NOTE F – OTHER ASSETS

 

The Company has extended non-revolving credit to its supplier of nutrition bars to allow this supplier to acquire the necessary equipment to manufacture the USANA nutrition bars.  Notes receivable are valued at their unpaid principal balance plus any accrued but unpaid interest, which approximates fair value.  Interest accrues at an annual interest rate of LIBOR plus 400 basis points. The note has a maturity date of February 1, 2024 and will be repaid by a combination of cash payments and credits for the manufacture of USANA’s nutrition bars.  There is no prepayment penalty.  Notes receivable from this supplier as of December 28, 2013, and September 27, 2014 were $4,942 and $7,359, respectively.

 

 

 

 

NOTE F – OTHER ASSETS --CONTINUED

 

The Company is in the process of evaluating options to potentially modify some of the terms of the credit agreement with its supplier of nutrition bars as there has been a delay in the completion of the project.  As a result of the delays, the Company performed an impairment test on the recoverability of the note receivable which required the use of estimates and assumptions.  The Company concluded that there was no impairment as of September 27, 2014, however, if assumptions change in the future, impairment charges could result.  The Company will continue to evaluate the note receivable for impairment at each reporting period.

 

The Company is building a state-of-the-art manufacturing and production facility in China, which is expected to become operational during the latter half of 2015.  As part of this project, land use rights totaling $1,483, and $7,474 as of December 28, 2013 and September 27, 2014, respectively, have been purchased and will be amortized over 50 years.  Land-use rights are classified within the “Other assets” line item in the Company’s consolidated balance sheets.