments are as follows:

	September 30, 2017				September 24, 2016
	Gross				Gross
	Carrying		Accumulated		Carrying		Accumulated
	Amount		Amortization		Amount		Amortization
	(in thousands)

FOOD SERVICE

Indefinite lived intangible assets
Trade Names	$	16,628	$	-	$	14,150	$	-

Amortized intangible assets
Non compete agreements		980		263		122		93
Customer relationships		20,510		6,476		35,491		31,895
License and rights		1,690		1,058		1,690		974
TOTAL FOOD SERVICE	$	39,808	$	7,797	$	51,453	$	32,962

RETAIL SUPERMARKETS

Indefinite lived intangible assets
Trade Names	$	6,557	$	-	$	7,206	$	-

Amortized Intangible Assets
Trade names		649		130		-		-
Customer relationships		7,979		2,822		7,979		2,021
TOTAL RETAIL SUPERMARKETS	$	15,185	$	2,952	$	15,185	$	2,021


FROZEN BEVERAGES

Indefinite lived intangible assets
Trade Names	$	9,315	$	-	$	9,315	$	-
Distribution rights		6,900		-

Amortized intangible assets
Customer relationships		257		50		200		28
Licenses and rights		1,400		794		1,400		723
TOTAL FROZEN BEVERAGES	$	17,872	$	844	$	10,915	$	751

CONSOLIDATED	$	72,865	$	11,593	$	77,553	$	35,734

The gross carrying amount of intangible assets is determined by applying a discounted cash flow model to the future sales and earnings associated with each intangible asset or is set by contract cost. The amortization period used for definite lived intangible assets is set by contract period or by the period over which the bulk of the discounted cash flow is expected to be generated. We currently believe that we will receive the benefit from the use of the trade names and distribution rights classified as indefinite lived intangible assets indefinitely and they are therefore

not

amortized.

Licenses and rights, customer relationships and non-compete agreements are being amortized by the straight-line method over periods ranging from

years and amortization expense is reflected throughout operating expenses.

Amortizing intangibles are reviewed for impairment as events or changes in circumstances occur indicating that the carrying amount of

the asset

may

not

be recoverable. Indefinite lived intangibles are reviewed annually at year end for impairment. Cash flow and sales analyses are used to assess impairment. The estimates of future cash flows and sales involve considerable management judgment and are based upon assumptions about expected future operating performance which include Level

inputs such as annual growth rates and discount rates. Assumptions used in these forecasts are consistent with internal planning. The actual cash flows and sales could differ from management’s estimates due to changes in business conditions, operating performance, economic conditions, competition and consumer preferences. There were

impairments of intangible assets in

2017,

2016

2015.

Intangible assets of

$200,000

were acquired in the frozen beverages segment in fiscal year

2015.

Intangible assets of

$1,078,000

were acquired in fiscal year

2016

in the food service segment due to the purchase of the HEARTBAR brand. In fiscal year

2017,

intangible assets of

$6,957,000

were acquired in our ICEE distributor acquisition in our frozen beverage segment and intangible assets of

$15,760,000

were acquired in the Hill & Valley acquisition in our food service segment and intangible assets of

$576,000

were acquired in the Labriola Baking acquisition, also in our food service segment.

Aggregate amortization expense of intangible assets for the fiscal years

2017,

2016

and

2015

was

$3,840,000,

$5,078,000

and

$5,370,000,

respectively.

Estimated amortization expense for the next

five

fiscal years is approximately

$3,500,000

2018,

$3,400,000

2019,

$3,000,000

2020,

$2,400,000

2021

and

$2,300,000

2022.

The weighted average amortization period of the intangible assets is

10.8

years.

Goodwill

The carrying amounts of goodwill for the reportable segments are as follows:

	Food		Retail		Frozen
	Service		Supermarkets		Beverages		Total

	(in thousands)

Balance at September 30, 2017	$	61,665	$	3,670	$	37,176	$	102,511
Balance at September 24, 2016	$	46,832	$	3,670	$	35,940	$	86,442

The carrying value of goodwill is determined based on the excess of the purchase price of acquisitions over the estimated fair value of tangible and intangible net assets. Goodwill is

not

amortized but is evaluated annually at year end by management for impairment. Our impairment analysis for

2017,

2016

and

2015

was based on a combination of the income approach, which estimates the fair value of reporting units based on discounted cash flows, and the market approach, which estimates the fair value of reporting units based on comparable market prices and multiples. Under the income approach the Company used a discounted cash flow which requires Level

inputs such as: annual growth rates, discount rates based upon the weighted average cost of capital and terminal values based upon current stock market multiples. There were

impairment charges in

2017,

2016

and

2015.

2017,

goodwill of

$1,236,000

was acquired in the ICEE distributor acquisition in our frozen beverage segment, goodwill of

$14,175,000

was acquired in the Hill & Valley acquisition in our food service segment and goodwill of

$658,000

was acquired in the Labriola Baking acquisition, also in our food service segment.

goodwill was acquired in fiscal year

2015

and

2016.

- 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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