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GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended
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May 27, 2017
Goodwill and Intangible Assets Disclosure [Abstract] |
GOODWILL AND INTANGIBLE ASSETS |
7. | GOODWILL AND INTANGIBLE ASSETS
Goodwill There was $6.3 million of goodwill reported on our balance sheet at both May 27, 2017 and May 28, 2016. The goodwill balance in its entirety relates to our IMES reporting unit which is included in the Healthcare segment. Goodwill is initially recorded based on the premium paid for acquisitions and is subsequently tested for impairment, using the first day of our fourth quarter as the measurement date. We test goodwill for impairment annually and whenever events or circumstances indicates an impairment may have occurred, such as a significant adverse change in the business climate, loss of key personnel or a decision to sell or dispose of a reporting unit. After reviewing the totality of events or circumstances as provided in ASU 2011-08, we determined that it was not more likely than not that the fair value for the IMES reporting unit exceeded its carrying value. Accordingly, the first step of the two step goodwill impairment test as described in FASB ASC 350-20-35 was performed. We performed the first step of the two step impairment test using the income method, which is based on a discounted future cash flow approach that uses the significant assumptions of projected revenue, projected operational profit, terminal growth rates, and the cost of capital. The results of our goodwill impairment test as of February 26, 2017 indicated that the value of goodwill attributed to our IMES reporting unit was not impaired. Since the acquisition of IMES in June 2015, there have been no fundamental changes in the business or market that would indicate a significant decline in the fair value since the acquisition date. In the two years since acquisition, the Company has made significant investments in the IMES business, including $6 million in capital expenditures that are expected to increase IMES’ product offerings and result in increased future sales, operating profit and cash flows. Management’s projections used to estimate the undiscounted cash flows included increasing sales volumes from new product offerings being developed and expanded sales into new geographies and operational improvements designed to reduce costs. Changes in any of the significant assumptions used, including if the Company does not successfully achieve its operating plan, which is dependent on the creation of new product offerings, can materially affect the expected cash flows, and such impacts could result in a material non-cash impairment charge of goodwill and other long lived assets. Although we believe our projected future operating results and cash flows and related estimates regarding fair values are based on reasonable assumptions, historically, projected operating results and cash flows have not always been achieved. Intangible Assets Intangible assets are initially recorded at their fair market values determined on quoted market prices in active markets, if available, or recognized valuation models. Intangible assets that have finite useful lives are amortized over their useful lives and are tested for impairment when events or changes in circumstances occur that indicate possible impairment. Our intangible assets represent the fair value for trade name, customer relationships, non-compete agreements, and technology acquired in connection with our acquisitions. Intangible assets subject to amortization as well as amortization expense are as follows (in thousands):
|  | Intangible Assets Subject to Amortization as of |
|  | May 27, 2017 |  |  | May 28, 2016 |
Gross Amounts: |  |  |  |  |  |  |  |
Trade Name |  | $ | 659 |  |  | $ | 659 |
Customer Relationships |  |  | 3,397 |  |  |  | 3,434 |
Non-compete Agreements |  |  | 177 |  |  |  | 177 |
Technology |  |  | 230 |  |  |  | 230 |
Total Gross Amounts |  | $ | 4,463 |  |  | $ | 4,500 |
Accumulated Amortization: |  |  |  |  |  |  |  |
Trade Name |  | $ | 441 |  |  | $ | 231 |
Customer Relationships |  |  | 446 |  |  |  | 374 |
Non-compete Agreements |  |  | 84 |  |  |  | 55 |
Technology |  |  | 51 |  |  |  | 22 |
Total Accumulated Amortization |  | $ | 1,022 |  |  | $ | 682 |
Net Intangibles |  | $ | 3,441 |  |  | $ | 3,818 |
We determined that intangible assets were not impaired as of May 27, 2017 on the basis that no adverse events or changes in circumstances were identified that could indicate that the carrying amounts of such assets may not be recoverable. The amortization expense associated with the intangible assets subject to amortization for the next five years is presented in the following table (in thousands):
|  |  | Amortization Expense |
Fiscal Year |  |  |  |  |
2018 |  |  | $ | 432 |
2019 |  |  |  | 245 |
2020 |  |  |  | 257 |
2021 |  |  |  | 245 |
2022 |  |  |  | 252 |
Thereafter |  |  |  | 2,010 |
Total amortization expense |  |  | $ | 3,441 |
The amortization expense associated with the intangible assets totaled approximately $0.4 million during fiscal 2017, $0.4 million during fiscal 2016 and $0.1 million during fiscal 2015. The weighted average number of years of amortization expense remaining is 15.1 years.

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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 -URI http://asc.fasb.org/topic&trid=2144416 + Details
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