Goodwill and Other Intangible Assets

12 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

The Company's goodwill and other intangible assets are as follows:



	As of March 31,
	2017			2016
Goodwill
UGG brand	$	6,101		$	6,101
Sanuk brand	—			113,944
Other brands	7,889			7,889
Total Goodwill	13,990			127,934
Other Intangible Assets
Indefinite-lived Intangible Assets
Trademarks	15,455			15,455
Definite-lived Intangible Assets
Trademarks	55,244			55,244
Other	57,629			57,629
Total gross carrying amount	112,873			112,873
Accumulated amortization	(54,361		)	(45,302		)
Accumulated impairment	(8,829		)	—
Net Definite-lived Intangible Assets	49,683			67,571
Total Other Intangible Assets	65,138			83,026
Total Goodwill and Other Intangible Assets	$	79,128		$	210,960

The weighted-average amortization period for definite-lived intangible assets is 16 years and 13 years for the years ended March 31, 2017 and 2016, respectively. Intangible assets consist primarily of indefinite-lived trademarks and definite-lived trademarks, customer and distributor relationships, patents, lease rights, and non-compete agreements arising from the application of purchase accounting.

Goodwill is allocated to the wholesale reportable operating segments of the brands described above. Changes in the Company's goodwill balance for the periods presented in the consolidated balance sheets are as follows:



	Goodwill, Gross		Accumulated Impairment			Goodwill, Net
Balance, March 31, 2015	$	143,765	$	(15,831	)	$	127,934
Changes related to acquisitions, impairments and other adjustments	—		—			—
Balance, March 31, 2016	143,765		(15,831		)	127,934
Changes related to acquisitions, impairments and other adjustments	—		(113,944		)	(113,944		)
Balance, March 31, 2017	$	143,765	$	(129,775	)	$	13,990

During the third quarter of the year ended March 31, 2017, consistent with applicable accounting guidance, the Company performed the annual impairment assessment of the Sanuk brand's wholesale reportable operating segment goodwill as of October 31, 2016 with the assistance of a third party valuation firm. The annual assessment determined that there was an indication of impairment of the Sanuk brand's wholesale reportable segment goodwill. In particular, step one of the impairment assessment concluded that the fair value of the Sanuk brand's wholesale reportable operating segment was below its carrying value, which was primarily the result of lower-than-forecasted sales, lower market multiples for non-athletic footwear and apparel, and a more limited view of international and domestic expansion opportunities for the brand given the changing retail environment. Accordingly, the Company then performed step two of the impairment assessment, which required fair value to be allocated to all of the assets and liabilities of the Sanuk brand's wholesale reportable operating segment, using a hypothetical allocation of assets, including net tangible and intangible assets. As a result of this analysis, the Company recorded a $113,944 non-cash impairment charge to the Sanuk brand's wholesale reportable operating segment goodwill during the third quarter of the year ended March 31, 2017, which was reflected in SG&A expenses in the consolidated statements of comprehensive income (loss).

At October 31, 2015, the Company performed the annual impairment test and evaluated the Sanuk brand's wholesale reportable operating segment goodwill and, based on comparing the carrying amounts of the Sanuk brand's wholesale reportable operating segment goodwill to the 2016 sales and operating results and the brands' long-term forecasts of sales and operating results as of their evaluation dates, the Company concluded the carrying amount of the Sanuk brand's wholesale reportable operating segment goodwill was not impaired. The change in the sales forecasts between fiscal year 2017 and fiscal year 2016 at the annual impairment testing date of October 31st of each fiscal year, was primarily due to the change in forecast assumptions discussed above.

During the third quarter of the year ended March 31, 2017, the Company evaluated the Sanuk brand's definite long-lived assets for indicators of impairment, primarily as a result of the goodwill impairment discussed above. The Company's analysis determined that the Sanuk brand's amortizable patent under the Sanuk brand's wholesale reportable operating segment was fully impaired as the Sanuk SIDEWALK SURFERS utility patent had very limited value in the marketplace because of its limited ability to exclude others from creating similar products. As a result, the Company recorded a non-cash impairment charge to the patent of $4,086 in the Sanuk wholesale reportable operating segment during the third quarter of fiscal year 2017, which was reflected in SG&A expenses in the consolidated statements of comprehensive income (loss). The impairment charge to the patent will result in lower annual amortization expense of approximately $500. The Company's analysis also determined that the Sanuk brand's other intangible assets, other than the amortizable patent discussed above, were not impaired as of the date on which the impairment test was completed, as it was determined that the undiscounted future cash flows associated with those assets exceeded their carrying values. However, as discussed above, additional impairment charges could be incurred in future periods.

At December 31, 2016 and 2015, the Company performed its annual impairment tests and evaluated the UGG brand and other brands' wholesale reportable operating segment goodwill, and at October 31, 2016 and 2015, evaluated the Teva brand's indefinite-lived trademarks. Based on the carrying amounts of the UGG brands and other brands' wholesale reportable segment goodwill and Teva brand's trademarks, the brands' fiscal year 2017 and 2016 sales and operating results, and the brands' long-term forecasts of sales and operating results as of their evaluation dates, the Company concluded that the carrying amounts of the goodwill and trademarks were not impaired.

During the third quarter of the year ended March 31, 2017, the Company recorded an impairment for other intangible assets in the DTC reportable operating segment of $4,743 due to a decline in market rental rates for European retail stores, which was reflected in SG&A expenses in the consolidated statements of comprehensive income (loss).

Aggregate amortization expense for amortizable intangible assets during the years ended March 31, 2017, 2016 and 2015 was $7,945, $8,850, and $11,291, respectively.

Charges incurred in the consolidated statements of comprehensive income (loss) relevant to the Company's other intangible assets during the year ended March 31, 2017 are as follows:



Balance, March 31, 2016	$	83,026
Impairment charges	(8,829		)
Amortization expense	(7,945		)
Foreign currency exchange rate fluctuations	(1,114		)
Balance, March 31, 2017	$	65,138

The following table summarizes the expected amortization expense as of March 31, 2017 for amortizable intangible assets for the next five years and thereafter:



Years Ending March 31:
2018	$	7,572
2019	6,106
2020	3,439
2021	2,526
2022	2,521
Thereafter	27,519
	$	49,683

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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