Select balance sheet data |
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Select balance sheet data | Note 2. Select balance sheet data Inventory Inventories are stated at the lower of cost, determined on the first-in, first-out method and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Work-in-process and finished goods are valued at production costs consisting of material, labor, and overhead. Inventories as of September 30, 2022 and December 31, 2021 consist of:
At December 31, 2021, there was uncertainty as to the level of demand from the former fitness customer. The Company received a notification from this customer in February 2022 resulting in a change in forecasted future cash flow, triggering an impairment assessment of assets purchased, and assets the Company had committed to purchase, to meet obligations under the agreement with the former fitness customer as of December 31, 2021. As a result, at December 31, 2021, the Company recorded an inventory impairment of $700, of which $661 was due to loss contacts recorded in other current liabilities and a $39 decrease to inventories. As of September 30, 2022, there was a balance of $77 of loss contract liabilities recorded in other current liabilities on the Condensed Consolidated Balance Sheets. Property, plant and equipment Property, plant and equipment as of September 30, 2022 and December 31, 2021 consist of:
Depreciation expense was $5,367 and $5,284 for the three months ended September 30, 2022 and 2021, respectively, and $16,342 and $15,520 for the nine months ended September 30, 2022 and 2021, respectively. At December 31, 2021, there was uncertainty as to the level of demand from the former fitness customer. The Company received a notification from the former fitness customer in February 2022 resulting in a change in forecasted future cash flow, triggering an impairment assessment of assets purchased, and assets the Company had committed to purchase, to meet obligations under the agreement with the former fitness customer as of December 31, 2021. As a result, at December 31, 2021, the Company recorded a long-lived asset impairment of $12,875. During the three and nine months ended September 30, 2022, the Company was able to cancel $168 and $2,257, respectively, of purchase commitments for property, plant and equipment relating to the former fitness customer that had previously been recorded in the Consolidated Statements of Comprehensive Income as an impairment of long-lived assets and loss on contracts as of December 31, 2021. The cancellation of loss contracts has resulted in the reversal of these amounts from other current liabilities in the Condensed Consolidated Balance Sheets and recorded in the Condensed Consolidated Statements of Comprehensive Income as an impairment of long-lived assets and gain on contracts for the respective periods. Throughout the three and nine months ended September 30, 2022, the Company sold $126 and $5,097, respectively, of machinery and equipment originally intended to support production for the former fitness customer, resulting in a gain on sale of the assets of $1,569 and $2,089, respectively. The gain on sale of assets is classified in impairment of long-lived assets and gain on contracts on the Condensed Consolidated Statements of Comprehensive Income as of September 30, 2022. As a result of the previously mentioned impairment, these assets had been written down to fair value at December 31, 2021. The Company completed the closure of its Greenwood, SC manufacturing facility during the third quarter of 2020 and sold the facility during the third quarter of 2021 for $5,300 before commissions and fees, resulting in a gain on the sale of the asset of $1,374, which is classified in cost of sales on the Condensed Consolidated Statements of Comprehensive Income as of September 30, 2021. As of September 30, 2022, $81 of property, plant and equipment has been reclassified within the Condensed Consolidated Balance Sheets as assets held for sale. The Company adopted ASC 842 on January 1, 2022, classifying finance leases of $903 in property, plant and equipment on the Condensed Consolidated Balance Sheets as of September 30, 2022. Please refer to Note 4 – Leases for additional information. Due to the adoption, the Company reclassified net capital leases of $1,136 to property, plant and equipment on the Condensed Consolidated Balance Sheets as of December 31, 2021. Goodwill There are no changes in the balance of goodwill of $71,535 between December 31, 2021 and September 30, 2022. Intangible Assets The following is a listing of intangible assets, the useful lives in years (amortization period) and accumulated amortization as of September 30, 2022 and December 31, 2021:
Non-amortizable brand name is tested annually during the fourth quarter for impairment, or more frequently if triggering events occur indicating there may be impairment. Changes in intangible assets between December 31, 2021 and September 30, 2022 consist of:
Amortization expense was $1,738 and $2,677 for the three months ended September 30, 2022 and 2021, respectively, and $5,214 and $8,030 for the nine months ended September 30, 2022 and 2021, respectively. Future amortization expense is expected to be as followed:
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