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Note 3 - Goodwill and Intangible Assets
9 Months Ended
Sep. 29, 2013
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure [Text Block]

3.      GOODWILL AND INTANGIBLE ASSETS        


Goodwill and other intangible assets are allocated to the Company’s reporting units at the date they are initially recorded. Goodwill and indefinite-lived intangible assets are not amortized but are subject to an annual (or under certain circumstances more frequent) impairment test based on their estimated fair value. Goodwill impairment testing is performed at the reporting unit level, one level below the business segment. The Company’s Manufacturing segment includes goodwill originating from the acquisitions of Gravure Ink (acquired in the Adorn Holdings, Inc. (“Adorn”) acquisition), Quality Hardwoods Sales (“Quality Hardwoods”), A.I.A. Countertops, LLC (“AIA”), Infinity Graphics, Décor Mfg., LLC (“Décor”), Creative Wood Designs, Inc. (“Creative Wood”), Middlebury Hardwood Products, Inc. (“Middlebury Hardwoods”), Frontline Mfg., Inc. (“Frontline”), and Premier Concepts, Inc. (“Premier”). While Gravure Ink, AIA, Infinity Graphics, Décor, Creative Wood, Middlebury Hardwoods, Frontline and Premier remain reporting units of the Company for which impairment is assessed, Quality Hardwoods is assessed for impairment as part of the Company’s hardwood door reporting unit. The Company’s Distribution segment includes goodwill originating from the acquisition of Blazon International Group (“Blazon”) and John H. McDonald Co., Inc. d/b/a West Side Furniture (“West Side”), which remain reporting units for which impairment is assessed.


Finite-lived intangible assets that meet certain criteria continue to be amortized over their useful lives and are also subject to an impairment test based on estimated undiscounted cash flows when impairment indicators exist. The Company performs the required impairment test of goodwill in the fourth quarter or more frequently if events or changes in circumstances indicate that the carrying value may exceed the fair value. No impairment was recognized during the third quarter and nine months ended September 29, 2013. There have been no material changes to the method of evaluating goodwill impairment during the third quarter of 2013. The Company does not believe there is a reasonable likelihood that there will be a material change in the estimates or assumptions used to determine impairment in the foreseeable future.


In early September 2013, the Company acquired the business and certain assets of two related Warsaw, Indiana-based companies, Frontline and Premier, in a combined transaction. The purchases were determined to be business combinations. The intangible assets recorded as a result of the Frontline acquisition included (in thousands): customer relationships - $1,411; trademarks - $221; non-compete agreement - $460; and goodwill - $2,795. The intangible assets recorded as a result of the Premier acquisition included (in thousands): customer relationships - $862; trademarks - $144; non-compete agreement - $203; and goodwill - $1,239. The goodwill recognized in both of these transactions is expected to be deductible for income tax purposes. The Frontline and Premier reporting units are included in the Manufacturing segment. See Note 4 for further details.


In late September 2013, the Company acquired the business and certain assets of Goshen, Indiana-based West Side. The purchase was determined to be a business combination and the intangible assets recorded as a result of the acquisition included (in thousands): customer relationships – $4,167; trademarks - $297; non-compete agreement - $998; and goodwill - $2,574. The West Side reporting unit is included in the Distribution segment. See Note 4 for further details.


Goodwill


Changes in the carrying amount of goodwill for the nine months ended September 29, 2013 by segment are as follows:


(thousands)

Manufacturing

   

Distribution

   

Total 

Balance – January 1, 2013

  $ 10,257   $ 105   $ 10,362  

Acquisitions

    4,034     2,574      6,608 

Balance – September 29, 2013

  $ 14,291   $ 2,679   $ 16,970  

Other Intangible Assets


As of September 29, 2013, the remaining intangible assets balance of $26.4 million is comprised of $4.2 million of trademarks which have an indefinite life, and therefore, no amortization expense has been recorded, and $22.2 million pertaining to customer relationships and non-compete agreements which are being amortized over periods ranging from 3 to 19 years.


Other intangible assets, net consist of the following as of September 29, 2013 and December 31, 2012:


(thousands)

   

Sept. 29,
2013

   

 Dec.31,
2012

 

Trademarks

  $ 4,166   $ 3,504  

Customer relationships

    23,668     17,228  

Non-compete agreements

    3,417     1,756  
      31,251     22,488  

Less: accumulated amortization

    (4,857 )   (3,269 )

Other intangible assets, net

  $ 26,394   $ 19,219  

Changes in the carrying value of other intangible assets for the nine months ended September 29, 2013 by segment are as follows:


(thousands)

 

Manufacturing

   

Distribution

   

Total

 

Balance – December 31, 2012

  $ 18,242     $ 977     $ 19,219  

Acquisitions

    3,301       5,462       8,763  

Amortization

    (1,369 )     (219 )     (1,588 )

Balance – September 29, 2013

  $ 20,174     $ 6,220     $ 26,394