Goodwill and Intangible Assets

12 Months Ended

Jan. 01, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

8. GOODWILL AND INTANGIBLE ASSETS

Goodwill

A summary of changes in goodwill by segment for the years ended January 1, 2022 and January 2, 2021 is as follows:


	Hydraulics			Electronics		Total
Balance at December 28, 2019	$	271,196		$	106,373	$	377,569
Acquisition of Balboa		—			76,031		76,031
Impairment charge		(31,871	)		—		(31,871	)
Currency translation		21,804			—		21,804
Balance at January 2, 2021	$	261,129		$	182,404	$	443,533
Acquisition of NEM		32,937			—		32,937
Measurement period adjustment, Balboa Water Group acquisition		—			509		509
Measurement period adjustment, NEM acquisition		(1,330	)		—		(1,330	)
Acquisition of Joyonway		—			3,309		3,309
Currency translation		(19,071	)		49		(19,022	)
Balance at January 1, 2022	$	273,665		$	186,271	$	459,936

During the first quarter of 2020, the global economy was significantly impacted by the COVID-19 pandemic. Given the economic impact, primarily in Europe, government-mandated facility closures and an unfavorable outlook for certain end markets, the Company concluded that this change in circumstances triggered the need to conduct an interim impairment review of its Faster reporting unit. The interim review was performed as of March 28, 2020. A recoverability test for the long-lived assets within the Faster reporting unit was performed first and resulted in the conclusion that the carrying value of the long-lived assets was fully recoverable. An interim quantitative impairment test for goodwill was then performed.

The fair value of the Faster reporting unit was determined based on a combination of income and market approach methodologies. The income approach utilized a discounted cash flow analysis, which estimates the present value of the projected free cash flows to be generated by the reporting unit. Principal assumptions used in the analysis included the Company’s estimates of future revenue and terminal growth rates, margin assumptions and discount rates. While assumptions utilized are subject to a high degree of judgment and complexity, the Company made every effort to estimate future cash flows as accurately as possible, given the high degree of economic uncertainty that existed. The market approaches estimate fair value by comparing to guideline public companies and guideline transactions. Various valuation multiples of companies that are economically and operationally similar were used as data points for selecting multiples. The Company concluded that the estimated fair value of the Faster reporting unit was less than its carrying value, and as a result, recorded a non-cash, non-tax-deductible goodwill impairment charge of $31,871.

Acquired Intangibles Assets

At January 1, 2022 and January 2, 2021, intangible assets consisted of the following:


		January 1, 2022							January 2, 2021
	Useful life (years)	Gross carrying amount		Accumulated amortization			Net carrying amount		Gross carrying amount		Accumulated amortization			Net carrying amount
Definite-lived intangibles:
Trade names and brands	10-20	$	83,443	$	(15,216	)	$	68,227	$	80,402	$	(11,188	)	$	69,214
Non-compete agreements	4 - 5		3,218		(1,092	)		2,126		950		(776	)		174
Technology	7 - 13		50,425		(16,729	)		33,696		45,955		(12,368	)		33,587
Supply agreement	10		21,000		(10,675	)		10,325		21,000		(8,575	)		12,425
Customer relationships	8 - 26		336,809		(43,488	)		293,321		330,406		(31,431	)		298,975
Sales order backlog	0.5		1,023		(1,023	)		—		8,000		(3,000	)		5,000
Workforce	5		6,077		(1,013	)		5,064		—		—			—
		$	501,995	$	(89,236	)	$	412,759	$	486,713	$	(67,338	)	$	419,375

Amortization expense on acquired intangibles assets for the 2021, 2020 and 2019 fiscal years was approximately $32,811, $22,114 and $18,065, respectively. Future estimated amortization expense is presented below.


Year:
2022	$	27,993
2023		27,934
2024		27,279
2025		27,072
2026		25,264
Thereafter		277,217
Total	$	412,759