Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Intangibles

v3.20.2
Goodwill and Intangibles
 6 Months Ended
Jun. 27, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangibles [Text Block] Goodwill and Other Intangibles

Effective January 1, 2020, the Company changed its management reporting and updated its reportable segments to Propulsion, Parts and Accessories (P&A) and Boat (inclusive of Business Acceleration) to align with its strategy. Refer to Note 11 – Segment Data for further information on the Company's reportable segments. As a result, the Company reallocated goodwill to its reporting units within the Propulsion and P&A segments based on each reporting unit's relative fair value.
Changes in the Company's goodwill during the six months ended June 27, 2020, by segment, are summarized below:
(in millions)
December 31,
2019
 
Acquisitions
 
Adjustments
 
June 27,
2020
Propulsion (A)
$
14.5

 
$
—

 
$
(0.2
)
 
$
14.3

Parts and Accessories (A)
371.9

 
—

 
(0.3
)
 
371.6

Boat
28.6

 
—

 
0.9

 
29.5

    Total
$
415.0

 
$
—

 
$
0.4

 
$
415.4

 
(A) In the 2019 Form 10-K, goodwill for Propulsion and Parts and Accessories were presented within the Marine Engine segment.

Changes in the Company's goodwill during the six months ended June 29, 2019, by segment, are summarized below:
(in millions)
December 31, 2018
 
Acquisitions
 
Adjustments
 
June 29,
2019
Propulsion (A)
$
14.6

 
$
—

 
$
—

 
$
14.6

Parts and Accessories (A)
360.5

 
—

 
7.4

 
367.9

Boat
2.2

 
26.0

 
—

 
28.2

    Total
$
377.3

 
$
26.0

 
$
7.4

 
$
410.7

 
(A) In the 2019 Form 10-K, goodwill for Propulsion and Parts and Accessories were presented within the Marine Engine segment.

Adjustments in the Boat segment for the six months ended June 27, 2020 relate to finalizing purchase accounting related to the Freedom Boat Club acquisition, primarily related to deferred taxes. Adjustments for the six months ended June 29, 2019 mainly relate to finalizing purchase accounting related to the Power Products acquisition. See Note 5 – Acquisitions for further details on the Company's acquisitions. Adjustments in both periods include the effect of foreign currency translation on goodwill denominated in currencies other than the U.S. dollar.
 
There was no accumulated impairment loss on Goodwill as of June 27, 2020, December 31, 2019 and June 29, 2019.

The Company's intangible assets, included within Other intangibles, net on the Condensed Consolidated Balance Sheets as of June 27, 2020, December 31, 2019 and June 29, 2019, are summarized by intangible asset type below:
 
June 27, 2020
 
December 31, 2019
 
June 29, 2019
(in millions)
Gross Amount
 
Accumulated Amortization
 
Gross Amount
 
Accumulated Amortization
 
Gross Amount
 
Accumulated Amortization
Intangible assets:
 
 
 
 
 
 
 
 
 
 
 
  Customer relationships (A)
$
686.6

 
$
(290.2
)
 
$
687.0

 
$
(274.6
)
 
$
686.9

 
$
(258.8
)
  Trade names
165.6

 
—

 
165.8

 
—

 
165.8

 
—

  Other (A)
18.3

 
(13.2
)
 
18.4

 
(13.1
)
 
18.3

 
(12.8
)
    Total
$
870.5

 
$
(303.4
)
 
$
871.2

 
$
(287.7
)
 
$
871.0

 
$
(271.6
)


(A) The weighted average remaining amortization period for Customer relationships and Other intangibles assets were 13.1 years and 11.5 years, respectively, as of June 27, 2020.

Other intangible assets primarily consist of patents and franchise agreements. Gross amounts and related accumulated amortization amounts include adjustments related to the impact of foreign currency translation. Aggregate amortization expense for intangibles was $8.0 million and $16.0 million for the three and six months ended June 27, 2020, respectively. Aggregate amortization expense for intangibles was $7.8 million and $15.7 million for the three and six months ended June 29, 2019, respectively.

The Company's intangible assets, included within Other intangibles, net on the Condensed Consolidated Balance Sheets as of June 27, 2020, December 31, 2019 and June 29, 2019, are summarized by segment below:
 
June 27, 2020
 
December 31, 2019
 
June 29, 2019
(in millions)
Gross Amount
 
Accumulated Amortization
 
Gross Amount
 
Accumulated Amortization
 
Gross Amount
 
Accumulated Amortization
Propulsion
$
1.0

 
$
(0.5
)
 
$
1.0

 
$
(0.5
)
 
$
1.0

 
$
(0.5
)
Parts and Accessories
617.0

 
(96.7
)
 
617.6

 
(81.9
)
 
617.5

 
(66.8
)
Boat
252.5

 
(206.2
)
 
252.6

 
(205.3
)
 
252.5

 
(204.3
)
    Total
$
870.5

 
$
(303.4
)
 
$
871.2

 
$
(287.7
)
 
$
871.0

 
$
(271.6
)


The Company tests its intangible assets for impairment during the fourth quarter of each year, or whenever a significant change in events and circumstances (triggering event) occurs that indicates the fair value of intangible assets may be below their carrying values. The Company determined the COVID-19 pandemic was a triggering event and, as a result, performed an interim impairment test of certain intangible assets as of March 28, 2020. The Company considered both quantitative and qualitative factors in its analysis and determined the fair values of its intangible assets were not “more-likely-than-not” lower than their carrying values. As such, the Company did not record an impairment charge during the three months ended March 28, 2020.

As business performance and marine demand exceeded expectations during the three months ended June 27, 2020, and no further triggering events were identified, the Company did not perform an additional interim impairment test in the second quarter. The Company will continue to monitor the impacts of COVID-19 and assess the need for further testing going forward.