Quarterly report pursuant to Section 13 or 15(d)

Note 6 - Goodwill and Intangible Assets

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Note 6 - Goodwill and Intangible Assets
3 Months Ended
Jan. 01, 2022
Notes to Financial Statements  
Goodwill and Intangible Assets Disclosure [Text Block]

 

Note O—Goodwill and Intangible Assets

 

Components of intangible assets consist of the following (in thousands):

 

   

December 2021

   

September 2021

     
   

Cost

   

Accumulated Amortization

   

Net Value

   

Cost

   

Accumulated Amortization

   

Net Value

  Economic Life  
                                                     

Goodwill

  $ 37,897     $     $ 37,897     $ 37,897     $     $ 37,897   N/A  
                                                     

Intangibles:

                                                   

Tradename/trademarks

  $ 16,000     $ (4,450 )   $ 11,550     $ 16,000     $ (4,317 )   $ 11,683  

20 – 30 yrs

 

Customer relationships

    7,400       (2,658 )     4,742       7,400       (2,473 )     4,927  

20 yrs

 

Technology

    10,024       (1,937 )     8087       9,952       (1,715 )     8237  

10 yrs

 

License agreements

    2,100       (862 )     1,238       2,100       (837 )     1,263  

15 – 30 yrs

 

Non-compete agreements

    1,657       (1,508 )     149       1,657       (1,476 )     181  

4 – 8.5 yrs

 

Total intangibles

  $ 37,181     $ (11,415 )   $ 25,766     $ 37,109     $ (10,818 )   $ 26,291      

 

Goodwill represents the acquired goodwill net of the $0.6 million impairment losses recorded in fiscal year 2011. As of December 2021, the Delta Group segment assets include $18.0 million of goodwill, and the Salt Life segment assets include $19.9 million.

 

Depending on the type of intangible asset, amortization is recorded under cost of goods sold or selling, general and administrative expenses. Amortization expense for intangible assets for the three-months ended December 2021 and December 2020 was $0.6 million and $0.4 million, respectively. Amortization expense is estimated to be approximately $1.6 million for the year ended September 2022, approximately $1.5 million for the year ended September 2023, and approximately $1.4 million for the years ended September 2024, 2025 and 2026.

 

On June 1, 2021, DTG2Go, LLC acquired specified net assets of Fan Print Inc., which primarily included its Autoscale.ai technology as well as immaterial net working capital. The costs to acquire the net assets were $8.0 million, of which $6.6 million was paid at closing through our existing U.S. credit facility and $1.4 million will be paid in three installments in our second, third, and fourth quarters of fiscal 2022. The acquisition qualified as an asset acquisition in accordance with ASU 2017-01, Clarifying the Definition of a Business, as substantially all of the fair value of the net assets acquired or $8.1 million were assigned to the technology intangible asset with an estimated economic life of 10 years. The acquisition cost also consists of additional payments contingent on the adjusted operating profits resulting from the Autoscale.ai technology for the period from June 1, 2021 through October 2, 2021, as well as for our fiscal years 2022 through 2026. These contingent earnout liabilities are recognized when the contingency is probable and reasonably estimable, which generally results in recognition, if earned, during the fourth quarter of each fiscal year and which would increase the value of the technology intangible asset.