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Goodwill and Intangible Assets
 12 Months Ended
Jan. 03, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure GOODWILL AND INTANGIBLE ASSETS
In connection with the nora acquisition on August 7, 2018, the Company recognized goodwill of $201.9 million and acquired intangible assets of $103.3 million. Goodwill includes all purchase price accounting adjustments of approximately $18.6 million related to additional liabilities that existed at the acquisition date. Goodwill and intangible assets were assigned pro-rata to the Company’s three operating segments. None of the goodwill is expected to be deductible for income tax purposes.

During the first quarter of 2020, we performed a qualitative assessment of goodwill impairment indicators, considering macroeconomic conditions related to the COVID-19 pandemic and its potential impact to sales and operating income. We expect that the duration of the COVID-19 pandemic and its adverse impacts on the global economy, global travel restrictions, COVID-19 related government shutdowns, disruptions to our supply chain, distribution disruption, and disruption to our customers’ plans to spend capital on projects that use our products and services will result in lower revenue and operating income. As a result, we determined that there were indicators of impairment, and the Company proceeded with a quantitative assessment of goodwill for all reporting units at the end of the first quarter.

In performing the first quarter quantitative goodwill impairment testing, the Company prepared valuations of reporting units on both a market comparable methodology and an income methodology, and those valuations were compared with the respective carrying values of the reporting units to determine whether any goodwill impairment existed. Our reporting units are one level below our reporting segment level. In preparing the valuations, past, present and future expectations of performance were considered, including the impact of the COVID-19 pandemic. This methodology is consistent with the approach used to perform the annual quantitative goodwill assessment in prior years. The weighted average cost of capital used in the goodwill impairment testing ranged between 10.0% and 10.5%, which primarily fluctuated based on a country risk premium assigned to the geographical region of the reporting unit. There is inherent uncertainty associated with key assumptions used in our impairment testing including the duration of the economic downturn associated with the COVID-19 pandemic and the recovery period. As a result of the first quarter assessment, we determined that the fair value for two reporting units was less than the carrying value and recognized a goodwill impairment loss of $116.5 million in the first quarter of 2020. The expected decline in revenue due to the impact of COVID-19 contributed to the lower fair value of our Europe and Asia-Pacific reporting units. As such, the goodwill impairment loss was allocated to our Europe and Asia-Pacific reporting units in the amounts of $99.2 million and $17.3 million, respectively. We determined that the goodwill in our Americas reporting unit was not impaired as the fair value exceeded the carrying value by more than 90% at April 5, 2020.

During the fourth quarters of 2020, 2019 and 2018, the Company performed the annual goodwill impairment test, consistent with the methodology discussed above. The Company performed this test at the reporting unit level, which is one level below the reporting segment level. In performing the impairment testing, the Company prepared valuations of reporting units on both a market comparable methodology and an income methodology, and those valuations were compared with the respective carrying values of the reporting units to determine whether any goodwill impairment existed. In preparing the valuations, past, present and future expectations of performance were considered, including the ongoing impact of the COVID-19 pandemic in 2020.

Each of the Company’s reporting units maintained fair values in excess of their respective carrying values as of the measurement date, and therefore no impairment was indicated as a result of the annual impairment testing. As of January 3, 2021, if the Company’s estimates of the fair values of its reporting units which carry a goodwill balance were 10% lower, the Company still believes no goodwill impairment would have existed. However, the full extent of the future impact of COVID-19 on the Company was and remains uncertain, and a prolonged COVID-19 pandemic could result in additional impairment of goodwill.
As of January 3, 2021, and December 29, 2019, the net carrying amount of goodwill was $165.8 million and $257.4 million, respectively. The changes in the carrying amounts of goodwill for the years ended January 3, 2021 and December 29, 2019 are as follows:

Goodwill
(in thousands)
Balance, at December 30, 2018$245,815 
Purchase price accounting adjustments17,181 
Foreign currency translation(5,557)
Balance, at December 29, 2019257,439 
Impairment(116,495)
Foreign currency translation24,833 
Balance, at January 3, 2021$165,777 

Additionally, we determined that the trademarks and trade names intangible assets related to the acquired nora business were also impaired and recognized an impairment loss of $4.8 million in the first quarter of 2020. There were no indicators of additional intangible asset impairment as of the end of fiscal year 2020. The net carrying amount of indefinite-lived intangible assets was $60.4 million and $59.4 million as of January 3, 2021 and December 29, 2019, respectively. The net carrying amount of intangible assets subject to amortization was $27.3 million and $29.7 million as of January 3, 2021 and December 29, 2019, respectively. Amortization expense related to intangible assets during the years 2020, 2019 and 2018 was $5.5 million, $5.9 million and $5.4 million, respectively, and is recorded in cost of sales in the consolidated statements of operations. As of January 3, 2021 and December 29, 2019, accumulated amortization related to intangible assets, including impacts of changes in foreign currency exchange rates, was $15.7 million and $12.9 million, respectively.