Annual report pursuant to Section 13 and 15(d)

Note 6 - Goodwill, Customer Relationships and Other Intangible Assets

v3.7.0.1
Note 6 - Goodwill, Customer Relationships and Other Intangible Assets
12 Months Ended
Apr. 02, 2017
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 the net identifiable assets acquired by the Company in business combinations. The Company considers CCIP and 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 at
April 2, 2017
and
April 3, 2016
amounted to
$24.0
million and is reported in the accompanying 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 must be performed during the year whenever an event or change in circumstances occurs that suggest 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. If step
one
indicates that the fair value of the reporting unit exceeds its carrying value, then a potential impairment exists, and the
second
step is then 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 as of
April 2, 2017
consisted primarily of the capitalized costs of acquired businesses, other than tangible assets, goodwill and assumed liabilities. The carrying amount and accumulated amortization of the Company’s other intangible assets as of
April 2, 2017
and
April 3, 2016,
the amortization expense for the fiscal years then ended 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
 
 
 
April 2,
 
 
April 3,
 
 
April 2,
 
 
April 3,
 
 
April 2,
 
 
April 3,
 
 
 
2017
 
 
2016
 
 
2017
 
 
2016
 
 
2017
 
 
2016
 
Tradename and trademarks
  $
1,987
    $
1,987
    $
1,066
    $
933
    $
133
    $
132
 
Non-compete covenants
   
98
     
98
     
67
     
60
     
7
     
7
 
Patents
   
1,601
     
1,601
     
565
     
458
     
107
     
108
 
Customer relationships
   
5,534
     
5,534
     
4,394
     
3,887
     
507
     
501
 
Total other intangible assets
  $
9,220
    $
9,220
    $
6,092
    $
5,338
    $
754
    $
748
 
                                                 
Classification within the accompanying consolidated statements of income:
     
 
     
 
 
Cost of products sold
   
 
     
 
     
 
     
 
    $
7
    $
7
 
Marketing and administrative expenses
   
 
     
 
     
 
     
 
     
747
     
741
 
Total amortization expense
   
 
     
 
     
 
     
 
    $
754
    $
748
 
 
The Company estimates that its amortization expense will be
$597,000,
$376,000,
$376,000,
$311,000
and
$287,000
in fiscal years
2018,
2019,
2020,
2021
and
2022,
respectively.