Goodwill And Other Intangible Assets | 6 Months Ended |
Jun. 28, 2014 |
Goodwill And Other Intangible Assets [Abstract] | ' |
Goodwill And Other Intangible Assets | ' |
NOTE 10. GOODWILL AND OTHER INTANGIBLE ASSETS |
The changes in the carrying amount of goodwill for the six months ended June 28, 2014, were as follows: |
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(in thousands) | | Carrying Amount | | | | | | | | |
Balance as of December 28, 2013 | | $ | 422,318 | | | | | | | | | |
| | | | | | | |
Goodwill acquired in the purchase of Baptista's (Note 4) | | 82,309 | | | | | | | | | |
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Change in goodwill attributable to discontinued operations (Note 3) | | (25,134 | ) | | | | | | | | |
Goodwill acquired in the purchase of route businesses | | 4,235 | | | | | | | | | |
| | | | | | | |
Goodwill attributable to the sale of route businesses | | (4,571 | ) | | | | | | | | |
Change in goodwill reclassified to route assets held for sale | | 168 | | | | | | | | | |
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Change in foreign currency exchange rate | | 177 | | | | | | | | | |
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Balance as of June 28, 2014 | | $ | 479,502 | | | | | | | | | |
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As of June 28, 2014 and December 28, 2013, other intangible assets consisted of the following: |
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(in thousands) | | Gross | | Accumulated | | Net |
Carrying | Amortization | Carrying |
Amount | | Amount |
As of June 28, 2014: | | | | | | |
Customer and contractual relationships – amortized | | $ | 145,856 | | | $ | (21,629 | ) | | $ | 124,227 | |
|
Non-compete agreement – amortized | | 710 | | | (90 | ) | | 620 | |
|
Reacquired rights – amortized | | 3,100 | | | (1,125 | ) | | 1,975 | |
|
Patents – amortized | | 8,600 | | | (1,338 | ) | | 7,262 | |
|
Developed technology – amortized | | 3,000 | | | — | | | 3,000 | |
|
Routes – unamortized | | 19,717 | | | — | | | 19,717 | |
|
Trademarks – unamortized | | 356,661 | | | — | | | 356,661 | |
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Balance as of June 28, 2014 | | $ | 537,644 | | | $ | (24,182 | ) | | $ | 513,462 | |
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As of December 28, 2013: | | | | | | |
Customer and contractual relationships – amortized | | $ | 145,356 | | | $ | (17,531 | ) | | $ | 127,825 | |
|
Non-compete agreement – amortized | | 110 | | | (62 | ) | | 48 | |
|
Reacquired rights – amortized | | 3,100 | | | (932 | ) | | 2,168 | |
|
Patents – amortized | | 8,600 | | | (947 | ) | | 7,653 | |
|
Routes – unamortized | | 19,652 | | | — | | | 19,652 | |
|
Trademarks – unamortized | | 359,261 | | | — | | | 359,261 | |
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Balance as of December 28, 2013 | | $ | 536,079 | | | $ | (19,472 | ) | | $ | 516,607 | |
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The increase in goodwill, customer relationships, developed technology, and non-compete agreements during the second quarter of 2014 related to the acquisition of Baptista's. These intangible asset values are preliminary and may require adjustment once the purchase price allocation is finalized. In addition, the allocation of goodwill to the sale of Private Brands is preliminary and may require adjustment when the gain on the sale is finalized in the third quarter of 2014. |
Amortization expense related to intangibles was $2.3 million for each of the quarters ended June 28, 2014 and June 29, 2013, and $4.7 million for each of the six months then ended. |
Routes and trademarks are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely. During the second quarter of 2014, we recorded a $3.6 million impairment to write down one of our trademarks to its fair value of $2.5 million. The write down was necessary due to a reduction in projected future cash flows for this trademark, which was determined using a level 3 fair value measurement. This fair value determination was made using the relief from royalty method under the income approach, which required us to estimate unobservable factors such as a royalty rate and discount rate and identify relevant projected revenue. |
During the second quarter of 2013, we recorded a $1.9 million impairment charge to write off one of our trademarks. The impairment charge was necessary due to the decision to replace future sales of associated products with a more recognizable brand. |
The majority of our trademarks, predominately those acquired in more recent transactions, have a fair value which approximates the book value. Any adverse changes in the use of these trademarks or the sales volumes of the associated products could result in an impairment charge. |
The changes in the carrying amount of route businesses for the six months ended June 28, 2014, were as follows: |
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(in thousands) | | Carrying Amount | | | | | | | | |
Balance as of December 28, 2013 | | $ | 19,652 | | | | | | | | | |
| | | | | | | |
Purchases of route businesses, exclusive of goodwill acquired | | 10,783 | | | | | | | | | |
| | | | | | | |
Sales of route businesses | | (10,227 | ) | | | | | | | | |
Change in route businesses reclassified to assets held for sale | | (491 | ) | | | | | | | | |
Balance as of June 28, 2014 | | $ | 19,717 | | | | | | | | | |
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Route businesses and associated goodwill allocated to assets held for sale represent assets available for sale in their present condition and for which actions to complete a sale have been initiated. As of June 28, 2014, $8.8 million in route businesses and $3.9 million of goodwill were included in assets held for sale. As of December 28, 2013, $8.3 million of route businesses and $4.1 million of goodwill were included in assets held for sale. |