GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Feb. 01, 2020

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

5. GOODWILL AND INTANGIBLE ASSETS

The gross carrying amounts and accumulated amortization of our intangible assets are as follows (in thousands):

	February 1, 2020
		Weighted
		Average
		Remaining			Accumulated
	Amortization	Amortization	Gross		Amortization/		Net
	Period	Period	Carrying		Impairment		Carrying
	(in years)	(in years)	Amount		Charges (1)		Value
Definite-lived intangible assets:
Customer relationships	15-18	14.81	$	61,610	$	(6,309)	$	55,301
Proprietary product designs	7	—		3,400		(3,400)		—
Other intangible assets	3-19	5.74		10,540		(4,249)		6,291
				75,550		(13,958)		61,592
Indefinite-lived intangible assets:
Product tradenames				13,725		(8,900)		4,825
Total intangible assets			$	89,275	$	(22,858)	$	66,417

	February 2, 2019
		Weighted
		Average
		Remaining			Accumulated
	Amortization	Amortization	Gross		Amortization/		Net
	Period	Period	Carrying		Impairment		Carrying
	(in years)	(in years)	Amount		Charges (1)		Value
Definite-lived intangible assets:
Customer relationships	16-18	14.95	$	5,600	$	(1,789)	$	3,811
Proprietary product designs	7	3.99		3,400		(2,633)		767
Other intangible assets	4-21	11.71		4,229		(2,794)		1,435
				13,229		(7,216)		6,013
Indefinite-lived intangible assets:
Product tradenames				13,725		(2,500)		11,225
Total intangible assets			$	26,954	$	(9,716)	$	17,238

(1) In fiscal 2019, impairment charges of $6.4 million and $4.1 million were recorded on indefinite-lived and definite-lived intangible assets, respectively. In fiscal 2018, impairment charges of $2.5 million and $0.5 million were recorded on indefinite-lived and definite-lived intangible assets, respectively (see Note 1 for further explanation).

In fiscal 2019, fiscal 2018 and fiscal 2017, we recognized amortization expense of $1.7 million, $1.6 million and $1.9 million, respectively, related to definite-lived intangible assets. As of February 1, 2020, the amortization expense related to our definite-lived intangible assets for the next five years will be approximately $4.0 million to $5.0 million each year.

On November 22, 2019, the Company acquired certain intangible assets from A.C. Moore Incorporated for $62.1 million, including customer relationships and tradenames totaling $56.0 million and $5.2 million, respectively. In connection with the transaction, we also leased a distribution facility in New Jersey and 19 store locations. The fair values of the intangible assets acquired were determined by using the income approach. The income approach indicates value for a subject based on the present value of cash flows expected to be generated by the asset. Projected cash flows are discounted at a market rate of return that reflects the relative risk of achieving the cash flows and the time value of money.

As of February 1, 2020 and February 2, 2019, goodwill totaled $94.3 million and $112.1 million, respectively.  As a result of our impairment testing in fiscal 2019, we fully impaired goodwill of $17.8 million related to our Darice wholesale business (see Note 1 for further explanation). The remaining goodwill balance as of February 1, 2020 is related to our Michaels brand.