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Goodwill and Other Intangible Assets
 12 Months Ended
Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets Goodwill and Intangible Assets
Goodwill
As a result of acquisitions of various businesses, the Company has significant intangible assets on its balance sheet that include goodwill and indefinite-lived intangibles. The Company’s goodwill and indefinite-lived intangibles are tested and reviewed for impairment annually as of March 31st or more frequently if facts and circumstances warrant by comparing the fair value of each reporting unit to its carrying value. Each of the Company’s businesses represent a reporting unit.
A reconciliation of the change in the carrying value of goodwill by segment for the years ended December 31, 2022 and 2021 are as follows (in thousands):
Balance at January 1, 2022
Acquisitions/Measurement Period Adjustments (1)
Goodwill ImpairmentBalance at December 31, 2022
5.11$92,966 $— $— $92,966 
BOA254,153 — — 254,153 
Ergobaby61,448 — (20,552)40,896 
Lugano83,458 2,879 — 86,337 
Marucci107,855 (32,136)— 75,719 
PrimaLoft— 291,150 291,150 
Velocity Outdoor30,079 9,694 — 39,773 
ACI58,029 — — 58,029 
Altor Solutions90,843 286 — 91,129 
Arnold39,267 — — 39,267 
Sterno55,336 — — 55,336 
Corporate (2)
8,649 — — 8,649 
Total$882,083 $271,873 $(20,552)$1,133,404 
(1)    Acquisition of businesses during the year ended December 31, 2022 includes the acquisition of PrimaLoft by the Company, and an add-on acquisition at Velocity.
(2)    Represents goodwill resulting from purchase accounting adjustments not "pushed down" to the ACI segment. This amount is allocated back to the ACI segment for purposes of goodwill impairment testing.
Balance at January 1, 2021
Acquisitions/Measurement Period Adjustments (1)
Balance at December 31, 2021
5.11$92,966 $— $92,966 
BOA254,153 — 254,153 
Ergobaby63,531 (2,083)61,448 
Lugano— 83,458 83,458 
Marucci68,170 39,685 107,855 
Velocity Outdoor30,079 — 30,079 
ACI58,029 — 58,029 
Altor Solutions75,369 15,474 90,843 
Arnold26,903 12,364 39,267 
Sterno55,336 — 55,336 
Corporate (2)
8,649 — 8,649 
Total$733,185 $148,898 $882,083 
(1)    Acquisition of businesses during the year ended December 31, 2021 includes the acquisition of Lugano by the Company, and add-on acquisitions at Altor, Arnold, and Marucci.
(2)    Represents goodwill resulting from purchase accounting adjustments not "pushed down" to the ACI segment. This amount is allocated back to the ACI segment for purposes of goodwill impairment testing.
Approximately $187.3 million of goodwill is deductible for income tax purposes at December 31, 2022.
Interim Impairment Testing
2022 Interim Impairment Testing
Ergobaby - The Company performed interim quantitative impairment testing at Ergobaby of goodwill and the indefinite lived tradename at December 31, 2022. As a result of operating results that were below historical and forecast amounts, the Company determined that a triggering event had occurred at Ergobaby. The Company used an income approach for the impairment test, whereby we estimate the fair value of the reporting unit based on the present value of future cash flows. Cash flow projections are based on management's estimate of revenue growth rates and operating margins, and take into consideration industry and market conditions as well as company specific economic factors. The Company used a weighted average cost of capital of 16% in the income approach. The discount rate used was based on the weighted average cost of capital adjusted for the relevant risk associated with business specific characteristics and Ergobaby's ability to execute on projected cash flows. Based on the results of the impairment test, the fair value of Ergobaby did not exceed its carrying value. We recorded goodwill impairment of $20.6 million at December 31, 2022. For the indefinite lived tradename, quantitative testing indicated that the fair value exceeded the carrying value.
Annual Impairment Testing
The Company uses a qualitative approach to test goodwill and indefinite lived intangible assets for impairment by first assessing qualitative factors to determine whether it is more-likely than-not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform quantitative goodwill impairment testing.
2022 Annual Impairment Testing
The results of the qualitative analysis indicated that it was more-likely-than-not that the fair value of each of our reporting units exceeded their carrying value for the 2022 annual impairment testing.
2021 Annual Impairment Testing
The Company determined that the Arnold reporting unit required additional quantitative testing because we could not conclude that the fair value of the reporting unit exceeded its carrying value based on qualitative factors alone. For the reporting units that were tested only on a qualitative basis for the 2021 annual impairment testing, the results of the qualitative analysis indicated that it is more likely than not that the fair value exceeded the carrying value of these reporting units.
The quantitative test of Arnold was performed using an income approach to determine the fair value of the reporting unit. The discount rate used in the income approach was 13.0% and the results of the quantitative impairment testing indicated that the fair value of the Arnold reporting unit exceeded the carrying value by 272%.
2020 Annual Impairment Testing
The Company determined that the Ergobaby, Altor Solutions and Velocity reporting units required additional quantitative testing because we could not conclude that the fair value of the reporting units exceeded their carrying value based on qualitative factors alone. For the reporting units that were tested only on a qualitative basis for the 2020 annual impairment testing, the results of the qualitative analysis indicated that it is more likely than not that the fair value exceeded the carrying value of these reporting units.
The quantitative tests of Ergobaby, Altor Solutions and Velocity were performed using an income approach to determine the fair value of the reporting units. For Ergobaby, the discount rate used in the income approach was 15.9% and the results of the quantitative impairment testing indicated that the fair value of the Ergobaby reporting unit exceeded the carrying value by 14.0%. For Altor, the discount rate used in the income approach was 13.3%, and the results of the quantitative impairment testing indicated that the fair value of the Altor reporting unit exceeded the carrying value by 3.8%. For Velocity, the discount rate used in the income approach was 12.8%, and the results of the quantitative impairment testing indicated that the fair value of the Velocity reporting unit exceeded the carrying value by 16.4%.
The following is a summary of the net carrying amount of goodwill at December 31, 2022 and 2021 (in thousands):
December 31, 2022December 31, 2021
Goodwill - gross carrying amount$1,211,701 $939,828 
Accumulated impairment losses (1)
(78,297)(57,745)
Goodwill - net carrying amount$1,133,404 $882,083 
(1) Includes goodwill impairment expense of $20.6 million recorded at Ergobaby, $32.9 million at Velocity and $24.9 million at Arnold.
Intangible Assets
Intangible assets are comprised of the following (in thousands):
December 31, 2022December 31, 2021
Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying AmountWeighted
Average
Useful Lives
Customer relationships$814,171 $(268,620)$545,551 $595,673 $(218,066)$377,607 14
Technology and patents214,653 (55,816)158,837 156,129 (42,035)114,094 12
Trade names, subject to amortization483,959 (119,464)364,495 411,880 (90,196)321,684 17
Non-compete agreements4,962 (4,149)813 4,942 (3,827)1,115 4
Other contractual intangible assets1,960 (1,185)775 1,960 (735)1,225 4
1,519,705 (449,234)1,070,471 1,170,584 (354,859)815,725 
Trade names, not subject to amortization56,965 — 56,965 56,965 — 56,965 
In-process research and development (1)
500 — 500 — — — 
Total intangibles, net$1,577,170 $(449,234)$1,127,936 $1,227,549 $(354,859)$872,690 
(1) In-process research and development is considered indefinite lived until the underlying technology becomes viable, at which point the intangible asset will be amortized over the expected useful life.
The Company’s amortization expense of intangible assets for the years ended December 31, 2022, 2021 and 2020 totaled $94.4 million, $80.3 million and $61.9 million, respectively.
Estimated charges to amortization expense of intangible assets over the next five years, is as follows, (in thousands):
2023$104,749 
2024$103,120 
2025$97,794 
2026$91,438 
2027$80,704