GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table reflects changes in the carrying amount of goodwill during the period by reportable segments:



(in thousands)	PeopleReady			PeopleManagement			PeopleScout			Total company
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

Divested goodwill before impairment (1)	—			(19,054		)	—			(19,054		)
Divested accumulated impairment loss (1)	—			17,000			—			17,000
Acquired goodwill (2)	—			—			16,606			16,606
Foreign currency translation	—			—			(3,959		)	(3,959		)

Balance at December 30, 2018
Goodwill before impairment	106,304			81,092			144,970			332,366
Accumulated impairment loss	(46,210		)	(33,700		)	(15,169		)	(95,079		)
Goodwill, net	$	60,094		$	47,392		$	129,801		$	237,287


(1)	Effective March 12, 2018, we entered divested our PlaneTechs business. As a result of this divestiture, we eliminated the remaining goodwill balance of the PlaneTechs business, which was a part of our PeopleManagement reportable segment. For additional information, see Note 3: Acquisitions and Divestiture.


(2)	Effective June 12, 2018, we acquired TMP Holdings LTD, through PeopleScout. Accordingly, the goodwill associated with the acquisition has been assigned to our PeopleScout reportable segment based on our final purchase price allocation. For additional information, see Note 3: Acquisitions and Divestiture.

Intangible assets

Finite-lived intangible assets

The following table presents our purchased finite-lived intangible assets:



	December 30, 2018							December 31, 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	$	153,704	$	(70,887	)	$	82,817	$	148,114	$	(53,801	)	$	94,313
Trade names/trademarks	2,580		(1,069		)	1,511		4,149		(3,736		)	413
Non-compete agreements	—		—			—		1,400		(1,377		)	23
Technologies	9,800		(8,720		)	1,080		17,500		(13,588		)	3,912
Total finite-lived intangible assets	$	166,084	$	(80,676	)	$	85,408	$	171,163	$	(72,502	)	$	98,661


(1)	Excludes assets that are fully amortized.

Finite-lived intangible assets include customer relationships and trade names/trademarks of $6.3 million and $1.7 million, respectively, as of the acquisition date, based on our final purchase price allocation relating to our acquisition of TMP Holdings LTD. For additional information, see Note 3: Acquisitions and Divestiture.

Amortization expense of our finite-lived intangible assets was $20.8 million, $21.4 million and $25.1 million for the years ended December 30, 2018, December 31, 2017 and January 1, 2017, respectively.

The following table provides the estimated future amortization of finite-lived intangible assets as of December 30, 2018:



(in thousands)
2019	$	18,986
2020	17,354
2021	14,049
2022	13,201
2023	11,593
Thereafter	10,225
Total future amortization	$	85,408

Indefinite-lived intangible assets

We also held indefinite-lived trade names/trademarks of $6.0 million as of December 30, 2018 and December 31, 2017.

Impairments

There were no goodwill or intangible asset impairment charges recorded during fiscal 2018 or 2017.

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 client of its plans to reduce the use of contingent labor and realign its contingent labor vendors for warehousing. Our former largest client 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 client.


◦	Goodwill impairment - 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 client 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 client and its supply chain and anticipated projects did not occur to the extent expected. PlaneTechs had been diversifying from providing services to one primary client without offsetting growth in the broader aviation and transportation marketplace. As a result of significantly underperforming against 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 underperformed against our expectations. As a result of underperforming against our expectations and increased future uncertainty in client 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.