Annual report pursuant to Section 13 and 15(d)

Note 6 - Goodwill, Customer Relationships and Other Intangible Assets

v3.19.2
Note 6 - Goodwill, Customer Relationships and Other Intangible Assets
12 Months Ended
Mar. 31, 2019
Notes to Financial Statements  
Goodwill and Intangible Assets Disclosure [Text Block]
Note
6
– Goodwill, Customer Relationships and Other Intangible Assets
 
Goodwill:
Goodwill represents the excess of the purchase price over the fair value of net identifiable assets acquired in business combinations. For the purpose of presenting and measuring for the impairment of goodwill, the Company has
two
reporting units:
one
that produces and markets infant and toddler bedding, blankets and accessories and another that produces and markets infant and toddler bibs, developmental toys, bath care and disposable products. The goodwill of the reporting units of the Company as of
March 31, 2019
and
April 1, 2018
amounted to
$30.0
million, which is reflected in the accompanying consolidated balance sheets net of accumulated impairment charges of
$22.9
million, for a net reported balance of
$7.1
million.
 
The Company measures for impairment the goodwill within its reporting units annually as of the
first
day of the Company’s fiscal year. An additional interim measurement for impairment is performed during the year whenever an event or change in circumstances occurs that suggests that the fair value of either of the reporting units of the Company has more likely than
not
(defined as having a likelihood of greater than
50%
) fallen below its carrying value. The annual or interim measurement for impairment is performed by
first
assessing qualitative factors to determine whether it is more likely than
not
that the fair value of a reporting unit is less than its carrying amount. If such qualitative factors so indicate, then the measurement for impairment is continued by calculating an estimate of the fair value of each reporting unit and comparing the estimated fair value to the carrying value of the reporting unit. If the carrying value exceeds the estimated fair value of the reporting unit, then an impairment charge is calculated as the difference between the carrying value of the reporting unit and its estimated fair value,
not
to exceed the goodwill of the reporting unit.
 
On
April 2, 2018,
the Company performed the annual measurement for impairment of the goodwill of its reporting units and concluded that the estimated fair value of each of the Company’s reporting units exceeded their carrying values, and thus the goodwill of the Company’s reporting units was
not
impaired as of that date.
 
Other Intangible Assets:
Other intangible assets as of
March 31, 2019
and
April 1, 2018
consisted primarily of the fair value of identifiable assets acquired in business combinations other than tangible assets and goodwill. The gross amount and accumulated amortization of the Company’s other intangible assets as of
March 31, 2019
and
April 1, 2018,
the amortization expense for fiscal years
2019
and
2018
and the classification of such amortization expense within the accompanying consolidated statements of income are as follows (in thousands):
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization Expense
 
   
Gross Amount
   
Accumulated Amortization
   
Fiscal Year Ended
 
   
March 31,
   
April 1,
   
March 31,
   
April 1,
   
March 31,
   
April 1,
 
   
2019
   
2018
   
2019
   
2018
   
2019
   
2018
 
Tradename and trademarks
  $
3,667
    $
3,667
    $
1,501
    $
1,270
    $
231
    $
204
 
Developed technology
   
1,100
     
1,100
     
183
     
73
     
110
     
73
 
Non-compete covenants
   
458
     
458
     
200
     
122
     
78
     
55
 
Patents
   
1,601
     
1,601
     
781
     
673
     
108
     
108
 
Customer relationships
   
7,374
     
7,374
     
5,103
     
4,790
     
313
     
396
 
Total other intangible assets
  $
14,200
    $
14,200
    $
7,768
    $
6,928
    $
840
    $
836
 
                                                 
Classification within the accompanying consolidated statements of income:
                                               
Cost of products sold
   
 
     
 
     
 
     
 
    $
6
    $
7
 
Marketing and administrative expenses
   
 
     
 
     
 
     
 
     
834
     
829
 
Total amortization expense
   
 
     
 
     
 
     
 
    $
840
    $
836
 
 
The Company estimates that its amortization expense will be
$854,000,
$790,000,
$765,000,
$689,000
and
$665,000
in fiscal years
2020,
2021,
2022,
2023
and
2024,
respectively.