Jack In The Box 2011 Annual Report Download - page 58

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Table of Contents


Franchise acquisitions — In each of the last three years, we have opportunistically acquired Qdoba franchised restaurants in select markets where we
believe there is continued opportunity for restaurant development. We account for the acquisition of franchised restaurants using the purchase method of
accounting for business combinations. The purchase price allocations were based on fair value estimates determined using significant unobservable
inputs (Level 3). The goodwill recorded in fiscal 2011 primarily relates to the acquisition of two markets and is largely attributable to the sales growth
potential of these markets. The following table provides detail of the combined acquisitions in each year ( dollars in thousands):
  
Restaurants acquired from franchisees 32 16 22
Property and equipment $ 6,934 $ 6,756 $ 5,182
Reacquired franchise rights 386 301 -
Goodwill 24,300 1,058 2,536
Liabilities assumed (117) - -
Gains on the acquisition of franchise-operated restaurants (1) (426) - (958)
Total consideration $ 31,077 $ 8,115 $ 6,760
(1) Included in selling, general and administrative expenses in the accompanying consolidated statements of earnings.
 
The changes in the carrying amount of goodwill during 2011 and 2010 by operating segment were as follows (in thousands):

  
Balance at September 27, 2009 $ 54,510 $ 31,333 $ 85,843
Acquisition of franchised restaurants - 1,058 1,058
Sale of company-operated restaurants to franchisees (1,860) - (1,860)
Balance at October 3, 2010 52,650 32,391 85,041
Acquisition of franchised restaurants - 24,300 24,300
Sale of company-operated restaurants to franchisees (3,469) - (3,469)
Balance at October 2, 2011 $ 49,181 $ 56,691 $ 105,872
Intangible assets, net consist of the following as of October 2, 2011 and October 3, 2010 (in thousands):
 
Amortized intangible assets:
Gross carrying amount $ 17,020 $ 17,035
Less accumulated amortization (8,325) (7,849)
Net carrying amount 8,695 9,186
Non-amortized intangible assets:
Trademark 8,800 8,800
Net carrying amount $ 17,495 $ 17,986
Amortized intangible assets include acquired franchise contracts recorded in connection with our acquisition of Qdoba in 2003, lease acquisition costs
and reacquired Qdoba franchise rights. The weighted-average life of these amortized intangible assets is approximately 21 years. Total amortization
expense related to intangible assets was $0.8 million, $0.7 million and $0.8 million in fiscal 2011, 2010 and 2009, respectively.
F-14