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Goodwill and Other Intangible Assets
 12 Months Ended
Jan. 02, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets
Goodwill and other intangible assets included in the Consolidated Balance Sheets consisted of the following (in thousands):
January 2, 2021December 28, 2019
Goodwill$292,434 $270,820 
Definite-lived intangible assets139,863 146,040 
Indefinite-lived intangible assets26,599 28,849 
Total goodwill and other intangible assets$458,896 $445,709 
Goodwill
The changes in the carrying amount of goodwill, by reporting segment, are as follows (in thousands):
Workplace FurnishingsResidential Building ProductsTotal
Balance as of December 29, 2018   
Goodwill$128,645 $186,662 $315,307 
Accumulated impairment losses(44,376)(143)(44,519)
Net goodwill balance as of December 29, 2018$84,269 $186,519 $270,788 
Foreign currency translation adjustment32 — 32 
Balance as of December 28, 2019   
Goodwill128,677 186,662 315,339 
Accumulated impairment losses(44,376)(143)(44,519)
Net goodwill balance as of December 28, 2019$84,301 $186,519 $270,820 
Goodwill acquired during the year39,800 10,314 50,114 
Impairment losses(28,500)— (28,500)
Balance as of January 2, 2021   
Goodwill168,477 196,976 365,453 
Accumulated impairment losses(72,876)(143)(73,019)
Net goodwill balance as of January 2, 2021$95,601 $196,833 $292,434 

Goodwill acquired in 2020 was the result of the Corporation's acquisition of DPG and three residential building products distributors. See "Note 4. Acquisitions" for additional information.

See Impairment Analysis section below for additional information regarding goodwill impairment recorded in 2020.

Definite-lived intangible assets
The table below summarizes amortizable definite-lived intangible assets, which are reflected in "Goodwill and Other Intangible Assets" in the Corporation’s Consolidated Balance Sheets (in thousands):
January 2, 2021December 28, 2019
GrossAccumulated AmortizationNetGrossAccumulated AmortizationNet
Patents$— $— $— $40 $40 $— 
Software182,127 78,619 103,508 176,836 67,541 109,295 
Trademarks and trade names9,964 3,546 6,418 7,564 3,381 4,183 
Customer lists and other91,002 61,065 29,937 104,004 71,442 32,562 
Net definite-lived intangible assets$283,093 $143,230 $139,863 $288,444 $142,404 $146,040 

In the first quarter of 2020, the Corporation recorded impairment charges of $0.6 million and $8.2 million, related to definite-lived trade names and customer lists, respectively, in the workplace furnishings segment.

The table above includes the estimated fair values of software, trademarks and trade names, and customer lists and other identified intangible assets acquired through business combinations in 2020. See "Note 4. Acquisitions" for additional information.
Amortization expense is reflected in "Selling and administrative expenses" in the Consolidated Statements of Comprehensive Income and was as follows (in thousands):
202020192018
Capitalized software$19,313 $18,130 $17,109 
Other definite-lived intangibles$4,950 $6,275 $6,615 

The occurrence of events such as acquisitions, dispositions, or impairments may impact future amortization expense. Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the following five fiscal years is as follows (in millions):
20212022202320242025
Amortization expense$27.4 $24.4 $20.3 $18.1 $16.4 

Indefinite-lived intangible assets
The Corporation also owns certain intangible assets, which are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely. These indefinite-lived intangible assets are reflected in "Goodwill and Other Intangible Assets" in the Consolidated Balance Sheets (in thousands):
January 2, 2021December 28, 2019
Trademarks and trade names$26,599 $28,849 

In the first quarter of 2020, the Corporation recorded an impairment charge of $2.3 million, related to an indefinite-lived trade name in the workplace furnishings segment. The remaining immaterial change in the indefinite-lived intangible assets balances shown above is related to foreign currency translation impacts.

Impairment Analysis
The Corporation evaluates its goodwill and indefinite-lived intangible assets for impairment on an annual basis during the fourth quarter, or whenever indicators of impairment exist. The Corporation also evaluates long-lived assets (which include definite-lived intangible assets) for impairment if indicators exist.

First Quarter 2020
At the end of the first quarter of 2020, the Corporation determined that a triggering event occurred, resulting in quantitative impairment tests performed over the goodwill, indefinite-lived intangible assets, and long-lived asset groups related to three smaller reporting units in the workplace furnishings segment. This determination was made considering the reduced sales and profitability projections for these reporting units, driven by the advent of the COVID-19 pandemic and related economic disruption. Management also considered the relative difference between the fair values and carrying values of the respective reporting units and indefinite-lived intangible assets in the most recent prior annual test performed during the fourth quarter of 2019. For the Corporation's remaining reporting units, management determined that the likelihood of the current fair value being less than the current carrying value was remote, and thus no quantitative impairment testing was performed.

As a result of the long-lived asset impairment testing, it was determined the carrying value of one long-lived asset group was not recoverable based on an analysis of the undiscounted estimated future cash flows of the group. Consequently, the Corporation recorded charges of $0.6 million and $8.2 million to fully impair the carrying values of a definite-lived trade name and customer list, respectively, within this asset group.

As a result of the indefinite-lived intangible asset impairment testing, it was determined the carrying value of one of the Corporation's indefinite-lived trade names exceeded the estimated fair value. Therefore, a $2.3 million impairment charge was recorded to reduce the carrying value to estimated fair value of $5.3 million. The fair value of this trade name is considered a Level 3 measurement which utilizes a relief-from-royalty discounted cash flows approach. Key inputs and assumptions involved include the estimated near-term revenue growth (ranging from -28 percent to +12 percent), long-term growth rate (3 percent), royalty rate (2 percent), and discount rate (16 percent).

For the goodwill impairment testing, management utilized a combination of both a discounted cash flows approach and market approach. Projections used in the impairment models reflected management's assumptions regarding revenue growth rates, economic and market trends including deterioration from the COVID-19 pandemic, cost structure, investments required for product enhancements, and other expectations about the anticipated short-term and long-term operating results of the reporting
units. As a result of the impairment testing, two reporting units were determined to have carrying values in excess of their fair values, resulting in goodwill impairment charges of $14.1 million and $7.5 million, respectively. These two reporting units have no remaining goodwill. The third reporting unit, which has goodwill of $6.9 million, was determined to have a fair value that exceeded carrying value by approximately 21 percent.

Fourth Quarter 2020
In the fourth quarter of 2020, the Corporation performed the required annual goodwill impairment assessment, and determined the carrying value of a smaller reporting unit in the workplace furnishings segment was in excess of its estimated fair value, resulting in a $6.9 million goodwill impairment charge. Following the impairment charge, this reporting unit has no remaining goodwill. The impairment testing utilized a combination of both a discounted cash flows approach and market approach. Projections used in the impairment model reflected management's assumptions regarding revenue growth rates, economic and market trends including continued demand softness from the current COVID-19 pandemic, cost structure, investments required for product enhancements, and other expectations about the anticipated short-term and long-term operating results of the reporting unit (Level 3 measurements). Key inputs and assumptions involved include the estimated near-term revenue growth (ranging from 12 to 18 percent), long-term growth rate (4 percent), and discount rate (16 percent). The impairment charge was driven by the continuing impact of the COVID-19 pandemic and a slower and more inconsistent recovery of customer demand for office furniture and related products in the markets served by this reporting unit, relative to management's previous projections. Management also performed impairment testing in the fourth quarter of 2020 with respect to the indefinite-lived intangible asset and long-lived assets held at this unit. No impairment was identified related to these assets.
The estimated fair values of each of the Corporation's other reporting units subjected to the goodwill impairment test in the fourth quarter of 2020 were concluded to be significantly in excess of their carrying values.