GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Oct. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Our goodwill balance and changes in the carrying amount of goodwill by operating segment are as follows (in thousands):



	Engineered Building Systems		Metal Components			Metal Coil Coating		Total
Balance, November 2, 2014	$	5,200	$	70,026		$	—	$	75,226
Additions	9,110		73,571			—		82,681
Other, net	—		119			—		119
Balance, November 1, 2015	$	14,310	$	143,716		—		$	158,026
Purchase accounting adjustments⁽¹⁾	—		(3,755		)	—		(3,755		)
Balance, October 30, 2016	$	14,310	$	139,961		$	—	$	154,271

(1)

Includes immaterial error corrections related to the balance sheet and statement of operations as of and for the year ended November 1, 2015. These corrections related to the fair value of liabilities assumed in the acquisition of CENTRIA and resulted in a decrease in goodwill and current liabilities of $3.8 million and $3.0 million, respectively. The impact of these error corrections on net income for the fiscal year ended October 30, 2016 was a decrease of $0.5 million ($0.8 million, before tax). Management has assessed both quantitative and qualitative factors discussed in ASC Topic 250, Accounting Changes and Error Corrections, and Staff Accounting Bulletin 1.M, Materiality (SAB Topic 1.M) to determine that the correction of these misstatements qualifies as an immaterial error correction.

On January 16, 2015, we completed the CENTRIA Acquisition. The fair value of all assets acquired and liabilities assumed were finalized during the first quarter of fiscal 2016, including certain contingent assets and liabilities and the post-closing working capital adjustment, which did not result in any material adjustments. This transaction resulted in goodwill of $79.0 million as the acquisition enhances our existing portfolio of cold storage and commercial and industrial solutions and expands our product offering into high-end IMP capabilities. Goodwill was allocated to the metal components segment and engineered building systems segment based on expected synergies that the Company believes the segments may derive from the acquisition.

In accordance with ASC Topic 350, Intangibles — Goodwill and Other, goodwill is tested for impairment at least annually at the reporting unit level, which is defined as an operating segment or a component of an operating segment that constitutes a business for which financial information is available and is regularly reviewed by management. Management has determined that we have six reporting units for the purpose of allocating goodwill and the subsequent testing of goodwill for impairment. Our metal components segment has five reporting units and our engineered building systems segment has one reporting unit with goodwill.

At the beginning of the fourth quarter of each fiscal year, we perform an annual impairment assessment of goodwill and indefinite-lived intangible assets. Additionally, we assess goodwill and indefinite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the fair value may be below the carrying value. We completed our annual impairment assessment of goodwill and indefinite-lived intangible assets in the fourth quarter of fiscal 2016 and we elected to apply the qualitative assessment for the goodwill in certain of our reporting units within the metal components segment and the engineered building systems segment as of August 1, 2016. We also applied the qualitative assessment for the indefinite-lived intangible assets within the engineered building systems segment as of August 1, 2016. Under the qualitative assessment, various events and circumstances (or factors) that would affect the estimated fair value of a reporting unit are identified (similar to impairment indicators above). These factors are then classified by the type of impact they would have on the estimated fair value using positive, neutral, and negative categories based on current business conditions. Additionally, an assessment of the level of impact that a particular factor would have on the estimated fair value is determined using relative weightings. Additionally, the Company considers the results of the most recent two-step quantitative impairment test completed for a reporting unit and compares the weighted average cost of capital (WACC), publicly traded company multiples and observable and recent transaction multiples between the current and prior years for a reporting unit. Based on our assessment of these tests, we do not believe it is more likely than not that the fair value of the reporting units or the indefinite-lived intangible assets are less than their respective carrying amounts.

We performed a “Step 1” test for one reporting unit within the metal components segment during the fourth quarter of fiscal 2016. We estimated the fair value of the reporting unit using projected discounted cash flows and publicly traded company multiples. To develop the projected cash flows associated with the reporting unit, we considered key factors that include assumptions regarding sales volume and prices, operating margins, capital expenditures, working capital needs and discount rates. We discounted the projected cash flows using a long-term, risk-adjusted weighted average cost of capital, which was based on our estimate of the investment returns that market participants would require for the reporting unit. We considered publicly traded company multiples for companies with operations similar to the reporting unit. Based on our completion of this test, we determined that the fair value of the reporting unit exceeded the carrying amount. Goodwill was not considered to be impaired.

The following table represents all our intangible assets activity for the fiscal years ended October 30, 2016 and November 1, 2015 (in thousands):



	Range of Life (Years)			October 30, 2016			November 1, 2015
Amortized intangible assets:
Cost:
Trade names		15		$	29,167		$	29,167
Customer lists and relationships	12	–	20	136,210			136,210
Non-competition agreements	5	–	10	8,132			8,132
Supplier relationships		3		150			150
Backlog		0.75		—			8,400
				$	173,659		$	182,059
Accumulated amortization:
Trade names				$	(8,768	)	$	(6,824	)
Customer lists and relationships				(23,295		)	(15,613		)
Non-competition agreements				(8,132		)	(8,132		)
Supplier relationships				(150		)	(150		)
Backlog				—			(8,400		)
				$	(40,345	)	$	(39,119	)

Net book value				$	133,314		$	142,940
Indefinite-lived intangible assets:
Trade names				13,455			13,455
Total intangible assets at net book value				$	146,769		$	156,395

The Star and Ceco trade name assets have an indefinite life and are not amortized, but are reviewed annually and tested for impairment. These trade names were determined to have indefinite lives due to the length of time the trade names have been in place, with some having been in place for decades. Our intention is to maintain these trade names indefinitely.

All other intangible assets are amortized on a straight-line basis or a basis consistent with the expected future cash flows over their expected useful lives. As of October 30, 2016 and November 1, 2015, the weighted average amortization period for all our intangible assets was 15.9 years. Amortization expense of intangibles was $9.6 million, $16.9 million and $4.1 million for 2016, 2015 and 2014, respectively. We expect to recognize amortization expense over the next five fiscal years as follows (in thousands):



2017	$	9,620
2018	9,620
2019	9,620
2020	9,327
2021	9,064

In accordance with ASC Topic 350, Intangibles — Goodwill and Other, we evaluate the remaining useful life of intangible assets on an annual basis. We also review finite-lived intangible assets for impairment when events or changes in circumstances indicate the carrying values may not be recoverable in accordance with ASC Topic 360, Property, Plant and Equipment.

- 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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