GOODWILL AND OTHER INTANGIBLE ASSETS

3 Months Ended

Sep. 28, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and Other Intangible Assets

The Company recorded intangible assets in connection with the Ayrshire and Sabre acquisitions resulting primarily favorable lease agreements.

In accordance with accounting guidance on goodwill and other intangible assets, the Company evaluates intangible assets for impairment at the reporting unit level annually, and whenever circumstances occur indicating that intangibles might be impaired.

During the third quarter for fiscal year 2019, the Company assessed other finite-lived intangible assets including the Company’s customer relationships and favorable lease agreements due to an indicator of possible impairment being present. As a result of the analysis performed, the Company determined that the carrying value of the customer relationships intangible asset was not recoverable and recorded an impairment for the entire carrying amount during the third quarter of fiscal year 2019. This resulted in an impairment charge related to other intangible assets of $2.5 million recognized in the third quarter of fiscal year 2019. The Company’s analysis did not indicate that any of its other long-lived assets were impaired.

During the first quarter of fiscal year 2020, the Company adopted the Accounting Standards Update 2016-02, Leases which supersedes ASC 840 Leases and creates a new topic, ASC 842 Leases. Under ASC 842, any assets or liabilities recognized in accordance with ASC 805 that are related to favorable or unfavorable terms of an operating lease for which an entity is a lessee, the entity should derecognize the asset or liability and commensurately adjust the ROU asset.

As such, the Company derecognized the intangible asset and added the offsetting amount to the ROU asset. Resulting in a reduction of favorable lease agreement intangible of $0.7 million, and no adjustment to retained earnings or future P&L impact.

The components of acquired intangible assets are as follows (in thousands):

	September 28, 2019
	Amortization Period in Years	Gross Carrying Amount		Accumulated Amortization			Impairment Recognized		Derecognition Favorable Lease per ASC 842			Net Carrying Amount
Intangible assets:
Favorable Lease Agreements	4 - 7	2,941		(2,284		)	—		(657		)	—
Total		$	2,941	$	(2,284	)	$	—	$	(657	)	$	—

	June 29, 2019
	Amortization Period in Years	Gross Carrying Amount		Accumulated Amortization			Impairment Recognized			Net Carrying Amount
Intangible assets:
Non-Compete Agreements	3 - 5	$	568	$	(568	)	$	—		$	—
Customer Relationships	10	4,803		(2,311		)	(2,492		)	—
Favorable Lease Agreements	4 - 7	2,941		(2,284		)	—			657
Total		$	8,312	$	(5,163	)	$	(2,492	)	$	657

Amortization expense was approximately $0 and $230,000 for the three months ended September 28, 2019 and September 29, 2018, respectively.