GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Jan. 28, 2017

3.GOODWILL AND INTANGIBLE ASSETS

The following table summarizes the changes in the Company’s net goodwill balance through January 28, 2017.


	2016		2015
Balance beginning of year
Goodwill	$	5,256	$	4,836
Accumulated impairment losses		(2,532)		(2,532)
		2,724		2,304

Activity during the year
Mergers		307		420

Balance end of year
Goodwill		5,563		5,256
Accumulated impairment losses		(2,532)		(2,532)
	$	3,031	$	2,724

In 2016, the Company acquired all of the outstanding shares of ModernHEALTH (see Note 2) resulting in additional goodwill totaling $285.

In 2015, the Company acquired all the outstanding shares of Roundy’s (see Note 2), resulting in additional goodwill totaling $401. In 2016, the Company finalized its Roundy's purchase allocation resulting in a decrease in goowill of $13 (see Note 2).

Testing for impairment must be performed annually, or on an interim basis upon the occurrence of a triggering event or a change in circumstances that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The annual evaluations of goodwill and indefinite-lived intangible assets were performed during the fourth quarter of 2016, 2015 and 2014 did not result in impairment.

Based on current and future expected cash flows, the Company believes goodwill impairments are not reasonably likely. A 10% reduction in fair value of the Company’s reporting units would not indicate a potential for impairment of the Company’s remaining goodwill balance.

In 2016, the Company acquired definite and indefinite lived intangible assets totaling approximately $136 as a result of the merger with ModernHEALTH.

In 2015, the Company acquired definite and indefinite lived intangible assets totaling approximately $324 as a result of the merger with Roundy's.

The following table summarizes the Company’s intangible assets balance through January 28, 2017.


	2016				2015
	Gross carrying		Accumulated		Gross carrying		Accumulated
	amount		amortization(1)		amount		amortization(1)
Definite-lived favorable leasehold interests	$	167	$	(41)	$	169	$	(31)
Definite-lived pharmacy prescription files		254		(56)		127		(40)
Definite-lived customer relationships		93		(55)		93		(39)
Definite-lived other		97		(33)		78		(23)
Indefinite-lived trade name		641		—		641		—
Indefinite-lived liquor licenses		86		—		78		—

Total	$	1,338	$	(185)	$	1,186	$	(133)

(1)

Favorable leasehold interests are amortized to rent expense, pharmacy prescription files are amortized to merchandise costs, customer relationships are amortized to depreciation and amortization expense and other intangibles are amortized to operating, general and administrative (“OG&A”) expense and depreciation and amortization expense.

Amortization expense associated with intangible assets totaled approximately $63, $51 and $41, during fiscal years 2016, 2015 and 2014, respectively. Future amortization expense associated with the net carrying amount of definite-lived intangible assets for the years subsequent to 2016 is estimated to be approximately:


2017	$	73
2018		57
2019		39
2020		30
2021		28
Thereafter		199

Total future estimated amortization associated with definite-lived intangible assets	$	426

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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