XML 33 R18.htm IDEA: XBRL DOCUMENT v3.22.0.1
Goodwill and Intangible Assets
 12 Months Ended
Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets
Note 9. Goodwill and Intangible Assets
Changes in the carrying amount of goodwill by operating and reportable segment are as follows (in thousands):
 TopgolfGolf EquipmentApparel, Gear and OtherTotal
Balance at December 31, 2020$— $27,025 $29,633 $56,658 
Acquisitions1,340,663 504,568 58,652 1,903,883 
Impairments— — — — 
Foreign currency translation— (471)— (471)
Balance at December 31, 2021$1,340,663 $531,122 $88,285 $1,960,070 
The $1,903,412,000 increase during the twelve months ended December 31, 2021 was primarily due to the addition of $1,903,883,000 in goodwill in connection with the Topgolf merger in March 2021, of which the Company attributed $1,340,663,000 to the Topgolf business, $504,568,000 to the golf equipment business and $58,652,000 to the apparel, gear and other business primarily due to the synergies the Company anticipates from leveraging the Topgolf business to expand its golf equipment and apparel businesses. This increase in goodwill was partially offset by changes in foreign currency rates period over period.
In accordance with ASC Topic 350, “Intangibles—Goodwill and Other,” the Company’s goodwill and non-amortizing intangible assets are subject to an annual impairment test or more frequently when impairment indicators are present. There were no impairment losses recognized during the years ended December 31, 2021 and 2019. During the year ended December 31, 2020, due to the significant disruptions caused by the COVID-19 pandemic on the Company's operations, the Company performed a qualitative assessment considering the macroeconomic conditions caused by the COVID-19 pandemic, and the potential impact on the Company's sales and operating income for fiscal 2020 and potentially beyond. As a result, the Company determined that there were indicators of impairment, and proceeded with a quantitative assessment of goodwill for all reporting.
In performing the quantitative goodwill impairment testing during fiscal 2020, the Company prepared valuations of its reporting units using both a market comparable methodology and an income methodology, and those valuations were compared with the respective carrying values of the reporting units to determine whether any goodwill impairment existed. The Company's reporting units are one level below its reportable segment level. In preparing the valuations, past, present and future expectations of performance were considered, including the impact of the COVID-19 pandemic. This methodology was consistent with the approach used to perform the annual quantitative goodwill assessment in prior years. The weighted average cost of capital used in the goodwill impairment testing ranged between 9.0% and 9.25%, which was derived from the financial structures of comparable companies corresponding to the industry of each reporting unit. There is inherent uncertainty associated with key assumptions used in the Company's impairment testing, including the duration of the economic downturn associated with the COVID-19 pandemic and the estimated recovery period. As a result of the second quarter assessment, the Company determined that the expected decline in revenue due to the impact of COVID-19 contributed to a lower fair value of the Jack Wolfskin reporting unit compared to its carrying value. As such, the Company recognized an impairment loss during the year ended December 31, 2020 of $148,375,000 to write-off the goodwill associated with Jack Wolfskin. The Company determined that the goodwill relating to its other reporting units was not impaired as the fair value significantly exceeded the carrying value.
As of December 31, 2021, the Company’s accumulated impairment loss on goodwill was $148,375,000.
There were no impairment charges recognized on the Company's indefinite-lived intangible assets during the years ended December 31, 2021 and 2019. During the year ended December 31, 2020, in connection with the quantitative assessment performed in 2020, the Company determined that the trade name intangible asset related to Jack Wolfskin was
impaired, and as such recognized an impairment loss of $25,894,000 to write-down the Jack Wolfskin trade name to its new estimated fair value.
The following sets forth the intangible assets by major asset class (dollars in thousands):
 Useful
Life
(Years)		December 31, 2021
Gross(1)
Accumulated AmortizationTranslation AdjustmentNet Book
Value
Indefinite-lived:
Trade name, trademark, trade dress and otherNA$1,441,003 $— $(15,820)$1,425,183 
Liquor licensesNA7,756 — — 7,756 
Amortizing:
Patents
2-16
32,041 (31,671)— 370 
Customer and distributor relationships and other
1-10
61,718 (27,405)(2,335)31,978 
Developed technology1069,651 (5,496)(804)63,351 
Total intangible assets$1,612,169 $(64,572)$(18,959)$1,528,638 
 Useful
Life
(Years)		December 31, 2020
 GrossAccumulated AmortizationNet Book
Value
Indefinite-lived:
Trade name, trademark, trade dress and otherNA$446,803 $— $446,803 
Amortizing:
Patents
2-16
31,581 (31,581)— 
Customer and distributor relationships and other
1-10
57,309 (19,773)37,536 
Total intangible assets$535,693 (51,354)$484,339 
____________
(1)The gross balance of intangible assets as of December 31, 2021 includes additions of $1,001,956 and $74,179 in indefinite-lived and amortizing intangible assets, respectively, related to the Topgolf merger that was completed on March 8, 2021.
The Company recognized amortization expense related to intangible assets of $13,041,000, $5,120,000, and $4,866,000 for the years ended December 31, 2021, 2020 and 2019, respectively, which is recorded in selling, general and administrative expenses in the accompanying consolidated statements of operations. Amortization expense related to intangible assets at December 31, 2021 in each of the next five fiscal years and beyond is expected to be incurred as follows (in thousands):
2022$13,263 
202311,695 
202411,606 
202511,394 
202611,348 
Thereafter36,393 
$95,699