Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2022

(a) Intangible Assets

The primary components of the Company’s intangible assets and the related accumulated amortization are as follows:


	Gross		Accumulated Amortization		Net Book Value
Year ended December 31, 2022:
Intangible assets subject to amortization:
Trademarks and brand names	$	40,128	$	28,633	$	11,495
Licensing agreements	89,523		68,205		21,318
Customer and distributor relationships	122,283		81,099		41,184
Computer software	109,209		72,626		36,583
Other intangibles	5,160		5,043		117
	$	366,303	$	255,606	110,697
Intangible assets not subject to amortization:
Trademarks					1,142,746
Perpetual licensing agreements and other					2,250
Net book value of intangible assets					$	1,255,693


	Gross		Accumulated Amortization		Net Book Value
Year ended January 1, 2022:
Intangible assets subject to amortization:
Trademarks and brand names	$	43,187	$	29,678	$	13,509
Licensing agreements	92,370		65,828		26,542
Customer and distributor relationships	132,971		78,647		54,324
Computer software	97,464		62,064		35,400
Other intangibles	3,984		3,720		264
	$	369,976	$	239,937	130,039
Intangible assets not subject to amortization:
Trademarks					1,087,881
Perpetual licensing agreements and other					2,250
Net book value of intangible assets					$	1,220,170

In June of 2022, the Company purchased the Champion trademark for footwear in the United States, Puerto Rico and Canada from Keds, LLC (“KEDS”) for $102,500. The trademark was recorded in “Trademarks and other identifiable intangibles, net” line in the Consolidated Balance Sheets and has an indefinite life. The Company previously licensed the Champion trademark for footwear in these locations. The purchase of the trademark was part of an agreement with KEDS settling litigation between the two parties and is another step forward in the Company’s Full Potential plan of growing the global Champion brand.

In connection with the annual impairment testing performed in the third quarter of 2022, the Company performed a quantitative assessment, utilizing an income approach to estimate the fair value of each indefinite-lived intangible asset. The most significant assumptions include the weighted average cost of capital, revenue growth rate, terminal growth rate and operating profit margin, all of which are used to estimate the fair value of the indefinite-lived intangible assets. The tests indicated the indefinite-lived intangible assets had fair values that exceeded their carrying values, and no impairment of trademarks or other identifiable intangible assets was identified as a result of the annual testing conducted in 2022.

In the first quarter of 2021, the Company recorded an impairment charge of $7,302 to fully impair an indefinite-lived trademark related to a specific brand within the European Innerwear business that was excluded from the disposal group as it was not marketed for sale. This impairment charge is reflected in the “Selling, general and administrative expenses” line in the Consolidated Statements of Income for the year ended January 1, 2022.

The amortization expense in continuing operations for intangible assets subject to amortization was $29,973, $31,069 and $30,858 for 2022, 2021 and 2020, respectively. The estimated amortization expense for the next five years, assuming no change in the estimated useful lives of identifiable intangible assets or changes in foreign exchange rates is as follows: $29,728 in 2023, $25,338 in 2024, $21,602 in 2025, $12,234 in 2026 and $5,261 in 2027.

(b) Goodwill

Goodwill and the changes in those amounts during the period are as follows:


	Innerwear		Activewear		International		Other		Total
Net book value at January 2, 2021	$	406,853	$	316,384	$	433,201	$	2,500	$	1,158,938
Currency translation	—		—		(25,843)		—		(25,843)
Net book value at January 1, 2022	$	406,853	$	316,384	$	407,358	$	2,500	$	1,133,095
Currency translation	—		—		(24,188)		—		(24,188)
Net book value at December 31, 2022	$	406,853	$	316,384	$	383,170	$	2,500	$	1,108,907

In connection with the annual goodwill impairment testing performed during the third quarter of 2022, the Company performed a quantitative assessment utilizing an income approach to estimate the fair value of each reporting unit. The most significant assumptions include the weighted average cost of capital, revenue growth rate, terminal growth rate and operating profit margin, all of which are used to estimate the fair value of the reporting units. The tests indicated the reporting units had fair values that exceeded their carrying values, and no impairment of goodwill was identified as a result of the annual testing conducted in 2022.

In 2020, the Company determined that there was a triggering event associated with its U.S. Sheer Hosiery reporting unit due to a significant decline in performance below management’s expectations and loss of a future wholesale sheer hosiery program. As a result, the Company recorded impairment charges for the full amount of goodwill related to the U.S. Sheer Hosiery reporting unit of $25,173, which are reflected in the “Selling, general and administrative expenses” line in the Consolidated Statements of Income in 2020. In the fourth quarter of 2021, the Company reached the decision to divest its U.S. Sheer Hosiery business, including the L’eggs brand, as part of its strategy to streamline its portfolio under its Full Potential plan. See Note “Assets and Liabilities Held for Sale” for additional information.