XML 66 R14.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

GOODWILL AND INTANGIBLE ASSETS GOODWILL AND INTANGIBLE ASSETS | 3 Months Ended
--- | ---
Nov. 02, 2019
Goodwill and Intangible Assets Disclosure [Abstract] |
GOODWILL AND INTANGIBLE ASSETS | NOTE 6—GOODWILL AND INTANGIBLE ASSETS The Company accounts for acquired businesses using the purchase method of accounting, which requires that the assets acquired and liabilities assumed be recorded at the acquisition date at their respective estimated fair values. Goodwill represents the excess acquisition cost over the fair value of net assets acquired in a business combination. Goodwill is assigned to the reporting units that are expected to benefit from the synergies of the business combination that generated the goodwill. The Company has five goodwill reporting units, two of which represent separate operating segments and are aggregated within the Wholesale reportable segment (U.S. Wholesale and Canada Wholesale), two of which are separate operating segments (Woodstock Farms and Blue Marble Brands) that do not meet the criteria for being disclosed as separate reportable segments, and a single retail reporting unit, which is included within discontinued operations. The Canada operating segment, which is aggregated with Wholesale, would not meet the quantitative thresholds for separate reporting if it did not meet the aggregation criteria. The composition of goodwill reporting units is evaluated for events or changes in circumstances indicating a goodwill reporting unit has changed. Relative fair value allocations are performed when components of an aggregated goodwill reporting unit become separate reporting units or move from one reporting unit to another. The Company reviews goodwill for impairment at least annually and more frequently if events or changes in circumstances indicate it is more likely than not that the fair value of a reporting unit is below its carrying amount. The annual review for goodwill impairment is performed as of the first day of the fourth quarter of each fiscal year. The Company tests for goodwill impairment at the reporting unit level, which is at or one level below the operating segment level. Supervalu Acquisition Goodwill In conjunction with the acquisition of Supervalu, goodwill resulting from the acquisition was assigned to the previous Supervalu Wholesale reporting unit and the previous legacy Company Wholesale reporting unit, as both of these reporting units were expected to benefit from the synergies of the business combination. The assignment was based on the relative synergistic value estimated as of the acquisition date. This systematic approach utilized the relative cash flow contributions and value created from the acquisition to each reporting unit on a stand-alone basis. As of the acquisition date, approximately $80.9 million was attributed to the legacy Company Wholesale reporting unit. As discussed in Note 7—Goodwill and Intangible Assets in the Consolidated Financial Statements of the Annual Report, the Company impaired all goodwill attributed to the Supervalu Wholesale reporting unit prior to the finalization of its purchase accounting within the opening balance sheet. In the first quarter of fiscal 2020, as discussed further in Note 4—Acquisitions the Company finalized purchase accounting and the opening balance sheet related to the Supervalu acquisition. Adjustments to the opening balance sheet goodwill in the first quarter of fiscal 2020, resulted in an additional goodwill impairment charge of $2.5 million. Fiscal 2020 Goodwill Impairment Review During the first quarter of fiscal 2020, the Company changed its management structure and internal financial reporting to combine the Supervalu Wholesale reporting unit and the legacy Company Wholesale reporting unit into one U.S. Wholesale reporting unit, and experienced a further sustained decline in market capitalization and enterprise value. As a result of the change in reporting units and the sustained decline in market capitalization and enterprise value, the Company performed an interim quantitative impairment review of goodwill for the Wholesale reporting unit, which included a determination of the fair value of all reporting units. The Company estimated the fair values of all reporting units using both the market approach, applying a multiple of earnings based on observable multiples for guideline publicly traded companies, and the income approach, discounting projected future cash flows based on management’s expectations of the current and future operating environment for each reporting unit. The calculation of the impairment charge includes substantial fact-based determinations and estimates including weighted average cost of capital, future revenue, profitability, cash flows and fair values of assets and liabilities. The rates used to discount projected future cash flows under the income approach reflect a weighted average cost of capital of 8.5%, which considered observable data about guideline publicly traded companies, an estimated market participant’s expectations about capital structure and risk premiums, including those reflected in the Company’s market capitalization. The Company corroborated the reasonableness of the estimated reporting unit fair values by reconciling to its enterprise value and market capitalization. Based on this analysis, the Company determined that the carrying value of its U.S. Wholesale reporting unit exceeded its fair value by an amount that exceeded its assigned goodwill. As a result, the Company recorded a goodwill impairment charge of $421.5 million in the first quarter of fiscal 2020. The goodwill impairment charge is reflected in Goodwill and asset impairment charges in the Condensed Consolidated Statements of Operations. The goodwill impairment charge reflects the impairment of all of the U.S. Wholesale’s reporting unit goodwill. Goodwill and Intangible Assets Changes Changes in the carrying value of Goodwill by reportable segment that have goodwill consisted of the following:
(in thousands) | Wholesale |  | Other |  | Total
Goodwill as of August 3, 2019 | $ | 432,103 |  | (1) | $ | 10,153 |  | (2) | $ | 442,256 |
Goodwill adjustment for prior fiscal year business combinations | 1,424 |  |  | — |  |  | 1,424 |
Impairment charges | (423,712 | ) |  | (293 | ) |  | (424,005 | )
Change in foreign exchange rates | 116 |  |  | — |  |  | 116 |
Goodwill as of November 2, 2019 | $ | 9,931 |  | (1) | $ | 9,860 |  | (2) | $ | 19,791 |
(1) | Amounts are net of accumulated goodwill impairment charges of $292.8 million and $716.5 million as of August 3, 2019 and November 2, 2019, respectively.
(2) | Amounts are net of accumulated goodwill impairment charges of $9.3 million and $9.6 million as of August 3, 2019 and November 2, 2019.
Identifiable intangible assets consisted of the following:
| November 2, 2019 |  | August 3, 2019
(in thousands) | Gross Carrying Amount |  | Accumulated Amortization |  | Net |  | Gross Carrying Amount |  | Accumulated Amortization |  | Net
Amortizing intangible assets: |  |  |  |  |  |  |  |  |  |  |
Customer relationships | $ | 1,008,103 |  |  | $ | 127,906 |  |  | $ | 880,197 |  |  | $ | 1,007,089 |  |  | $ | 111,940 |  |  | $ | 895,149 |
Non-compete agreements | 12,900 |  |  | 7,571 |  |  | 5,329 |  |  | 12,900 |  |  | 6,237 |  |  | 6,663 |
Operating lease intangibles | 11,748 |  |  | 2,451 |  |  | 9,297 |  |  | 32,103 |  |  | 2,209 |  |  | 29,894 |
Trademarks and tradenames | 67,700 |  |  | 18,750 |  |  | 48,950 |  |  | 67,700 |  |  | 14,161 |  |  | 53,539 |
Total amortizing intangible assets | 1,100,451 |  |  | 156,678 |  |  | 943,773 |  |  | 1,119,792 |  |  | 134,547 |  |  | 985,245 |
Indefinite lived intangible assets: |  |  |  |  |  |  |  |  |  |  |
Trademarks and tradenames | 55,813 |  |  | — |  |  | 55,813 |  |  | 55,813 |  |  | — |  |  | 55,813 |
Intangible assets, net | $ | 1,156,264 |  |  | $ | 156,678 |  |  | $ | 999,586 |  |  | $ | 1,175,605 |  |  | $ | 134,547 |  |  | $ | 1,041,058 |
Amortization expense was $22.1 million and $3.7 million for the 13-week periods ended November 2, 2019 and October 27, 2018, respectively. The estimated future amortization expense for each of the next five fiscal years and thereafter on definite lived intangible assets existing as of November 2, 2019 is shown below:
Fiscal Year: | (In thousands)
Remaining fiscal 2020 | $ | 64,180 |
2021 | 71,510 |
2022 | 65,893 |
2023 | 65,842 |
2024 | 66,054 |
2025 and thereafter | 610,294 |
| $ | 943,773 |

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