Jack In The Box 2013 Annual Report Download - page 56
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Franchise acquisitions — In each of the last three years, we have acquired Qdoba franchised restaurants in select markets where we believe there is
continued opportunity for restaurant development. Additionally, in 2013 we exercised our right of first refusal and acquired one Jack in the Box franchise
restaurant. We account for the acquisition of franchised restaurants using the acquisition 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 primarily relates to the sales
growth potential of the markets acquired and is expected to be deductible for income tax purposes. The following table provides detail of the combined
acquisitions in each year (dollars in thousands):
Restaurants acquired from franchisees
14
46
32
Property and equipment
$3,030
$12,379
$6,934
Reacquired franchise rights
148
604
386
Goodwill
9,169
36,084
24,300
Liabilities assumed
(283)
(122)
(117)
Gains on the acquisition of franchise-operated restaurants (1)
—
—
(426)
Total consideration
$12,064
$48,945
$31,077
____________________________
(1) In 2011, the assets acquired and liabilities assumed exceeded the consideration for two of the units acquired. The gains are included in selling, general and administrative
expenses in the accompanying consolidated statements of earnings.
The changes in the carrying amount of goodwill during 2013 and 2012 by reportable segment were as follows ( in thousands):
Balance at October 2, 2011
$49,181
$56,691
$105,872
Acquisition of franchised restaurants
—
36,084
36,084
Sale of company-operated restaurants to franchisees
(1,334)
—
(1,334)
Balance at September 30, 2012
47,847
92,775
140,622
Acquisition of franchised restaurants
1,173
7,996
9,169
2013 Qdoba Closures
—
(174)
(174)
Sale of company-operated restaurants to franchisees
(629)
—
(629)
Balance at September 29, 2013
$48,391
$100,597
$148,988
Intangible assets, net consist of the following as of the end of each fiscal year ( in thousands):
Amortized intangible assets:
Gross carrying amount
$17,203
$17,319
Less accumulated amortization
(9,613)
(8,913)
Net carrying amount
7,590
8,406
Non-amortized intangible assets:
Trademark
8,800
8,800
Net carrying amount
$16,390
$17,206
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 24 years. Total amortization expense related
to intangible assets was $1.0 million, $0.9 million and $0.8 million in fiscal 2013, 2012 and 2011, respectively.
F-14