Goodwill

12 Months Ended

Dec. 28, 2019

As of December 28, 2019, the Company had 11 reporting units with goodwill for which the annual goodwill impairment test was completed. We perform the annual impairment test on the first day of the fourth quarter each year. In 2019, we performed a two-step quantitative analysis on all of our reporting units. Step 1 of that analysis compares the estimated the fair value of the reporting units using an income approach (i.e., a discounted cash flow technique) and a market approach to the carrying value of the reporting unit. If the estimated fair value exceeds its carrying value, the goodwill of the reporting unit is not considered impaired. If the carrying value of the reporting unit exceeds its fair value, we proceed to the second step to measure the amount of potential impairment loss. Based on this analysis, it was determined that the reporting units’ fair values were greater than their carrying values and no impairment charges were recognized in 2019. The accumulated impairment charges recognized in periods prior to 2017 totaled $68.2 million.

These estimates of a reporting unit’s fair value involve significant management estimates and assumptions, including but not limited to sales prices of similar assets, assumptions related to future profitability, cash flows, and discount rates. These estimates are based upon historical trends, management’s knowledge and experience and overall economic factors, including projections of future earnings potential. Developing discounted future cash flow estimates in applying the income approach required management to evaluate its intermediate to longer-term strategies, including, but not limited to, estimates about revenue growth, operating margins, capital requirements, inflation and working capital management. The development of appropriate rates to discount the estimated future cash flows required the selection of risk premiums, which can materially affect the present value of estimated future cash flows.

Within the West segment, as a result of management changes in 2019, we integrated our Austin operations with those of our Houston operations, resulting in one reporting unit for goodwill.

The following table presents goodwill by reportable segments and in total:



	West			East		Cement		Total
Balance—December 30, 2017	$	526,290		$	305,374	$	204,656	$	1,036,320
Acquisitions	59,148			101,431		—		160,579
Foreign currency translation adjustments	(4,871		)	—		—		(4,871		)
Balance, December 29, 2018	$	580,567		$	406,805	$	204,656	$	1,192,028
Acquisitions (1)	1,657			3,621		—		5,278
Foreign currency translation adjustments	2,393			—		—		2,393
Balance, December 28, 2019	$	584,617		$	410,426	$	204,656	$	1,199,699

______________________

(1)

Reflects goodwill from 2019 acquisitions and working capital adjustments from prior year acquisitions.

Summit Materials, LLC

Goodwill

appropriate rates to discount the estimated future cash flows required the selection of risk premiums, which can materially affect the present value of estimated future cash flows.

Within the West segment, as a result of management changes in 2019, we integrated our Austin operations with those of our Houston operations, resulting in one reporting unit for goodwill.

The following table presents goodwill by reportable segments and in total:



	West			East		Cement		Total
Balance—December 30, 2017	$	527,290		$	305,374	$	204,656	$	1,037,320
Acquisitions	59,148			101,431		—		160,579
Foreign currency translation adjustments	(4,871		)	—		—		(4,871		)
Balance, December 29, 2018	$	581,567		$	406,805	$	204,656	$	1,193,028
Acquisitions (1)	1,657			3,621		—		5,278
Foreign currency translation adjustments	2,393			—		—		2,393
Balance, December 28, 2019	$	585,617		$	410,426	$	204,656	$	1,200,699

______________________

(1)

Reflects goodwill from 2019 acquisitions and working capital adjustments from prior year acquisitions.