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GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended
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Jan. 01, 2017
Goodwill and Intangible Assets Disclosure [Abstract] |
Goodwill and Intangible Assets | GOODWILL AND INTANGIBLE ASSETS Goodwill The following table reflects changes in the carrying amount of goodwill by our reportable segments:
(in thousands) | PeopleReady | PeopleManagement | PeopleScout | Total company
Balance at December 25, 2015 |  |  |  |
Goodwill before impairment | $ | 106,304 |  | $ | 103,977 |  | $ | 104,424 |  | $ | 314,705 |
Accumulated impairment loss | (46,210 | ) | — |  | — |  | (46,210 | )
Goodwill, net | 60,094 |  | 103,977 |  | 104,424 |  | 268,495 |
Acquired goodwill and other (1) | — |  | (3,831 | ) | 25,491 |  | 21,660 |
Impairment loss | — |  | (50,700 | ) | (15,169 | ) | (65,869 | )
Foreign currency translation | — |  | — |  | (63 | ) | (63 | )
Balance at January 1, 2017 |  |  |  |
Goodwill before impairment | 106,304 |  | 100,146 |  | 129,852 |  | 336,302 |
Accumulated impairment loss | (46,210 | ) | (50,700 | ) | (15,169 | ) | (112,079 | )
Goodwill, net | 60,094 |  | 49,446 |  | 114,683 |  | 224,223 |
Foreign currency translation | — |  | — |  | 2,471 |  | 2,471 |
Balance at December 31, 2017 |  |  |  |
Goodwill before impairment | 106,304 |  | 100,146 |  | 132,323 |  | 338,773 |
Accumulated impairment loss | (46,210 | ) | (50,700 | ) | (15,169 | ) | (112,079 | )
Goodwill, net | $ | 60,094 |  | $ | 49,446 |  | $ | 117,154 |  | $ | 226,694 |
(1) Effective January 4, 2016, we acquired the RPO business of Aon Hewitt, which is part of our PeopleScout reportable segment. Accordingly, the goodwill associated with the acquisition has been assigned to our PeopleScout reportable segment based on our purchase price allocation. Effective December 1, 2015, we acquired SIMOS, which is part of our PeopleManagement reportable segment. The amount presented includes year-to-date adjustments to the preliminary SIMOS purchase accounting for goodwill. For additional information see Note 2: Acquisitions. Intangible assets Finite-lived intangible assets The following table presents our purchased finite-lived intangible assets:
| December 31, 2017 |  | January 1, 2017
(in thousands) | Gross carrying amount | Accumulated amortization | Net carrying amount |  | Gross carrying amount | Accumulated amortization | Net carrying amount
Finite-lived intangible assets (1): |  |  |  |  |  |  |
Customer relationships (2) | $ | 148,114 |  | $ | (53,801 | ) | $ | 94,313 |  |  | $ | 165,725 |  | $ | (54,676 | ) | $ | 111,049 |
Trade names/trademarks (3) | 4,149 |  | (3,736 | ) | 413 |  |  | 4,378 |  | (3,385 | ) | 993 |
Non-compete agreements | 1,400 |  | (1,377 | ) | 23 |  |  | 1,400 |  | (1,097 | ) | 303 |
Technologies | 17,500 |  | (13,588 | ) | 3,912 |  |  | 17,009 |  | (9,683 | ) | 7,326 |
Total finite-lived intangible assets | $ | 171,163 |  | $ | (72,502 | ) | $ | 98,661 |  |  | $ | 188,512 |  | $ | (68,841 | ) | $ | 119,671 |
(1) | Excludes assets that are fully amortized.
(2) | Balance at January 1, 2017, is net of impairment loss of $28.9 million.
(3) | Balance at January 1, 2017, is net of impairment loss of $4.3 million.
Amortization expense of our finite-lived intangible assets was $21.4 million, $25.1 million and $19.9 million for the years ended December 31, 2017, January 1, 2017 and December 25, 2015, respectively. The following table provides the estimated future amortization of finite-lived intangible assets as of December 31, 2017:
(in thousands) |
2018 | $ | 19,821 |
2019 | 17,299 |
2020 | 15,736 |
2021 | 12,431 |
2022 | 12,128 |
Thereafter | 21,246 |
Total future amortization | $ | 98,661 |
Indefinite-lived intangible assets We also held indefinite-lived trade names/trademarks of $6.0 million as of December 31, 2017 and January 1, 2017. Impairments There were no goodwill or intangible asset impairment charges recorded during fiscal 2017 or 2015. 2016 impairments We performed our annual goodwill impairment analysis as of the first day of our second quarter of fiscal 2016. This analysis required significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur and determination of our weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested. The weighted average cost of capital used in our most recent annual impairment test was risk-adjusted to reflect the specific risk profile of the reporting units and ranged from 12.0% to 17.0%. As a result of our test we recorded a goodwill impairment charge of $65.9 million relating to the Staff Management, PlaneTechs and hrX reporting units as follows:
• | Staff Management: In April 2016, we were notified by our former largest customer of its plans to reduce the use of contingent labor and realign its contingent labor vendors for warehousing. Our former largest customer announced it would be reducing the use of our services for its warehouse fulfillment centers in the United States and focusing our services on its planned expansion of distribution service sites to a national network for delivery direct to the customer.
◦ | Goodwill impairmen t - We estimated that the change in scope of our services would decrease revenues by approximately $125 million compared to the prior year. As a result, we lowered our future expectations, which resulted in a goodwill impairment charge of $33.7 million.
◦ | Intangible asset impairment - The significant decrease in scope of services by our former largest customer required us to lower our future expectations, which was the primary trigger of an impairment charge to our acquired customer relationships intangible asset of $28.9 million and indefinite-lived intangible assets trade name of $4.5 million. Considerable management judgment was necessary to determine key assumptions, including projected revenue, royalty rates, and an appropriate discount rate of 13.0% for the customer relationships intangibles asset and 17.0% for the indefinite-lived trade-name. In addition, we utilized the relief from royalty method to determine the fair value of Staff Management’s indefinite-lived trade name using a royalty rate of 10.0%.
• | PlaneTechs: Revenue declined significantly compared to fiscal 2015 as large projects were completed for a major aviation customer and its supply chain and anticipated projects did not occur to the extent expected. PlaneTechs has been diversifying from providing services to one primary customer without offsetting growth in the broader aviation and transportation marketplace. As a result of significantly underperforming against current year expectations and increased future uncertainty, we lowered our future expectations, which resulted in a goodwill impairment charge of $17.0 million.
• | hrX: Sales of this service line included our internally developed applicant tracking software (“ATS”). ATS sales and prospects have underperformed against our expectations. As a result of underperforming against our expectations and increased future uncertainty in customer demand, we lowered our future expectations, which resulted in a goodwill impairment charge of $15.2 million. Note, our PeopleScout and hrX service lines were combined during fiscal 2016 and now represent a single operating segment (PeopleScout).
Spartan and CLP Resources: In the third quarter of fiscal 2016, we finalized the changes to the organizational and reporting structure of our Labor Ready, Spartan Staffing and CLP Resources service lines, which resulted in them merging into one service line. The combined service line was re-branded as PeopleReady. As a result, we recognized an impairment charge of $4.3 million for the remaining net book value of the Spartan and CLP Resources trade name/trademarks intangible assets.

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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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