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Goodwill, Intangible Assets, and Cloud Computing Arrangements
12 Months Ended
Apr. 02, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets
5.
Goodwill, Intangible Assets, and Cloud Computing Arrangements

Goodwill

Goodwill represents the excess of the cost of an acquired business over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business combination. At April 2, 2022 and April 3, 2021, the Company had goodwill of $192.0 million and $191.8 million, respectively. The change in the goodwill balance during the period was a result of the final working capital settlement in the first quarter of fiscal 2022 related to the acquisition of ScotBilt. Goodwill is allocated to reporting units included in the U.S. Factory-built Housing segment, which include the Company’s U.S. manufacturing and retail operations.

Intangible Assets

The components of amortizable intangible assets were as follows:

(Dollars in thousands)

 

April 2, 2022

 

 

April 3, 2021

 

 

 

Customer
Relationships

 

 

Trade
Names

 

 

Total

 

 

Customer
Relationships

 

 

Trade
Names

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross carrying amount

 

$

61,986

 

 

$

21,419

 

 

$

83,405

 

 

$

61,963

 

 

$

21,409

 

 

$

83,372

 

Accumulated amortization

 

 

(23,819

)

 

 

(8,303

)

 

 

(32,122

)

 

 

(18,158

)

 

 

(6,379

)

 

 

(24,537

)

Amortizable intangibles, net

 

$

38,167

 

 

$

13,116

 

 

$

51,283

 

 

$

43,805

 

 

$

15,030

 

 

$

58,835

 

Weighted average remaining amortization period, in years

 

 

6.8

 

 

 

6.9

 

 

 

6.8

 

 

 

7.8

 

 

 

7.9

 

 

 

7.8

 

The Company recognized customer relationships of $13.0 million and trade names of $8.1 million related to the acquisition of ScotBilt. The fair value of the customer relationship intangible asset was estimated using the multi-period excess earnings method of the income approach. The fair value of the customer relationship intangible asset was determined based on estimates and assumptions of projected cash flows attributable to the acquired customer relationships, the annual attrition rate of existing customer relationships, the contributory asset charges attributable to the assets that support the customer relationships, such as: (i) net working capital; (ii) property, plant, and equipment; (iii) trade names; and (iv) workforce, with the economic life and the discount rate as determined at the time of the acquisition. The fair value of the trade names intangible asset was estimated using the relief-from-royalty method of the income approach. The fair value of the trade names intangible asset was determined based on estimates and assumptions of the expected life of the intangible asset, the royalty rate, and the discount rate that reflects the level of risk associated with the future cash flows, as determined at the time of the acquisition.

Amortization of intangible assets for the fiscal years ended April 2, 2022, April 3, 2021, and March 28, 2020 was $7.6 million, $5.6 million, and $5.4 million respectively. Estimated amortization expense of intangible assets over the next five years is estimated to be (dollars in thousands):

 

Fiscal 2023

 

$

7,436

 

Fiscal 2024

 

 

7,388

 

Fiscal 2025

 

 

7,388

 

Fiscal 2026

 

 

7,388

 

Fiscal 2027

 

 

7,346

 

Cloud Computing Arrangements

The Company capitalizes costs associated with the development of cloud computing arrangements in a manner consistent with internally developed software. At April 2, 2022 and April 3, 2021, the Company had capitalized cloud computing costs of $20.5 million and $0.3 million, respectively. Cloud computing costs are included in other noncurrent assets in the accompanying consolidated balance sheets. Amortization of capitalized cloud computing costs was $0.2 million for the fiscal year ended April 2, 2022. There was no amortization of capitalized cloud computing costs during fiscal 2021 as the related systems had not yet been placed in service.