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Goodwill and Other Intangible Assets
3 Months Ended
Apr. 04, 2020
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets

NOTE 8.  GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and intangible assets are as follows:

 

 

 

 

 

 

 

 

 

 

Initial

 

 

April 4,

 

 

December 28,

 

 

Useful Life

 

 

2020

 

 

2019

 

 

(in years)

 

 

(in thousands)

 

 

 

Goodwill

 

$

323,800

 

 

$

277,600

 

 

indefinite

 

 

 

 

 

 

 

 

 

 

 

Other intangible assets:

 

 

 

 

 

 

 

 

 

 

Trade names (indefinite-lived)

 

$

148,841

 

 

$

148,841

 

 

indefinite

 

 

 

 

 

 

 

 

 

 

 

Customer relationships and customer-related assets

 

 

201,547

 

 

 

200,647

 

 

<1-10

Trade name (amortizable)

 

 

23,500

 

 

 

-

 

 

15

Developed technology

 

 

5,600

 

 

 

3,000

 

 

6-10

Non-compete agreement

 

 

3,338

 

 

 

1,668

 

 

2-5

Software license

 

 

590

 

 

 

590

 

 

2

Less:  Accumulated amortization

 

 

(103,526

)

 

 

(98,784

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Subtotal

 

 

131,049

 

 

 

107,121

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other intangible assets, net

 

$

279,890

 

 

$

255,962

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill at December 28, 2019

 

$

277,600

 

 

 

 

 

 

 

Increase related to the acquisition of NewSouth

 

 

46,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill at April 4, 2020

 

$

323,800

 

 

 

 

 

 

 

 

Estimated amortization of our amortizable intangible assets for future years is as follows:

(in thousands)

 

Total

 

Remainder of 2020

 

$

14,677

 

2021

 

 

17,727

 

2022

 

 

16,869

 

2023

 

 

14,708

 

2024

 

 

14,621

 

Thereafter

 

 

52,447

 

 

 

 

 

 

Total

 

$

131,049

 

 

Amortization expense for relating to amortizable intangible assets for the three months ended April 4, 2020, and March 30, 2019, was $4.7 million and $4.0 million, respectively.

 

We perform our annual goodwill and indefinite-lived intangible asset impairment testing on the first day of our fiscal fourth quarter of each year, and at interim periods if needed based on occurrence of triggering events. Given the general deterioration in economic and market conditions surrounding the COVID-19 pandemic, and the narrow excess fair value over carrying value of its WinDoor and WWS trade names as described in our 2019 Form 10-K, the Company determined it should complete interim impairment tests of its WinDoor and WWS trade names as of April 4, 2020.

 

Although these interim impairment tests did not indicate that impairments of those assets exist at this time, due to earlier and stricter stay-at-home orders relating to the COVID-19 pandemic in the western states, WWS reporting unit sales could decrease further or for longer than we currently forecast, which would result in an impairment if such decrease in sales were to occur. Our modeling has indicated that if sales of our WWS reporting unit decrease to approximately $133 million in 2020, assuming a long-term compound average growth rate of 7% thereafter, with a terminal growth rate of 3%, the $73.0 million carrying value of our WWS trade name would exceed it fair value by approximately $6 million. However, if WWS achieves 2020 net sales that are flat to prior year and returns to growth assumptions for 2021 and beyond, as modeled in our 2019 annual impairment test, which includes a terminal growth rate of 3%, then no impairment is indicated. A key assumption in our modeling is an assessment of macro industry growth in our WWS reporting unit’s key markets.