Quarterly report pursuant to Section 13 or 15(d)

Note 3 - Goodwill, Customer Relationships and Other Intangible Assets

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Note 3 - Goodwill, Customer Relationships and Other Intangible Assets
6 Months Ended
Oct. 02, 2016
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. The Company considers its wholly-owned subsidiaries, Crown Crafts Infant Products, Inc. (“CCIP”) and Hamco, Inc. (“Hamco”), to each be a reporting unit of the Company for the purpose of presenting and testing for the impairment of goodwill. The goodwill of the reporting units of the Company as of October 2, 2016 and April 3, 2016 amounted to $24.0 million, and is reflected in the accompanying condensed consolidated balance sheets net of accumulated impairment charges of $22.9 million, for a net reported balance of $1.1 million.
 
The Company
tests the fair value of the goodwill, if any, within its reporting units annually as of the first day of the Company’s fiscal year. An additional interim impairment test is performed during the year whenever an event or change in circumstances occurs that suggests that the fair value of the goodwill 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 impairment test 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 impairment test is continued
in a two-step approach. The first step is the estimation of the fair value of each reporting unit to ensure that its fair value exceeds its carrying value. If step one indicates that a potential impairment exists, then the second step is performed to measure the amount of an impairment charge, if any. In the second step, these estimated fair values are used as the hypothetical purchase price for the reporting units, and an allocation of such hypothetical purchase price is made to the identifiable tangible and intangible assets and assigned liabilities of the reporting units. The impairment charge is calculated as the amount, if any, by which the carrying value of the goodwill exceeds the implied amount of goodwill that results from this hypothetical purchase price allocation.
 
The annual impairment test of the fair value of the goodwill of the reporting units of the Company was performed as of April 4, 2016, and the Company concluded that the fair value of the goodwill of the Company’s reporting units substantially exceeded their carrying values as of that date.
 
Other Intangible Assets:
Other intangible assets at October 2, 2016 and April 3, 2016
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 2, 2016 and April 3, 2016
, the amortization expense for the three and six-month periods ended October 2, 2016 and September 27, 2015 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 2,
 
 
April 3,
 
 
October 2,
 
 
April 3,
 
 
October 2,
 
 
September 27,
 
 
October 2,
 
 
September 27,
 
 
 
2016
 
 
2016
 
 
2016
 
 
2016
 
 
2016
 
 
2015
 
 
2016
 
 
2015
 
Tradename and trademarks
  $ 1,987     $ 1,987     $ 1,000     $ 933     $ 33     $ 33     $ 67     $ 66  
Non-compete covenants
    98       98       63       60       1       1       3       3  
Patents
    1,601       1,601       512       458       27       27       54       54  
Customer relationships
    5,534       5,534       4,140       3,887       127       128       253       248  
Total other intangible assets
  $ 9,220     $ 9,220     $ 5,715     $ 5,338     $ 188     $ 189     $ 377     $ 371  
                                                                 
Classification within the accompanying unaudited condensed consolidated statements of income:                                                                
Cost of products sold
                                  $ 1     $ 1     $ 3     $ 3  
Marketing and administrative expenses
                                    187       188       374       368  
Total amortization expense
                                  $ 188     $ 189     $ 377     $ 371