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Note 4 - Goodwill and Intangible Assets
9 Months Ended
Sep. 28, 2014
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure [Text Block]

4.     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 impairment test based on their estimated fair value performed annually in the fourth quarter (or under certain circumstances more frequently as warranted). 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. 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”), Premier Concepts, Inc. (“Premier”), Precision Painting Group (“Precision”), Foremost Fabricators, LLC (“Foremost”), and PolyDyn3, LLC (“PolyDyn3”). While Gravure Ink, AIA, Infinity Graphics, Décor, Creative Wood, Middlebury Hardwoods, Frontline, Premier, Precision, Foremost, and PolyDyn3 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 acquisitions of Blazon International Group (“Blazon”), John H. McDonald Co., Inc. d/b/a West Side Furniture (“West Side”), and Foremost, 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 assesses finite-lived intangible assets for impairment 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 28, 2014 related to goodwill, indefinite-lived intangible assets or finite-lived intangible assets. There have been no material changes to the method of evaluating impairment related to goodwill and indefinite-lived intangible assets during the third quarter of 2014.


In early June 2014, the Company acquired the business and certain assets of Bremen, Indiana and Elkhart, Indiana-based Precision. 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 - $2,904; trademarks - $483; non-compete agreements - $1,105; and goodwill - $3,693. The goodwill recognized in this transaction is expected to be deductible for income tax purposes. Precision is included in the Manufacturing segment. See Note 5 for further details.


In late June 2014, the Company acquired the business and certain assets of Goshen, Indiana-based Foremost. 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 - $15,485; trademarks - $4,070; non-compete agreements - $1,350; and goodwill - $8,025. The goodwill recognized in this transaction is expected to be deductible for income tax purposes. The Foremost reporting units are included in the Manufacturing and Distribution segments. See Note 5 for further details.


In early September 2014, the Company acquired the business and certain assets of Elkhart, Indiana-based PolyDyn3. 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 - $201; trademarks - $6; non-compete agreements - $23; and goodwill - $57. The goodwill recognized in this transaction is expected to be deductible for income tax purposes. PolyDyn3 is included in the Manufacturing segment. See Note 5 for further details.


Goodwill


Changes in the carrying amount of goodwill for the nine months ended September 28, 2014 by segment are as follows:


(thousands)

 

Manufacturing

   

Distribution

   

Total

 

Balance - December 31, 2013

  $ 13,720     $ 2,775     $ 16,495  

Acquisitions

    8,687       3,210       11,897  

Balance - September 28, 2014

  $ 22,407     $ 5,985     $ 28,392  

Other Intangible Assets


As of September 28, 2014, the remaining intangible assets balance of $48.2 million is comprised of $8.7 million of trademarks which have an indefinite life, and therefore, no amortization expense has been recorded, and $39.5 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 28, 2014 and December 31, 2013:


(thousands)

 

Sept. 28, 2014

 

Weighted Average Useful Life (years)

 

Dec. 31, 2013

 

Weighted Average Useful Life (years)

Customer relationships

  $ 42,258  

11

  $ 23,668  

11

Non-compete agreements

    5,895  

3

    3,417  

3

Trademarks

    8,725         4,166    
      56,878         31,251    

Less: accumulated amortization

    (8,676 )       (5,640 )  

Other intangible assets, net

  $ 48,202       $ 25,611    

Changes in the carrying value of other intangible assets for the nine months ended September 28, 2014 by segment are as follows:


(thousands)

 

Manufacturing

   

Distribution

   

Total

 

Balance - December 31, 2013

  $ 19,626     $ 5,985     $ 25,611  

Acquisitions

    17,265       8,362       25,627  

Amoritization

    (2,156 )     (880 )     (3,036 )

Balance - September 28, 2014

  $ 34,735     $ 13,467     $ 48,202