GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Nov. 03, 2019

Notes to Financial Statements [Abstract]

The changes in the carrying amount of goodwill for the thirty-nine weeks ended November 3, 2019, by segment (please see Note 20, “Segment Data,” for further discussion of the Company’s reportable segments), were as follows:



(In millions)	Calvin Klein North America		Calvin Klein International			Tommy Hilfiger North America		Tommy Hilfiger International			Heritage Brands Wholesale		Heritage Brands Retail			Total
Balance as of February 3, 2019
Goodwill, gross	$	780.3	$	909.5		$	204.4	$	1,529.8		$	246.5	$	11.9		$	3,682.4
Accumulated impairment losses	—		—			—		—			—		(11.9		)	(11.9		)
Goodwill, net	780.3		909.5			204.4		1,529.8			246.5		—			3,670.5
Australia acquisition	—		9.2			—		57.7			—		—			66.9
TH CSAP acquisition	—		—			—		63.9			—		—			63.9
Currency translation	0.2		(18.4		)	—		(44.6		)	—		—			(62.8		)
Balance as of November 3, 2019
Goodwill, gross	780.5		900.3			204.4		1,606.8			246.5		11.9			3,750.4
Accumulated impairment losses	—		—			—		—			—		(11.9		)	(11.9		)
Goodwill, net	$	780.5	$	900.3		$	204.4	$	1,606.8		$	246.5	$	—		$	3,738.5

The goodwill acquired in the Australia and TH CSAP acquisitions was assigned as of the respective acquisition dates to the Company’s reporting units that are expected to benefit from the synergies of the combinations.

The Company performed its annual impairment assessment for goodwill, which is done at the reporting unit level, and indefinite-lived intangible assets as of the beginning of the third quarter of 2019. Please see Note 1, “Summary of Significant Accounting Policies,” in the Notes to Consolidated Financial Statements included in Item 8 of the Company’s Annual Report on Form 10-K for the year ended February 3, 2019 for discussion of the Company’s goodwill and intangible assets impairment testing process.

The Company’s annual goodwill impairment test for 2019 yielded estimated fair values in excess of the carrying amounts for all of the Company’s reporting units and therefore no impairment of goodwill was identified. The reporting unit with the least excess fair value had an estimated fair value that exceeded its carrying amount by 15%.

Additionally, no impairment of indefinite-lived intangible assets was identified as a result of the Company’s annual indefinite-lived intangible asset impairment test for 2019. The fair values of all of the Company’s indefinite-lived intangible assets substantially exceeded their carrying amounts, with the exception of the Company’s perpetual license right, which had a fair value that exceeded its carrying amount by 3% at the testing date. The excess fair value of the perpetual license right declined

compared to the prior year, primarily driven by an increase in the weighted average cost of capital as compared to the prior year. The carrying amount of the perpetual license right was $203.8 million as of November 3, 2019. While the perpetual license right was not determined to be impaired, it is at risk of future impairment in the event the related business does not perform as projected or if market factors utilized in the impairment analysis deteriorate, including an unfavorable change in long-term growth rates or the weighted average cost of capital. Holding all other assumptions constant, a 100 basis point change in the annual revenue growth rate of the business conducted under the perpetual license would result in a change to the estimated fair value of the Company’s perpetual license right of approximately $25.0 million. Likewise, a 100 basis point change in the weighted average cost of capital would result in a change to the estimated fair value of the Company’s perpetual license right of approximately $50.0 million.