Note 5 - Goodwill and Other Intangible Assets

12 Months Ended

Sep. 27, 2020

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

5    GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in the carrying amount of goodwill related to continuing operations are as follows:

(Thousands of Dollars)	2020			2019
Goodwill, gross amount		1,539,038			1,534,905
Accumulated impairment losses		(1,288,729	)		(1,288,729	)
Goodwill, beginning of year		250,309			246,176
Goodwill acquired in business combinations		78,136			4,133
Goodwill, end of year		328,445			250,309

Identified intangible assets related to continuing operations consist of the following:

	September 27		September 29
(Thousands of Dollars)	2020		2019
Non-amortized intangible assets:
Mastheads	40,459		21,883
Amortizable intangible assets:
Customer and newspaper subscriber lists	774,604		697,145
Less accumulated amortization	632,457		611,786
		142,147		85,359
Non-compete and consulting agreements	28,656		28,675
Less accumulated amortization	28,582		28,524
		74		151
		182,680		107,393

In January 2017, the FASB issued a new standard simplifying the assessment of a goodwill impairment. The new standard maintains a qualitative and quantitative assessment but eliminates the Step 2 of the quantitative assessment. The new standard also changes the way a goodwill impairment is calculated. For companies that have reporting units with zero or negative carrying value, the new standard requires disclosure of the amount of goodwill for those reporting units.

All of the Company’s goodwill is attributed to the single reporting unit with negative carrying value. The Company performed its annual assessment on the first day of our fourth fiscal quarter, and determined the fair value of our single reporting unit was significantly in excess of carrying value and as such, there was no impairment in 2020 and 2019.

In 2020, due to continuing revenue declines, cost of debt, and debt to equity weighting, we recorded non-cash charges to reduce the carrying value of non-amortized intangible assets. We also recorded pretax charges to reduce the carrying value of other assets in 2018. No such charges occurred in 2019. Such charges are recorded in assets loss (gain) on sales, impairments and other in the Consolidated Statements of Income and Comprehensive Income (Loss). We recorded deferred income tax benefits related to these charges.

A summary of the pretax impairment charges is included in the table below:

(Thousands of Dollars)	2020		2019		2018
Continuing operations:
Non-amortized intangible assets		972		—		—
Property, equipment and other assets		—		—		267
		972		—		267

The Company recognized $27,960,000 of advertiser relationships, $28,200,000 of subscriber relationships, $19,580,000 of commercial print relationships and $20,390,000 of indefinite-lived masthead assets as part of the Transactions.

Annual amortization of intangible assets for the years ending September 2021 to September 2025 is estimated to be $22,617,000, $20,451,000, $19,654,000, $17,920,000, and $12,897,000, respectively. The weighted average amortization period for those amortizable assets acquired as part of the Transactions is 10.5 years.

The Company recognized $78,136,000 of Goodwill as part of the Transactions. The value of the acquired Goodwill is primarily related to an assembled workforce and expected synergies from combining operations. For tax, purposes, the amount of Goodwill that is expected to be deductible is $41,734,000. Refer to Note 2 for more information regarding preliminary purchasing accounting for the Transactions.