Goodwill and Other Intangible Assets

6 Months Ended

Jul. 02, 2022

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

(5) Goodwill and Other Intangible Assets

The carrying amounts of goodwill and other intangible assets, as of the dates indicated, consist of the following (in thousands):

	July 2, 2022						January 1, 2022
	Gross Carrying		Accumulated		Net Carrying		Gross Carrying		Accumulated		Net Carrying
	Amount		Amortization		Amount		Amount		Amortization		Amount
Finite-Lived Intangible Assets
Trademarks	$	6,800	$	4,156	$	2,644	$	6,800	$	3,929	$	2,871
Customer relationships		411,394		178,212		233,182		406,963		167,860		239,103
Total finite-lived intangible assets	$	418,194	$	182,368	$	235,826	$	413,763	$	171,789	$	241,974
Indefinite-Lived Intangible Assets
Goodwill	$	649,105					$	644,871
Trademarks	$	1,684,830					$	1,685,145

Amortization expense associated with finite-lived intangible assets was $5.4 million and $10.6 million for the second quarter and first two quarters of 2022, respectively, and $5.4 million and $10.8 million the second quarter and first two quarters of 2021, respectively, and is recorded in operating expenses. We expect to recognize an additional $10.8 million of amortization expense associated with our finite-lived intangible assets during the remainder of fiscal 2022, and thereafter $21.6 million of amortization expense in fiscal 2023, $21.5 million in each of fiscal 2024 and fiscal 2025, $20.8 million in fiscal 2026, and $16.0 million in fiscal 2027.

We did not recognize any impairment charges for indefinite-lived intangible assets for the first two quarters of 2022 or 2021. During the fourth quarter of fiscal 2021, we partially impaired the Static Guard and Molly McButter brands, and these assets had a remaining carrying value of $36.5 million at July 2, 2022 and January 1, 2022. If, however, operating results for any of our brands, including recently impaired brands and newly acquired brands, deteriorate, at rates in excess of our current projections, we may be required to record non-cash impairment charges to certain intangible assets. In addition, any significant decline in our market capitalization, even if due to macroeconomic factors, could put pressure on the carrying value of our goodwill. A determination that all or a portion of our goodwill or indefinite-lived intangible assets are impaired, although a non-cash charge to operations, could have a material adverse effect on our business, goodwill and indefinite-lived intangible assets (trademarks), see Note 2(g), “Summary of Significant Accounting Policies—Goodwill and Other Intangible Assets” to our 2021 Annual Report on Form 10-K.