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Intangible Assets
9 Months Ended
Nov. 01, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets Disclosure [Text Block]

7.     Intangible Assets

 

The adverse economic effects brought on by the COVID-19 pandemic, including reductions in our sales, earnings and market value, as well as other changing market dynamics, required that we perform a valuation of our intangible assets.

 

The calculation methodology for the fair value of our Home Meridian segment and the Shenandoah division of our Domestic Upholstery segment included three approaches: the Discounted Cash Flow Method (DCF) which was given the largest weighting, the Guideline Public Company Method (GPCM) based on the consideration of the facts of the Company’s peer competitors and the Guideline Transaction Method (GTM) based on consideration of transactions with varying risk profiles, geographies and market conditions.

 

The income approach, specifically the relief from royalty method, was used as the valuation methodology for our trade names and trademarks, based on cash flow projections and growth rates for each trade name for five years in the future provided by management, and a royalty rate benchmark for companies with similar activities.

 

As a result of our intangible asset valuation analysis, in the first quarter of fiscal 2021, we recorded $44.3 million non-cash impairment charges including $23.2 million to Home Meridian goodwill, $16.4 million to Shenandoah goodwill and $4.8 million to certain of Home Meridian segment’s trade names.

 

        Thirty-Nine Weeks Ended        
       

November 1, 2020

   

February 2, 2020

 

Non-amortizable Intangible Assets

 

Segment

 

Beginning Balance

   

Impairment Charges

   

Net Book Value

   

Beginning Balance

   

Impairment Charges

   

Net Book Value

 

Goodwill

 

Home Meridian

  $ 23,187     $ (23,187 )   $ -     $ 23,187     $ -     $ 23,187  

Goodwill

 

Domestic Upholstery

    16,871       (16,381 )     490       16,871       -       16,871  

   Total Goodwill

    40,058       (39,568 )     490       40,058       -       40,058  
                                                     

Trademarks and trade names - Home Meridian

 

Home Meridian

    11,400       (4,750 )     6,650       11,400       -       11,400  

Trademarks and trade names - Bradington-Young

 

Domestic Upholstery

    861       -       861       861       -       861  

Trademarks and trade names - Sam Moore

 

Domestic Upholstery

    396       -       396       396       -       396  

   Total Trademarks and trade names

  $ 12,657     $ (4,750 )   $ 7,907     $ 12,657     $ -     $ 12,657  
                                                     

   Total non-amortizable assets

  $ 52,715     $ (44,318 )   $ 8,397     $ 52,715     $ -     $ 52,715  

 

Our amortizable intangible assets are recorded in our Home Meridian and Domestic Upholstery segments. The carrying amounts and changes therein of those amortizable intangible assets were as follows:

 

   

Amortizable Intangible Assets

 
   

Customer

                 
   

Relationships

   

Trademarks

   

Totals

 
                         

Balance at February 2, 2020

  $ 19,996     $ 718     $ 20,714  

Amortization

    (1,743 )     (45 )     (1,788 )

Balance at November 1, 2020

  $ 18,253     $ 673     $ 18,926  

 

For the remainder of fiscal 2021, amortization expense is expected to be approximately $596,000.