Goodwill and Other Intangible Assets

12 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

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



	As of March 31,
	2018			2017
Goodwill:
UGG brand	$	6,101		$	6,101
Other brands	7,889			7,889
Total goodwill	13,990			13,990
Other intangible assets:
Indefinite-lived intangible assets
Trademarks	15,454			15,454
Definite-lived intangible assets
Trademarks	55,245			55,245
Other	53,216			51,383
Total gross carrying amount	108,461			106,628
Accumulated amortization	(66,065		)	(56,944		)
Net definite-lived intangible assets	42,396			49,684
Total other intangible assets	57,850			65,138
Total goodwill and other intangible assets	$	71,840		$	79,128

The weighted-average amortization period for definite-lived intangible assets is 15 and 16 years for the years ended March 31, 2018 and 2017, 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 to the Company's goodwill in the consolidated balance sheets are as follows:



	Goodwill, Gross		Accumulated Impairment			Goodwill, Net
Balance as of March 31, 2016	$	143,765	$	(15,831	)	$	127,934
Changes related to acquisitions, impairments and other adjustments*	—		(113,944		)	(113,944		)
Balance as of March 31, 2017	143,765		(129,775		)	13,990
Changes related to acquisitions, impairments and other adjustments	—		—			—
Balance as of March 31, 2018	$	143,765	$	(129,775	)	$	13,990

*Impairment recorded for the Sanuk brand wholesale reportable operating segment goodwill, as discussed below.

Annual Impairment Assessment

Goodwill & Indefinite-Lived Intangible Assets. During fiscal years 2018, 2017 and 2016, the Company performed its annual impairment assessment and evaluated the UGG and other brands' wholesale reportable operating segment goodwill at December 31st and evaluated its Teva indefinite-lived trademarks at October 31st. Based on the carrying amounts of the UGG and other brands' goodwill and Teva brand trademarks, the brands' actual fiscal year sales and operating results, and the brands' long-term forecasts of sales and operating results as of their evaluation dates, the Company concluded that these assets were not impaired.

During fiscal year 2017, the Company performed the annual impairment assessment of its Sanuk brand wholesale reportable operating segment goodwill at October 31, 2016, with the assistance of a third party valuation firm. The assessment identified an indicator of impairment and the Company performed the following:

•

Under step one of the impairment assessment, management concluded that the fair value of the Sanuk brand 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.

•

Under step two of the impairment assessment, management concluded that the fair value allocated to all of the assets and liabilities of the Sanuk brand wholesale reportable operating segment, using a hypothetical allocation of assets, including net tangible and intangible assets, resulted in a non-cash impairment charge of $113,944, which was recognized in the third quarter of fiscal year 2017 and recorded in SG&A expenses in the consolidated statements of comprehensive income (loss).

Definite-Lived Intangible Assets. The Company did not identify any definite-lived intangible asset impairments during the years ended March 31, 2018 and 2016. However, during fiscal year 2017, and in connection with the goodwill impairment discussed above, the Company identified an impairment of the Sanuk brand's amortizable patent. The Company's analysis determined that the Sanuk brand's amortizable patent 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 recognized 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 recorded in SG&A expenses in the consolidated statements of comprehensive income (loss). The Company did not identify any additional impairments for Sanuk brand's other definite-lived intangible assets during fiscal year 2017, as the undiscounted future cash flows associated with those assets exceeded their carrying values.

During the third quarter of fiscal year 2017, the Company also recognized an impairment for definite-lived 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 recorded in SG&A expenses in the consolidated statements of comprehensive income (loss).

Amortization Expense

A reconciliation of charges incurred in the consolidated statements of comprehensive income (loss) relevant to the Company's other intangible assets is as follows:



Balance as of March 31, 2016	$	83,026
Impairment charges	(8,829		)
Amortization expense	(7,945		)
Foreign currency exchange rate fluctuations	(1,114		)
Balance as of March 31, 2017	65,138
Amortization expense	(7,807		)
Foreign currency exchange rate fluctuations	519
Balance as of March 31, 2018	$	57,850

Expected amortization expense for amortizable intangible assets subsequent to March 31, 2018 is as follows:



Years Ending March 31:
2019	$	6,294
2020	3,511
2021	2,534
2022	2,525
2023	2,450
Thereafter	25,082
Total expected amortization in future periods	$	42,396

- 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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