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Goodwill and Other Intangible Assets | 12 Months Ended
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Dec. 31, 2016
Goodwill And Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangible Assets |
Note 7. | Goodwill and Other Intangible Assets
The table below summarizes our goodwill and other intangible assets at December 31, 2016 and January 2, 2016, respectively, each of which is explained in additional detail below (amounts in thousands):
|  | December 31, 2016 |  |  | January 2, 2016 |
Goodwill |  | $ | 465,578 |  |  | $ | 464,926 |
Amortizable intangible assets, net of amortization |  |  | 592,964 |  |  |  | 461,466 |
Indefinite-lived intangible assets |  |  | 243,000 |  |  |  | 414,000 |
Total goodwill and other intangible assets |  | $ | 1,301,542 |  |  | $ | 1,340,392 |
The changes in the carrying amount of goodwill, by segment, during fiscal 2015 and fiscal 2016, are as follows (amounts in thousands):
|  | DSD Segment |  |  | Warehouse Segment |  |  | Total |
Balance as of January 3, 2015 |  | $ | 278,483 |  |  | $ | 4,477 |  |  | $ | 282,960 |
Change in goodwill related to acquisitions |  |  | 145,925 |  |  |  | 36,041 |  |  |  | 181,966 |
Balance as of January 2, 2016 |  | $ | 424,408 |  |  | $ | 40,518 |  |  | $ | 464,926 |
Change in goodwill related to acquisitions |  |  | 155 |  |  |  | 497 |  |  |  | 652 |
Balance as of December 31, 2016 |  | $ | 424,563 |  |  | $ | 41,015 |  |  | $ | 465,578 |
Changes in goodwill related to acquisitions during fiscal 2015 and fiscal 2016 are from DKB in the DSD Segment and Alpine Valley Bread Company (“Alpine”) in the Warehouse Segment. The table below presents the changes to goodwill by acquisition, for the original goodwill amount recorded at acquisition, from January 3, 2015 to January 2, 2016 (amounts in thousands):
|  | DKB |  |  | Alpine |  |  | Total |
Change in goodwill during fiscal 2015 |  | $ | 145,925 |  |  | $ | 36,041 |  |  | $ | 181,966 |
The table below presents the changes to goodwill by acquisition from January 2, 2016 to December 31, 2016 (amounts in thousands):
|  | DKB |  |  | Alpine |  |  | Total |
Working capital adjustments |  | $ | 60 |  |  | $ | 497 |  |  | $ | 557 |
Acquisition-related tax adjustments |  |  | (315 | ) |  |  | — |  |  |  | (315 | )
Adjustment to property, plant and equipment |  |  | 410 |  |  |  | — |  |  |  | 410 |
Change in goodwill during fiscal 2016 |  | $ | 155 |  |  | $ | 497 |  |  | $ | 652 |
As of December 31, 2016 and January 2, 2016, the company had the following amounts related to amortizable intangible assets (amounts in thousands):
|  | December 31, 2016 |  |  | January 2, 2016 |
Asset |  | Cost |  |  | Accumulated Amortization |  |  | Net Value |  |  | Cost |  |  | Accumulated Amortization |  |  | Net Value |
Trademarks |  | $ | 402,327 |  |  | $ | 25,129 |  |  | $ | 377,198 |  |  | $ | 246,327 |  |  | $ | 18,037 |  |  | $ | 228,290 |
Customer relationships |  |  | 281,621 |  |  |  | 68,163 |  |  |  | 213,458 |  |  |  | 281,621 |  |  |  | 51,650 |  |  |  | 229,971 |
Non-compete agreements |  |  | 4,874 |  |  |  | 4,666 |  |  |  | 208 |  |  |  | 4,874 |  |  |  | 4,043 |  |  |  | 831 |
Distributor relationships |  |  | 4,123 |  |  |  | 2,023 |  |  |  | 2,100 |  |  |  | 4,123 |  |  |  | 1,749 |  |  |  | 2,374 |
Total |  | $ | 692,945 |  |  | $ | 99,981 |  |  | $ | 592,964 |  |  | $ | 536,945 |  |  | $ | 75,479 |  |  | $ | 461,466 |
As of December 31, 2016 and January 2, 2016, there was $243.0 million and $414.0 million, respectively, of indefinite-lived intangible trademark assets separately identified from goodwill. These trademarks are classified as indefinite-lived because there is no foreseeable limit to the period over which the asset is expected to contribute to our cash flows. They are well established brands, many older than forty years old, with a long history and well defined markets. In addition, we are continuing to use these brands both in their original markets and throughout our expansion territories. We believe these factors support an indefinite-life assignment with an annual impairment analysis to determine if the trademarks are realizing their expected economic benefits. The company’s core markets were flat in fiscal 2016. As a result, we noticed that several of our brands were performing below expectations in the back half of the year. This was caused primarily from our regional brands that were negatively impacted by our national brands and the flat market in general. Concurrent with our annual impairment test, the company was also undergoing an enterprise-wide business and operational review. The diagnostic phase of this review was completed in our fourth quarter and included a brand rationalization study that impacts certain trademarks’ future revenue projections. This study included examining which brands will be part of a national or regional focus. We included the potential impact of this study in our expected results while performing our annual impairment test for all of our indefinite-lived intangible trademark assets. This led to a $15.0 million impairment charge of three indefinite-lived trademarks. This study is ongoing and may impact future periods. Following this impairment, the company evaluated the indefinite-lived classification and determined that the three trademarks which were impaired should be reassigned as finite-lived assets with an estimated useful life of forty years each. We do not intend to discontinue using these trademarks; however, our expectation of limiting them to each of their respective core markets impacts their growth potential. The carrying value of these three trademarks, before impairment, was $171.0 million. The fair value of these three trademarks was $156.0 million during our test. The difference between the carrying value and the fair value resulted in a $15.0 million impairment. The remaining indefinite-lived intangible trademark assets all had fair values in excess of their respective carrying values so no impairment was recognized. Amortization expense for fiscal 2016, 2015, and 2014 was as follows (amounts in thousands):
|  | Amortization expense |
Fiscal 2016 |  | $ | 24,502 |
Fiscal 2015 |  | $ | 15,403 |
Fiscal 2014 |  | $ | 11,740 |
Estimated amortization of intangibles for 2017 and the next four years thereafter is as follows (amounts in thousands):
Fiscal year |  | Amortization of Intangibles |
2017 |  | $ | 27,495 |
2018 |  | $ | 26,778 |
2019 |  | $ | 26,285 |
2020 |  | $ | 25,776 |
2021 |  | $ | 25,300 |

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16373-109275 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16265-109275 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16323-109275 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13816-109267 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13854-109267 + Details
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