Jamba Juice 2008 Annual Report Download - page 75

Table of Contents
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Other Intangible Assets
The other intangible assets acquired of $5.3 million include the following (in thousands):
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Favorable leases $3,300 related lease term
Franchise agreements 1,314 13.4 years
Employment/non-solicitation agreements 730 4.0 years
Total other intangible assets $5,344
Accrued jambacard Liability
Jamba Juice Company has a stored value or gift card program, known as jambacard. When these cards are purchased, Jamba Juice Company records
an accrued jambacard liability (deferred revenue). As of the Merger Date, Jamba Juice Company had an outstanding balance of $17.7 million in accrued
jambacard liability, which has been adjusted to fair value by discounting the projected cash flows to present value, which are calculated as the costs to service
deferred revenue, plus an estimated profit margin. The estimated fair value of the accrued jambacard liability as of November 28, 2006 was $14.8 million.
Deferred Rent and Construction Allowances
As of the Merger Date, Jamba Juice Company had a deferred rent liability of $10.6 million, which represented deferred rent arising from the difference
between the straight-line rent expense charged to operations and the cash paid under the Jamba Juice Company leases, as well as the unamortized construction
allowances received from landlords. In accordance with SFAS No. 141, these deferred amounts have not been recorded by the Company.
Deferred Income Tax Liability
Because the purchase price allocated to assets acquired and liabilities assumed differs for financial reporting and tax purposes, the Company has, in
accordance with SFAS No. 109, Accounting for Income Taxes, recognized deferred tax assets or liabilities for the deferred tax effects of those temporary
differences. As a result, the Company has recognized net deferred tax liabilities of $58.2 million.
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The Company acquired the assets of 22 Jamba Juice franchised stores owned by Sanders Liquid Sunshine (“Sanders”) and Vegas Liquid Sunshine
(“Vegas”) on September 18, 2007 in the Northern California and Nevada geographic regions, respectively for $15.3 million, which includes a holdback of
$1.4 million that is being held in escrow. In addition, the Company acquired ten stores on April 4, 2007 and two stores on June 26, 2007 from Four Life
Foods, LLC (“Four Life”) and Juice The Two of Us, Inc., respectively for a total of $9.3 million. Stores located in the Central California and Northern
California geographic regions were acquired from Four Life and Juice The Two of Us, respectively. All acquisitions were accounted for using the purchase
method of accounting and resulted in total goodwill of approximately $19.0 million. All of the goodwill is expected to be tax deductible for tax purposes. The
operating results of stores acquired are included in the consolidated statements of operations from the date of acquisition.
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