Goodwill and Other Intangible Assets

Goodwill and other intangible assets included in the Consolidated Balance Sheets consisted of the following (in thousands):



	December 30, 2017		December 31, 2016
Goodwill	$	279,505	$	290,699
Definite-lived intangible assets	182,186		182,666
Indefinite-lived intangible assets	29,201		38,054
	$	490,892	$	511,419

Goodwill

The changes in the carrying amount of goodwill, by reporting segment, are as follows (in thousands):



	Office Furniture			Hearth Products			Total
Balance as of January 2, 2016
Goodwill	$	121,964		$	183,199		$	305,163
Accumulated impairment losses	(27,370		)	(143		)	(27,513		)
Net goodwill balance as of January 2, 2016	94,594			183,056			277,650

Goodwill acquired during the year	15,928			—			15,928
Impairment losses	(2,876		)	—			(2,876		)
Foreign currency translation adjustment	(3		)	—			(3		)

Balance as of December 31, 2016
Goodwill	137,889			183,199			321,088
Accumulated impairment losses	(30,246		)	(143		)	(30,389		)
Net goodwill balance as of December 31, 2016	107,643			183,056			290,699

Goodwill acquired during the year	—			—			—
Impairment losses	(11,150		)	—			(11,150		)
Foreign currency translation adjustment	(44		)	—			(44		)

Balance as of December 30, 2017
Goodwill	137,845			183,199			321,044
Accumulated impairment losses	(41,396		)	(143		)	(41,539		)
Net goodwill balance as of December 30, 2017	$	96,449		$	183,056		$	279,505

The increases in goodwill relate to completed acquisitions. See "Note 4. Acquisitions and Divestitures" in the Notes to Consolidated Financial Statements for further information. The decreases in goodwill in the office furniture segment were due to impairment charges, which are described below.

Paoli - On December 6, 2017, the Corporation made the decision to discontinue the Paoli office furniture brand. The manufacturing of Paoli branded products will cease in the first quarter of 2018. The Corporation made this decision as part of continued efforts to drive efficiency and simplification, delivering increased value to its shareholders. As a result of this decision, the Corporation recorded a $6.3 million goodwill impairment charge, an $8.3 million impairment charge related to an indefinite-lived trade name, and a $1.5 million impairment charge related to a definite-lived customer list. These impairment charges reduced the total amount of Paoli's goodwill and other intangible assets to $0 on the Consolidated Balance Sheets as of December 30, 2017.

Annual Goodwill Impairment Assessment - As a result of the required annual impairment assessment performed in the fourth quarter of 2017, the Corporation determined the fair value of a reporting unit within the office furniture segment was below its carrying value. The decline in the estimated fair value of this reporting unit was primarily driven by reducing long-term margin expectations for the reporting unit. The projections used in the impairment model reflected management's assumptions regarding revenue growth rates, economic and market trends, cost structure, investments required for operational transformation, and other expectations about the anticipated short-term and long-term operating results of the reporting unit. The Corporation assumed a discount rate of 13.5 percent, near term growth rates ranging from 7 percent to 10 percent, and a terminal growth rate of 3 percent. Based on the quantitative analysis, the Corporation recorded a $4.8 million goodwill impairment charge in 2017. There was $19.6 million net goodwill remaining in the reporting unit as of December 30, 2017. Holding other assumptions constant, a 100 basis point increase in the discount rate would result in a $3.3 million decrease in the estimated fair value of the reporting unit. Holding other assumptions constant, a 100 basis point decrease in the long-term growth rate would result in a $1.4 million decrease in the estimated fair value of the reporting unit. Prior to the goodwill impairment assessment, the Corporation completed a qualitative review of long-lived assets for all asset groups to determine if events or changes in circumstances indicated that the carrying amount of each asset group may not be recoverable (if a "triggering event" existed). Based on this review, the Corporation tested the recoverability of the long-lived assets, other than goodwill and indefinite-lived intangible assets, in certain asset groups where a triggering event existed, and found no impairments, except for the $1.5 million impairment charge to remove the Paoli definite-lived customer list asset, based on the closure of this office furniture brand.

Based on the results of the annual impairment test, the Corporation concluded that no other goodwill impairment existed apart from the impairment charges discussed above. For all other reporting units included in the annual quantitative impairment test, the estimated fair value is significantly in excess of the carrying value.

Definite-lived intangible assets

The table below summarizes amortizable definite-lived intangible assets, which are reflected in "Goodwill and Other Intangible Assets" in the Corporation’s Consolidated Balance Sheets (in thousands):



	December 30, 2017						December 31, 2016
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Patents	$	40	$	26	$	14	$	18,645	$	18,623	$	22
Software	167,105		34,792		132,313		149,587		25,792		123,795
Trademarks and trade names	7,564		2,061		5,503		7,564		1,401		6,163
Customer lists and other	106,090		61,734		44,356		117,789		65,103		52,686
Net definite lived intangible assets	$	280,799	$	98,613	$	182,186	$	293,585	$	110,919	$	182,666

Amortization expense is reflected in "Selling and administrative expenses" in the Consolidated Statements of Comprehensive Income and was as follows (in thousands):



	2017		2016		2015
Capitalized software	$	9,389	$	4,722	$	3,482
Other definite-lived intangibles	$	6,989	$	7,055	$	7,570

Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the following five fiscal years is as follows (in millions):



	2018		2019		2020		2021		2022
Amortization expense	$	23.0	$	21.9	$	21.0	$	20.2	$	17.2

The occurrence of events such as acquisitions, dispositions, or impairments in the future may result in changes to amounts.

Indefinite-lived intangible assets

The Corporation also owns certain intangible assets, which are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely. These indefinite-lived intangible assets are reflected in "Goodwill and Other Intangible Assets" in the Consolidated Balance Sheets (in thousands):



	December 30, 2017		December 31, 2016
Trademarks and trade names	$	29,201	$	38,054

In the fourth quarter of 2017, the Corporation recorded an impairment charge of $8.3 million to remove the Paoli trade name asset, based on the closure of this office furniture brand. As a result of the required annual impairment assessment performed in the fourth quarter of 2017, the Corporation did not record any other impairment charges related to indefinite-lived intangible assets.

Sale and License of an Intangible Asset

In the third quarter of 2017, the Corporation recorded a $6.0 million nonrecurring gain from the sale and license of an intangible asset, which had a zero carrying value. This nonrecurring gain is reflected in "(Gain) loss on sale, disposal, and license of assets" in the Consolidated Statements of Comprehensive Income.