Intangible Assets

Intangible assets are summarized as follows:



September 30, 2018	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

			(in thousands)
Finite-lived intangible assets:
Trademarks	15	$	5,474	$	(2,234)	$	3,240
Customer agreements	4		2,832		(2,562)		270
Favorable lease	2		537		(537)		-
Patents	10		361		(318)		43
		$	9,204	$	(5,651)		3,553
Indefinite-lived intangible assets:
Trademarks							961,807

Intangible assets, net						$	965,360



December 31, 2017	Useful Lives (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

			(in thousands)
Finite-lived intangible assets:
Trademarks	15	$	5,462	$	(1,913)	$	3,549
Customer agreements	4		2,832		(2,257)		575
Favorable lease	2		537		(537)		-
Patents	10		665		(296)		369
		$	9,496	$	(5,003)		4,493
Indefinite-lived intangible assets:
Trademarks							990,677

Intangible assets, net						$	995,170

Estimated future annual amortization expense for intangible assets in service as of September 30, 2018 is summarized as follows:


Years ending December 31,		(in thousands)
Remainder of 2018	$	185
2019		627
2020		439
2021		436
2022		413
Thereafter		1,453
	$	3,553

Amortization expense amounted to $0.2 million for each of the three months ended September 30, 2018 and 2017. Amortization expense amounted to $0.6 million and $0.7 million for the nine months ended September 30, 2018 and 2017, respectively.

Finite-lived intangible assets represent trademarks, customer agreements and patents related to the Company’s brands and a favorable lease. Finite-lived intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets. The carrying value of finite-lived intangible assets and other long-lived assets is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Indefinite-lived intangible assets are not amortized, but instead are subject to impairment evaluation. As of September 30, 2018, the trademarks of Martha Stewart, Jessica Simpson, Avia, AND1, Heelys, Joe’s Jeans, GAIAM, Emeril, Caribbean Joe, and Ellen Tracy have been determined to have an indefinite useful life, and accordingly, consistent with ASC Topic 350, no amortization has been recorded in the Company’s unaudited condensed consolidated statements of operations. Instead, each of these intangible assets are tested for impairment annually and as needed on an individual basis as separate single units of accounting, with any related impairment charge recorded to the statement of operations at the time of determining such impairment. The annual evaluation of the Company’s indefinite-lived trademarks is performed as of October 1, the beginning of the Company’s fourth fiscal quarter. Based on the Company’s annual evaluation, the Company determined that a certain trademark should no longer be classified as an indefinite-lived intangible asset and beginning in the fourth quarter 2018 will be reclassified as a finite-lived intangible asset and amortized on a straight-line basis over the remaining estimated useful life of the trademark.

During the nine months ended September 30, 2018, the Company recorded non-cash impairment charges of $17.9 million for indefinite-lived intangible assets related to the trademarks of two of the Company’s non-core brands: Caribbean Joe and Ellen Tracy. The impairments arose due to reduced growth expectations and the impact of licensee transitions for these brands identified during the annual budget process which began at the end of the third quarter 2018. During the nine months ended September 30, 2017, the Company recorded non-cash impairment charges of $36.5 million for indefinite-lived intangible assets related to the trademarks of five of the Company’s non-core brands: Caribbean Joe, Revo, Franklin Mint, Nevados, and FUL. The impairments arose due to reduced contractual minimums or reduced sales forecasts in key distribution channels for these brands. Fair value for each trademark was determined based on the income approach using estimates of future discounted cash flows. These charges are included in impairment charges in the unaudited condensed consolidated statements of operations.

During the nine months ended September 30, 2018, the Company sold both the Revo and FUL trademarks. During the nine months ended September 30, 2018, the Company incurred a loss on the sale of the assets of $7.1 million. The following table shows the change in indefinite-lived intangible assets for the nine months ended September 30, 2018 (in thousands):


Balance at January 1, 2018	$	995,170
Impairment of trademarks		(17,899)
Sale of trademarks		(11,473)
Amortization		(648)
Additions		210
Balance at September 30, 2018	$	965,360