Intangible Assets and Goodwill

12 Months Ended

Dec. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

(a) Intangible Assets

The primary components of the Company’s intangible assets and the related accumulated amortization are as follows:


	Gross		Accumulated Amortization		Net Book Value
Year ended December 30, 2023:
Intangible assets subject to amortization:
Trademarks	$	39,439	$	29,434	$	10,005
License agreements	89,622		73,181		16,441
Customer and distributor relationships	123,827		92,314		31,513
Computer software	114,927		85,542		29,385
Other intangibles	5,191		5,191		—
	$	373,006	$	285,662	87,344
Intangible assets not subject to amortization:
Trademarks					1,146,110
Perpetual license agreements and other					2,250
Net book value of intangible assets					$	1,235,704


	Gross		Accumulated Amortization		Net Book Value
Year ended December 31, 2022:
Intangible assets subject to amortization:
Trademarks	$	40,128	$	28,633	$	11,495
License agreements	89,523		68,205		21,318
Customer and distributor relationships	122,283		81,099		41,184
Computer software	109,209		72,626		36,583
Other intangibles	5,160		5,043		117
	$	366,303	$	255,606	110,697
Intangible assets not subject to amortization:
Trademarks					1,142,746
Perpetual license agreements and other					2,250
Net book value of intangible assets					$	1,255,693

In connection with the annual intangible assets impairment analysis performed in the third quarter of 2023, the Company performed a quantitative assessment utilizing an income approach to estimate the fair values of certain indefinite-lived intangible assets. The most significant assumptions used to estimate the fair values of the indefinite-lived intangible assets included revenue growth rates, operating profit margin rates, terminal growth rates and discount rates. The analysis indicated that the indefinite-lived intangible assets had fair values that exceeded their carrying values by more than 20% at the time the analysis was performed. Although the Company determined that no impairment existed for the Company’s indefinite-lived intangible assets as of the date the analysis was performed in the third quarter of 2023, these assets could be at risk for future impairment due to changes in the Company’s business or global economic conditions.

In June of 2022, the Company purchased the Champion trademark for footwear in the United States, Puerto Rico and Canada from Keds, LLC (“KEDS”) for $102,500. The trademark was recorded in “Trademarks and other identifiable intangibles, net” line in the Consolidated Balance Sheets and has an indefinite life. The Company previously licensed the Champion trademark for footwear in these locations. The purchase of the trademark was part of an agreement with KEDS settling litigation between the two parties.

In the first quarter of 2021, the Company recorded an impairment charge of $7,302 to fully impair an indefinite-lived trademark related to a specific brand within the European Innerwear business that was excluded from the disposal group as it was not marketed for sale. This impairment charge is reflected in the “Selling, general and administrative expenses” line in the Consolidated Statements of Operations for the year ended January 1, 2022.

The amortization expense in continuing operations for intangible assets subject to amortization was $29,769, $29,973 and $31,069 for 2023, 2022 and 2021, respectively. The estimated amortization expense for the next five years, assuming no change in the estimated useful lives of identifiable intangible assets or changes in foreign exchange rates is as follows: $27,833 in 2024, $24,747 in 2025, $16,279 in 2026, $6,998 in 2027 and $4,407 in 2028.

(b) Goodwill

Goodwill and the changes in those amounts during the period are as follows:


	Innerwear		Activewear		International		Other		Total
Net book value at January 1, 2022	$	406,853	$	316,384	$	407,358	$	2,500	$	1,133,095
Currency translation	—		—		(24,188)		—		(24,188)
Net book value at December 31, 2022	$	406,853	$	316,384	$	383,170	$	2,500	$	1,108,907
Currency translation	—		—		3,837		—		3,837
Net book value at December 30, 2023	$	406,853	$	316,384	$	387,007	$	2,500	$	1,112,744

In connection with the annual goodwill impairment analysis performed in the third quarter of 2023, the Company performed a quantitative assessment utilizing an income approach to estimate the fair value of each reporting unit. The most significant assumptions used to estimate the fair values of the reporting units included revenue growth rates, operating profit margin rates, terminal growth rates and discount rates. While the analysis indicated that all reporting units had fair values that exceeded their carrying values, the Company noted meaningful declines in the fair value cushion above the carrying value for three reporting units. The decline in the U.S. Activewear reporting unit fair value cushion was driven by the continued challenging activewear market dynamics and the impact of continued strategic actions geared toward improving Champion’s brand position, regaining momentum and positioning the business for long-term profitable growth through a more disciplined product and channel segmentation approach, a shift in mix and assortment changes, which continue to weigh on the reporting unit’s financial results and resulted in a fair value that exceeded the carrying value by less than 10% at the time the analysis was performed. The decline in the fair value cushions of the Champion Europe and Australia reporting units was primarily driven by continued macroeconomic pressures impacting consumer spending which resulted in fair value cushions that exceeded their carrying values by less than 15% at the time the analysis was performed. As a result, the goodwill associated with these three reporting units was considered to be at a higher risk for future impairment if economic conditions worsen or reporting unit earnings and operating cash flows do not recover as currently estimated by management. As of December 30, 2023, the combined goodwill associated with these three reporting units was approximately $684,916. Although the Company determined that no impairment existed for the Company’s goodwill as of the date the analysis was performed in the third quarter of 2023, these assets could be at risk for future impairment due to changes in the Company’s business or global economic conditions.