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Trademarks, Licenses and Other Intangible Assets

12 Months Ended

Dec. 31, 2017

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Trademarks, Licenses and Other Intangible Assets

(8)

Trademarks, Licenses and Other Intangible Assets

2017	Gross		Accumulated		Net Book
	Amount		Amortization		Value
Trademarks (indefinite lives)	$	129,033	$	—	$	129,033
Trademarks (finite lives)		46,461		72		46,389
Licenses (finite lives)		69,439		46,857		22,582
Other intangible assets (finite lives)		14,949		12,458		2,491
Subtotal		130,849		59,387		71,462
Total	$	259,882	$	59,387	$	200,495

2016		Gross		Accumulated		Net Book
		Amount		Amortization		Value
Trademarks (indefinite lives)	$	115,793	$	—	$	115,793
Trademarks (finite lives)		40,794		63		40,731
Licenses (finite lives)		62,102		37,206		24,896
Other intangible assets (finite lives)		12,861		10,413		2,448
Subtotal		115,757		47,682		68,075
Total	$	231,550	$	47,682	$	183,868

Amortization expense was $6.0 million, $5.9 million and $5.8 million in 2017, 2016 and 2015, respectively. Amortization expense is expected to approximate $6.1 million, $3.9 million, and $3.4 million in 2018, 2019, 2020, respectively, and $2.8 million 2021 and 2022. The weighted average amortization period for trademarks, licenses and other intangible assets with finite lives are 18 years, 14 years and 2 years, respectively, and 14 years on average.

The Company reviews intangible assets with indefinite lives for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. There were no impairment charges for trademarks with indefinite useful lives in 2016 and 2015. Product sales of some of our legacy mass market product lines have been declining for many years and now represent a very small portion of our net sales. During the fourth quarter of 2017, the Company set in motion a plan to discontinue several of these product lines over the next few years. As a result, the Company recorded an impairment loss of $2.1 million as of December 31, 2017, which represented approximately 50% of total intangible assets relating to our mass market product lines. The fair values used in our evaluations are estimated based upon discounted future cash flow projections using a weighted average cost of capital of 6.22%. The cash flow projections are based upon a number of assumptions, including, future sales levels and future cost of goods and operating expense levels, as well as economic conditions, changes to our business model or changes in consumer acceptance of our products which are more subjective in nature. The Company believes that the assumptions it has made in projecting future cash flows for the evaluations described above are reasonable and currently no other impairment indicators exist for our indefinite-lived assets. However, if future actual results do not meet our expectations, the Company may be required to record an impairment charge, the amount of which could be material to our results of operations.

The cost of trademarks, licenses and other intangible assets with finite lives is being amortized by the straight-line method over the term of the respective license or the intangible assets estimated useful life which range from three to twenty years. If the residual value of a finite life intangible asset exceeds its carrying value, then the asset is not amortized. The Company reviews intangible assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Product sales of our Karl Lagerfeld brand have not met with our original expectations. During the fourth quarter of 2016, the Company recorded an impairment loss of $5.7 million.

Trademarks (finite lives) primarily represent Lanvin brand names and trademarks and in connection with their purchase, Lanvin was granted the right to repurchase the brand names and trademarks in 2025 for the greater of €70 million (approximately $84 million) or one times the average of the annual sales for the years ending December 31, 2023 and 2024 (residual value). Because the residual value of the intangible asset exceeds its carrying value, the asset is not amortized.