NOTE E — GOODWILL AND INTANGIBLE ASSETS

The Company’s intangible assets, all of which are included in the U.S. Wholesale and International segments, consist of the following (in thousands):


	Year Ended December 31,
	2016							2015
	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Goodwill	$	14,201	$	—		$	14,201	$	18,101	$	—		$	18,101
Indefinite-lived intangible assets:
Trade names		7,616		—			7,616		7,616		—			7,616

Finite-lived intangible assets:
Licenses		15,847		(8,919	)		6,928		15,847		(8,462	)		7,385
Trade names		31,150		(8,286	)		22,864		29,724		(6,818	)		22,906
Customer relationships		49,372		(12,188	)		37,184		50,823		(10,806	)		40,017
Other		1,266		(840	)		426		1,202		(634	)		568

Total	$	119,452	$	(30,233	)	$	89,219	$	123,313	$	(26,720	)	$	96,593

A summary of the activities related to the Company’s intangible assets for the years ended December 31, 2016, 2015 and 2014 consists of the following (in thousands):


	Intangible Assets			Goodwill			Total Intangible Assets and Goodwill
Goodwill and Intangible Assets, December 31, 2013	$	50,064		$	5,085		$	55,149
Acquisition of trade names		12,348			—			12,348
Acquisition of customer relationships		32,417			—			32,417
Acquisition of other intangible assets		618			—			618
Goodwill from Kitchen Craft acquisition		—			13,016			13,016
Impairment of trade names		(3,384	)		—			(3,384	)
Amortization		(6,567	)		—			(6,567	)

Goodwill and Intangible Assets, December 31, 2014		85,496			18,101			103,597
Amortization		(7,004	)		—			(7,004	)

Goodwill and Intangible Assets, December 31, 2015		78,492			18,101			96,593
Acquisition of trade names		5,159			—			5,159
Acquisition of customer relationships		8,878			—			8,878
Acquisition of other intangible assets		50			—			50
Foreign currency translation adjustment		(11,400	)		(3,900	)		(15,300	)

Amortization		(6,161	)		—			(6,161	)

Goodwill and Intangible Assets, December 31, 2016	$	75,018		$	14,201		$	89,219

The weighted-average amortization periods for the Company’s finite-lived intangible assets as of December 31, 2016 are as follows:


	Years
Trade names		14
Licenses		33
Customer relationships		13
Other		11

Estimated amortization expense for each of the five succeeding fiscal years is as follows (in thousands):


Year ending December 31,
2017	$	6,669
2018		6,669
2019		6,669
2020		6,654
2021		6,176

Amortization expense for the years ended December 31, 2016, 2015 and 2014 was $6.2 million, $7.0 million and $6.6 million, respectively.

Annual indefinite-lived trade name impairment test

For the Company’s 2016 and 2015 annual impairment tests for its indefinite-lived trade names as of October 1, 2016 and 2015, the Company elected to first perform a qualitative assessment to determine if it was more likely than not that the fair values of the Company’s indefinite-lived trade names were less than the carrying values. The Company considered events and circumstances that could affect the significant inputs used to determine the fair values of the indefinite-lived trade names. Based on the qualitative assessment, the Company determined it was not more likely than not that the fair values of the Company’s indefinite-lived trade names were less than the carrying values as of October 1, 2016 and 2015.

In 2014, the Company performed quantitative impairment test for its indefinite-lived trade names which involved the assessment of the fair market values of the Company’s indefinite-lived trade names based on Level 3 unobservable inputs, using a relief from royalty approach, assuming a discount rate of 14.0%-15.5% and an average long term growth rate of 2.5%-3%. The result of the impairment assessment of the Company’s indefinite-lived trade names indicated that the carrying values of the Elements^® and Melannco^® trade names exceeded their fair values as of October 1, 2014. The Company’s home décor products category had experienced a decline in sales and profit in recent years. The Company believed the most significant factor resulting in the decline was the reduction in retail space allocated by the Company’s customers to the category which had also contributed to pricing pressure. As a result of these factors, the Company recorded an impairment charge of $3.4 million, related to these brands, in its consolidated statement of operations for the year ended December 31, 2014.

Annual goodwill impairment test

The Company bypassed the optional qualitative impairment analysis for its three reporting units with goodwill for its October 1, 2016 impairment test. Accordingly, the first step of the two step goodwill impairment test was performed. Under the first step, the estimated fair value of each of the reporting units was determined using the income approach or a combined income and market approach with equal weighting. The significant assumptions used under the income approach, or discounted cash flow method, are projected net sales, projected earnings before interest, tax, depreciation and amortization (“EBITDA”), terminal growth rates, and the cost of capital. Projected net sales, projected EBITDA and terminal growth rates were determined to be significant assumptions because they are three primary drivers of the projected cash flows in the discounted cash flow fair value model. Cost of capital was also determined to be a significant assumption as it is the discount rate used to calculate the current fair value of those projected cash flows. The market approach is based on a market multiple (revenue and EBITDA) and requires an estimate of appropriate multiples based on market date. Under the combined income and market approach, the resultant estimated fair value of two of the three reporting units exceeded their carrying value as of October 1, 2016.

For the Creative Tops reporting unit, which carried goodwill of $2.1 million, the market approach was not used as it was concluded that the selected industry market data was not consistent with a business with the future growth expectations of this reporting unit. The reporting unit’s fair value, as calculated under the income approach, was approximately 3% less than the carrying value. The decline in fair value was due to the forecasted sales and profits for the reporting unit falling below expectations relative to the Company’s previous projections and the macroeconomic conditions in Europe contributing to a decline in EBITDA. With the assistance of a third party valuation specialist, the Company performed the second step of the impairment test by estimating the fair value of the assets and liabilities to determine the implied fair value of goodwill. The implied fair value of goodwill was determined to be greater than the carrying value and no impairment charge was recorded. Changes in any of the significant assumptions used in the calculation of the fair value of the reporting unit or changes in the assumptions used in the calculation of the fair value of the assets and liabilities of the reporting unit, could lead to a potentially material non-cash impairment charge.

The excess of fair value of the Kitchen Craft reporting unit, which carried goodwill of $9.7 million, was approximately 3% over its carrying value. Macroeconomic conditions in Europe have contributed to a decline in EBITDA. Management’s projections used to estimate the cash flows included increasing net sales and operational improvements designed to reduce costs. Changes in any of the significant assumptions used can materially affect the expected cash flows, and such impacts can result in the requirement to proceed to the second step of the test and potentially a material non-cash impairment charge could result. The Company is not currently aware of any negative changes in its assumptions that could lead to the fair value of the reporting unit being less than the carrying value.

As of December 31, 2016, the Company assessed the carrying value of goodwill and determined based on qualitative factors, no impairment existed.