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Goodwill and Other Intangible Assets
12 Months Ended
Dec. 28, 2019
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets

Note 9.

Goodwill and Other Intangible Assets

The table below summarizes our goodwill and other intangible assets at December 28, 2019 and December 29, 2018, respectively, each of which is explained in additional detail below (amounts in thousands):

 

 

 

December 28, 2019

 

 

December 29, 2018

 

Goodwill

 

$

545,244

 

 

$

545,379

 

Amortizable intangible assets, net of amortization

 

 

623,107

 

 

 

588,329

 

Indefinite-lived intangible assets

 

 

127,100

 

 

 

206,600

 

Total goodwill and other intangible assets

 

$

1,295,451

 

 

$

1,340,308

 

 

The changes in the carrying amount of goodwill during fiscal 2018 and fiscal 2019, are as follows (amounts in thousands):

 

 

 

Total

 

Balance as of December 30, 2017

 

$

464,777

 

Change in goodwill related to acquisition

 

 

80,602

 

Balance as of December 29, 2018

 

$

545,379

 

Change in goodwill related to acquisition

 

 

(135

)

Balance as of December 28, 2019

 

$

545,244

 

 

Goodwill decreased $0.1 million during fiscal 2019 due to changes in working capital, property, plant, and equipment, and financial assets related to the Canyon Bakehouse, LLC (“Canyon”) acquisition discussed in Note 10, Acquisition, which was acquired in fiscal 2018.  

 

Changes in goodwill during fiscal 2018 related to the Canyon acquisition.  Goodwill was not impaired in fiscal years 2019, 2018, or 2017.

As of December 28, 2019 and December 29, 2018, the company had the following amounts related to amortizable intangible assets (amounts in thousands):

 

 

 

December 28, 2019

 

 

December 29, 2018

 

Asset

 

Cost

 

 

Accumulated

Amortization

 

 

Net Value

 

 

Cost

 

 

Accumulated

Amortization

 

 

Net Value

 

Trademarks

 

$

477,193

 

 

$

55,746

 

 

$

421,447

 

 

$

413,092

 

 

$

44,711

 

 

$

368,381

 

Customer relationships

 

 

318,021

 

 

 

117,836

 

 

 

200,185

 

 

 

318,021

 

 

 

99,904

 

 

 

218,117

 

Non-compete agreements

 

 

5,154

 

 

 

4,954

 

 

 

200

 

 

 

5,154

 

 

 

4,874

 

 

 

280

 

Distributor relationships

 

 

4,123

 

 

 

2,848

 

 

 

1,275

 

 

 

4,123

 

 

 

2,572

 

 

 

1,551

 

Total

 

$

804,491

 

 

$

181,384

 

 

$

623,107

 

 

$

740,390

 

 

$

152,061

 

 

$

588,329

 

 

As of December 28, 2019 and December 29, 2018, there was $127.1 million and $206.6 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 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.

Fiscal 2019 restructuring and related impairment charges

During fiscal 2019, the company recognized intangible asset impairments of $15.4 million that are recorded in the restructuring and related impairment charges line item of our Consolidated Statements of Income.  The impairments are a result of a brand rationalization study that impacted certain trademarks’ future use.  The study was completed in the fourth quarter of fiscal 2019.  The study concluded that certain products of our regional brands were to be discontinued or converted to one of our national brands.  As a result of these actions, a triggering event occurred, and we examined several trademarks for potential impairment.  One of the trademarks was an indefinite-lived trademark asset and was tested by comparing the fair value of the brand to its carrying value.  Based on this analysis the indefinite-lived trademark was not impaired, however, the company has evaluated the classification of this asset and determined that it should be recognized as finite-lived as of December 28, 2019 with an estimated useful life of 33 years that will begin amortizing at the beginning of fiscal 2020.  

Three finite-lived trademark assets were tested using an undiscounted cash flow test.  As a result of this test, the projected cash flows for two of the finite-lived brands did not exceed the carrying value.  One of the finite-lived brands was not considered impaired using the undiscounted cash flow test.  The second step of the test determined the fair value of the asset and the difference between the fair value and the carrying value was recorded as an impairment for the two finite-lived trademark assets that failed step one.  The impairment charge also consisted of one brand that has limited future benefits to the company and was fully impaired.  All of these impairments were attributed to regional brands.  

Fiscal 2018 restructuring and related impairment charges

There were no goodwill or other intangible asset impairments recorded as a result of the restructuring during fiscal 2018.

Fiscal 2017 restructuring and related impairment charges

During fiscal 2017, the company recognized intangible asset impairments of $66.2 million that are recorded in the restructuring and related impairment charges line item of our Consolidated Statements of Income.  The company is continually undergoing an enterprise-wide business and operational review as discussed in Note 5, Restructuring Activities.  The first review included a brand rationalization study that impacted certain trademarks’ future use.  The study was substantially completed in the third quarter of fiscal 2017.  The study concluded that our brands should be classified as either national or regional and brands that did not fit into those categories were to be discontinued.  National brands would have more marketing support than the de-emphasized remaining regional brands and, in many cases, would shift sales from regional brands as certain regional brand bread products are discontinued.  As a result of these actions, a triggering event occurred, and we examined several trademarks for potential impairment.  One of the trademarks was an indefinite-lived trademark asset and was tested by comparing the fair value of the brand to its carrying value.  Three finite-lived trademark assets were tested using an undiscounted cash flow test.  As a result of this test, the projected cash flows for these brands did not exceed the carrying value.  The second step of the test determined the fair value of the asset and the difference between the fair value and the carrying value was recorded as an impairment.  The impairment charge also consisted of six brands that either are being discontinued or will have limited future benefits to the company.  These brands were fully impaired.  All of these impairments were attributed to regional brands.  Following the impairments, we evaluated the classification of the impaired indefinite-lived asset and determined that it should be reassigned as finite-lived with an estimated useful life of 30 years.  The table below presents the restructuring impairment charges for fiscal 2017 (amounts in thousands):

 

 

 

Total

 

Indefinite-lived intangible assets

 

$

18,500

 

Finite-lived intangible assets

 

 

47,747

 

Restructuring impairment charges

 

$

66,247

 

 

Amortization expense

Amortization expense for fiscal years 2019, 2018, and 2017 was as follows (amounts in thousands):

 

 

 

Amortization

expense

 

Fiscal 2019

 

$

29,323

 

Fiscal 2018

 

$

25,892

 

Fiscal 2017

 

$

27,274

 

 

Estimated amortization of intangibles for fiscal 2020 and the next four years thereafter is as follows (amounts in thousands):

 

Fiscal year

 

Amortization of

Intangibles

 

2020

 

$

30,792

 

2021

 

$

30,148

 

2022

 

$

29,599

 

2023

 

$

28,718

 

2024

 

$

28,022