Jamba Juice 2009 Annual Report Download - page 110

Table of Contents
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factors, and other actuarial assumptions. The estimated accruals for these liabilities, portions of which are calculated by independent third-party actuaries,
could be significantly affected if future occurrences and claims differ from these assumptions and historical trends. The workers’ compensation self-
insurance reserve is included in “Workers’ compensation and health self-insurance reserves” in the balance sheet as of November 28, 2006, was $3.0 million.
Cash and Cash Equivalents —Jamba Juice Company considers all highly liquid instruments with maturities of three months or less when purchased
to be cash equivalents. As of November 28, 2006, Jamba Juice Company did not have any investments with maturities greater than three months.
Receivables—Receivables represent amounts due for royalty fees, advertising fees, and jambacards issued by the franchisees. The allowance for
doubtful accounts is Jamba Juice Company’s estimate of the amount of probable credit losses in Jamba Juice Company’s existing accounts receivable.
Inventories—Inventories include only the purchase cost and are stated at the lower of cost or market. Cost is determined using the first-in, first-out
method. Inventories consist of food, beverages, and available-for-sale promotional products.
Property, Fixtures, and Equipment —Property, fixtures, and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation of furniture, fixtures, and equipment is calculated using the straight-line method over the estimated useful life of the asset generally ranging from
three to seven years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the related lease term, which is generally 10 years.
The costs of repair and maintenance are expensed when incurred, while expenditures for refurbishments and improvements that significantly add to the
productive capacity or extend the useful life of an asset are capitalized.
Goodwill—Goodwill represents the excess of the purchase price over net assets acquired and is not amortized. Goodwill is subject to annual impairment
tests in April of each year. This analysis is performed at the reporting unit level in accordance with Statement of Financial Accounting Standards (“SFAS”)
No. 142, Goodwill and Other Intangible Assets. Based upon impairment analyses performed in accordance with SFAS No. 142 there was no goodwill
impairment recorded in the 22 Week Period and fiscal 2006.
Capitalized Interest—Jamba Juice Company capitalizes interest costs related to the purchase and construction of qualifying assets. During the 22
Week Period and fiscal 2006, Jamba Juice Company capitalized interest of $130,000 and $183,000, respectively. Capitalized interest is amortized over the life
of the assets.
Other Intangible Assets —Other intangible assets consist of leasehold acquisition costs and are amortized on a straight-line basis over the periods of
expected benefit, which range from 8 to 10 years, and are limited to the lease term, including reasonably assured renewal periods.
Store Closing and Impairment Charges—In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Asset ,
losses related to the impairment of long-lived assets are recognized when expected future cash flows are less than the asset’s carrying value. When facts and
circumstances indicate that the carrying values of long-lived assets may be impaired, Jamba Juice Company makes an evaluation of recoverability by
comparing the carrying values of the assets to projected future cash flows, in addition to other quantitative and qualitative analyses. Impairment tests are
conducted quarterly. Upon indication that the carrying values of its assets may not be recoverable, Jamba Juice Company recognizes an impairment loss as a
charge against current operations for an amount equal to the difference between the carrying value and the asset’s fair
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