Jamba Juice 2014 Annual Report Download - page 64

Assets Held For Sale — The Company classifies assets as held for sale and suspend depreciation and amortization when approval at the appropriate
level has been provided, the assets can be immediately removed from operations, an active program has begun to locate a buyer, the assets are being actively
marketed for sale at or near their current fair value, significant changes to the plan of sale are not likely and the sale is probable within one year. Upon
classification as held for sale, long-lived assets are no longer depreciated, and an assessment of impairment is performed to identify and expense any excess of
carrying value over fair value less costs to sell. Subsequent changes to the estimated fair value less the costs to sell will impact the measurement of assets held
for sale. To the extent fair value increases, any impairment previously taken is reversed. If the carrying value of the assets held for sale exceeds the fair value
less costs to sell, the Company will record an expense for the amount of the excess. The Company also reclassifies the associated prior year balances. At
December 30, 2014, the fair value of assets held for sale exceeded the carrying value.
Impairment of long-lived assets — The Company evaluates long-lived assets for impairment when facts and circumstances indicate that the carrying
values of long-lived assets may not be recoverable. The impairment evaluation is generally performed at the individual store asset group level. The Company
first compares the carrying value of the asset to the asset’s estimated future undiscounted cash flows. If the estimated future cash flows are less than the
carrying value of the asset, the Company measures an impairment loss based on the asset’s estimated fair value. The fair value of a store’s assets is estimated
using a discounted cash flow model based on internal projections and taking into consideration the view of a market participant. The estimate of cash flows is
based on, among other things, certain assumptions about expected future operating performance. Factors considered during the impairment evaluation
include factors related to actual operating cash flows, the period of time since a store has been opened or remodeled, refranchising expectations and the
maturity of the relevant market. The Company recorded impairment charges of $0.2 million, $0.7 million and $0.7 million for fiscal 2014, fiscal 2013 and
fiscal 2012, respectively.
Goodwill, Trademarks and Other Intangible Asset Impairment Goodwill is evaluated for impairment on an annual basis during the Company’s fourth
fiscal quarter, or more frequently if circumstances, such as material deterioration in performance, indicate carrying values may exceed their fair values. The
goodwill impairment analysis is a two-step process: First, the reporting unit’s estimated fair value is compared to its carrying value, including goodwill. If the
Company determines that the estimated fair value of the reporting unit is less than its carrying value, it moves to the second step to determine the implied fair
value of the reporting unit’s goodwill. If the carrying amount of the reporting unit’s goodwill exceeds its implied fair value, an impairment loss is recognized.
In September 2011, the FASB issued new guidance allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill
impairment to determine whether it should calculate the fair value of a reporting unit. If impairment is deemed more likely than not, management would
perform the currently prescribed two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. The Company applies
the qualitative approach when appropriate. When reviewing goodwill for impairment, the Company assesses whether goodwill should be allocated to
operating levels lower than its single operating segment for which discrete financial information is available and reviewed for decision-making purposes.
These lower levels are referred to as reporting units. Currently, the Company’s one operating segment was determined to be one reporting unit. During the
fiscal year ended December 30, 2014 no goodwill impairment was recorded.
Intangible assets not subject to amortization (primarily trademarks) are evaluated for impairment on an annual basis during the fourth fiscal quarter, or
more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company qualitatively assesses the impairment for other
intangible assets not subject to amortization to determine whether it is more likely than not that the fair value of intangible assets are less than their carrying
amount. For other intangible assets not subject to amortization not assessed qualitatively, a quantitative approach is utilized. The Company compares the
carrying value of the applicable asset to its fair value, which the Company estimates using a discounted cash flow analysis or by comparison with the market
values of similar assets. If the carrying amount of the asset exceeds its estimated fair value, the Company determines the impairment loss, if any, as the excess
of the carrying value of the intangible asset over its fair value. An impairment loss is generally recognized when the carrying amount of the trademarks
exceeds the fair value. The fair value of trademarks was estimated using the income approach, which is based on assumptions about future cash flows
resulting from our franchise, license agreements and acquired businesses.
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