Quarterly report pursuant to Section 13 or 15(d)

Note 3 - Goodwill, Customer Relationships and Other Intangible Assets

v3.8.0.1
Note 3 - Goodwill, Customer Relationships and Other Intangible Assets
6 Months Ended
Oct. 01, 2017
Notes to Financial Statements  
Goodwill and Intangible Assets Disclosure [Text Block]
Note
3
– 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 bibs, bath and disposable products
. The goodwill of the reporting units of the Company as of
April 2, 2017
amounted to
$24.0
million, which was increased by
$5.4
million as a result of the Carousel Acquisition as the excess of the acquisition cost over the fair values of the identifiable tangible and intangible assets acquired. Thus, as of
October 1, 2017,
the goodwill of the reporting units of the Company amounted to
$29.4
million, which is reflected in the accompanying condensed consolidated balance sheets net of accumulated impairment charges of
$22.9
million, for a net reported balance of
$6.5
million.
 
As disclosed in Note
1,
effective as of
April 3, 2017,
the Company adopted ASU
No.
2017
-
04,
the intent of which was to simplify the measurement of goodwill for impairment.
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 3, 2017,
t
he 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 substantially 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
October 1, 2017
and
April 2, 2017
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
October 1, 2017
and
April 2, 2017
, the amortization expense for the
three
and
six
-month periods ended
October 1, 2017
and
October 2, 2016
and the classification of such amortization expense within the accompanying unaudited condensed consolidated statements of income are as follows (in thousands):
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortization Expense
 
   
Gross Amount
   
Accumulated Amortization
   
Three-Month Periods Ended
   
Six-Month Periods Ended
 
   
October 1,
   
April 2,
   
October 1,
   
April 2,
   
October 1,
   
October 2,
   
October 1,
   
October 2,
 
   
2017
   
2017
   
2017
   
2017
   
2017
   
2016
   
2017
   
2016
 
Tradename and trademarks
  $
3,387
    $
1,987
    $
1,154
    $
1,066
    $
54
    $
33
    $
88
    $
67
 
Developed technology
   
1,100
     
-
     
18
     
-
     
18
     
-
     
18
     
-
 
Non-compete covenants
   
458
     
98
     
82
     
67
     
13
     
1
     
15
     
3
 
Patents
   
1,601
     
1,601
     
619
     
565
     
27
     
27
     
54
     
54
 
Customer relationships
   
5,534
     
5,534
     
4,648
     
4,394
     
128
     
127
     
254
     
253
 
Total other intangible assets
  $
12,080
    $
9,220
    $
6,521
    $
6,092
    $
240
    $
188
    $
429
    $
377
 
                                                                 
Classification within the accompanying unaudited condensed consolidated statements of income:
                                                               
Cost of products sold
   
 
     
 
     
 
     
 
    $
1
    $
1
    $
3
    $
3
 
Marketing and administrative expenses
   
 
     
 
     
 
     
 
     
239
     
187
     
426
     
374
 
Total amortization expense
   
 
     
 
     
 
     
 
    $
240
    $
188
    $
429
    $
377