XML 49 R12.htm IDEA: XBRL DOCUMENT
v3.20.1

Goodwill and Other Intangible Assets | 3 Months Ended
--- | ---
Mar. 28, 2020
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill and other intangible assets included in the Condensed Consolidated Balance Sheets consisted of the following (in thousands):
| March 28, 2020 |  | December 28, 2019
Goodwill | $ | 258,174 |  |  | $ | 270,820 |
Definite-lived intangible assets | 133,996 |  |  | 146,040 |
Indefinite-lived intangible assets | 26,600 |  |  | 28,849 |
Total goodwill and other intangible assets | $ | 418,770 |  |  | $ | 445,709 |
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 December 28, 2019 |  |  |  |  |
Goodwill | $ | 128,677 |  |  | $ | 186,662 |  |  | $ | 315,339 |
Accumulated impairment losses | (44,376 | ) |  | (143 | ) |  | (44,519 | )
Net goodwill balance as of December 28, 2019 | 84,301 |  |  | 186,519 |  |  | 270,820 |
Goodwill acquired | — |  |  | 8,935 |  |  | 8,935 |
Impairment losses | (21,607 | ) |  | — |  |  | (21,607 | )
Foreign currency translation adjustment | 26 |  |  | — |  |  | 26 |
Balance as of March 28, 2020 |  |  |  |  |  |  |
Goodwill | 128,703 |  |  | 195,597 |  |  | 324,300 |
Accumulated impairment losses | (65,983 | ) |  | (143 | ) |  | (66,126 | )
Net goodwill balance as of March 28, 2020 | $ | 62,720 |  |  | $ | 195,454 |  |  | $ | 258,174 |
See "Note 3. Acquisitions and Divestitures" for additional information regarding goodwill acquired in the current period; see Impairment Analysis section below for additional information regarding goodwill impairment recorded in the current period. Definite-lived intangible assets The table below summarizes amortizable definite-lived intangible assets, which are reflected in "Goodwill and Other Intangible Assets" in the Condensed Consolidated Balance Sheets (in thousands):
| March 28, 2020 |  | December 28, 2019
| Gross |  | Accumulated Amortization |  | Net |  | Gross |  | Accumulated Amortization |  | Net
Patents | $ | 40 |  |  | $ | 40 |  |  | $ | — |  |  | $ | 40 |  |  | $ | 40 |  |  | $ | — |
Software | 179,560 |  |  | 72,046 |  |  | 107,514 |  |  | 176,836 |  |  | 67,541 |  |  | 109,295 |
Trademarks and trade names | 6,564 |  |  | 3,134 |  |  | 3,430 |  |  | 7,564 |  |  | 3,381 |  |  | 4,183 |
Customer lists and other | 90,239 |  |  | 67,187 |  |  | 23,052 |  |  | 104,004 |  |  | 71,442 |  |  | 32,562 |
Net definite-lived intangible assets | $ | 276,403 |  |  | $ | 142,407 |  |  | $ | 133,996 |  |  | $ | 288,444 |  |  | $ | 142,404 |  |  | $ | 146,040 |
At the end of the first quarter of 2020, the Corporation recorded impairment charges of $0.6 million and $8.2 million related to definite-lived tradenames and customer lists, respectively, in the office furniture segment. See Impairment Analysis section below for additional information. Amortization expense is reflected in "Selling and administrative expenses" in the Condensed Consolidated Statements of Comprehensive Income and was as follows (in thousands):
| Three Months Ended
| March 28, 2020 |  | March 30, 2019
Capitalized software | $ | 4,550 |  |  | $ | 4,595 |
Other definite-lived intangibles | $ | 1,523 |  |  | $ | 1,574 |
The occurrence of events such as acquisitions, dispositions, or impairments may impact future amortization expense. 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):
|  | 2020 |  | 2021 |  | 2022 |  | 2023 |  | 2024
Amortization expense |  | $ | 23.3 |  |  | $ | 22.1 |  |  | $ | 19.0 |  |  | $ | 16.4 |  |  | $ | 15.1 |
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 Condensed Consolidated Balance Sheets (in thousands):
| March 28, 2020 |  | December 28, 2019
Trademarks and trade names | $ | 26,600 |  |  | $ | 28,849 |
At the end of the first quarter of 2020, the Corporation recorded an impairment charge of $2.3 million related to an indefinite-lived tradename in the office furniture segment. See Impairment Analysis section below for additional information. The remaining immaterial change in the indefinite-lived intangible assets balances shown above is related to foreign currency translation impacts. Impairment Analysis The Corporation evaluates its goodwill and indefinite-lived intangible assets for impairment on an annual basis during the fourth quarter, or whenever indicators of impairment exist. The Corporation also evaluates long-lived assets (which include definite-lived intangible assets) for impairment if indicators exist. At the end of the first quarter of 2020, the Corporation determined that a triggering event occurred, resulting in quantitative impairment tests performed over the goodwill, indefinite-lived intangible assets, and long-lived asset groups related to three reporting units in the office furniture segment. This determination was made considering the reduced sales and profitability projections for these reporting units, driven by the COVID-19 pandemic and related economic disruption. Management also considered the relative difference between the fair values and carrying values of the respective reporting units and indefinite-lived intangible assets in the most recent annual test performed during the fourth quarter of 2019. For the Corporation's remaining reporting units, management determined that the likelihood of the current fair value being less than the current carrying value was remote, and thus no quantitative impairment testing was performed. As a result of the long-lived asset impairment testing, it was determined the carrying value of one long-lived asset group was not recoverable based on an analysis of the undiscounted estimated future cash flows of the group. Consequently, the Corporation recorded charges of $0.6 million and $8.2 million to fully impair the carrying values of a definite-lived tradename and customer list, respectively, within this asset group. As a result of the indefinite-lived intangible asset impairment testing, it was determined the carrying value of one of the Corporation's indefinite-lived tradenames exceeded the estimated fair value. Therefore, a $2.3 million impairment charge was recorded to reduce the carrying value to estimated fair value of $5.3 million. The fair value of this tradename is considered a Level 3 measurement which utilizes a relief-from-royalty discounted cash flows approach. Key inputs and assumptions involved include the estimated near-term revenue growth (ranging from -28 percent to +12 percent), long-term growth rate (3 percent), royalty rate (2 percent), and discount rate (16 percent). For the goodwill impairment testing, management utilized a combination of both a discounted cash flows approach and market approach. Projections used in the impairment models reflected management's assumptions regarding revenue growth rates, economic and market trends including deterioration from the current COVID-19 pandemic, cost structure, investments required for product enhancements, and other expectations about the anticipated short-term and long-term operating results of the reporting units. As a result of the impairment testing, two reporting units were determined to have carrying values in excess of their fair values, resulting in goodwill impairment charges of $14.1 million and $7.5 million, respectively. These two reporting units have no remaining goodwill. The third reporting unit, which has goodwill of $6.9 million, was determined to have a fair value that exceeded carrying value by approximately 21 percent. For this reporting unit, the Corporation assumed a discount rate of 15.5 percent, near-term growth rates ranging from -24 percent to +17 percent, and a terminal growth rate of 4 percent. Holding other assumptions constant, a 100 basis point increase in the discount rate would result in a $3.7 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 $1.9 million decrease in the estimated fair value of the reporting unit. Both of these scenarios individually would result in the estimated fair value exceeding the carrying value. All impairment charges described above are reflected in "Impairment charges" in the Condensed Consolidated Statements of Comprehensive Income.

X
- References No definition available. + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration