Goodwill and Other Intangibles (Notes)

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill are as follows:

	Fiscal Year
(In millions)	2022		2021
Goodwill balance at beginning of the year	$	556.6	$	442.4
Acquisition of a business (see Note 19)	—		118.9
Impairment	(48.4)		—
Foreign currency translation effects	(23.2)		(4.7)
Goodwill balance at end of the year	$	485.0	$	556.6

In the fourth quarter of fiscal 2022, after completion of its annual impairment testing, the Company recognized a $48.4 million goodwill impairment charge to the Sweaty Betty® reporting unit. The impairment was due to an increase in the discount rates used in the valuation. The Company did not recognize any goodwill impairment charges during fiscal years 2021 and 2020.

The Company’s indefinite-lived intangible assets, which comprise trade names and trademarks, totaled $274.0 million and $718.1 million as of December 31, 2022 and January 1, 2022, respectively. In the fourth quarter of fiscal 2022, after the completion of the annual impairment testing, the Company recognized impairment charges of $191.0 million and $189.3 million to the Sperry® and Sweaty Betty® trade names, respectively. The impairment charge for the Sperry® trade name was due to reductions in future cash flow assumptions mainly due to decreases in anticipated future performance and an increase in the discount rate used in the valuation. The impairment charge for the Sweaty Betty® trade name resulted from reductions in future cash flow assumptions due to an increase in the discount rate used in the valuation. In the fourth quarter of fiscal 2020, after the completion of the annual impairment testing, the Company recognized a $222.2 million impairment charge for the Sperry® trade name.

The Sperry® and Sweaty Betty® trade names were valued using the income approach, specifically the multi-period excess earnings method. The Sweaty Betty® reporting unit fair value was estimated using both income-based and market-based valuation methods. The key assumptions used in the valuations were revenue growth, EBITDA margin, and the discount rate. Although the Company believes the estimates and assumptions used in the valuation were appropriate, it is possible assumptions could change in future periods. The risk of future impairment to the Sperry® and Sweaty Betty® trade names and Sweaty Betty® goodwill depend on key assumptions used in the determination of the trade name's and Sweaty Betty® reporting unit's fair value, such as revenue growth, EBITDA margin, discount rate, and assumed tax rate, or macroeconomic conditions that could adversely affect the value of the Company's Sperry® and Sweaty Betty® trade names and Sweaty Betty® reporting unit. A future impairment charge of the Sperry® trade name or Sweaty Betty® trade name and Sweaty Betty® reporting unit goodwill could have an adverse material effect on the Company's consolidated financial results. The carrying value of the Company’s Sperry® and Sweaty Betty® trade names indefinite-lived intangible assets was $105.3 million and $94.1 million, respectively, as of December 31, 2022.

Amortizable intangible assets are amortized using the straight-line method over their estimated useful lives. The combined gross carrying values and accumulated amortization for these amortizable intangibles are as follows:

	December 31, 2022
(In millions)	Gross carrying value		Accumulated amortization		Net		Average remaining life (years)
Customer relationships	$	118.4	$	55.2	$	63.2	10
Other	22.2		18.0		4.2		3
Total	$	140.6	$	73.2	$	67.4

	January 1, 2022
(In millions)	Gross carrying value		Accumulated amortization		Net		Average remaining life (years)
Customer relationships	$	119.9	$	49.1	$	70.8	11
Other	20.3		16.5		3.8		3
Total	$	140.2	$	65.6	$	74.6

Amortization expense for these amortizable intangible assets was $7.9 million, $8.4 million and $7.1 million for fiscal years 2022, 2021 and 2020, respectively. Estimated aggregate amortization expense for such intangibles for the fiscal years subsequent to December 31, 2022 is as follows:

(In millions)	2023		2024		2025		2026		2027
Amortization expense	$	7.6	$	7.3	$	7.0	$	6.7	$	6.4