Annual report pursuant to Section 13 and 15(d)

Goodwill and Other Intangible Assets

v3.21.1
Goodwill and Other Intangible Assets
12 Months Ended
Jan. 30, 2021
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets

 

6.

Goodwill and Other Intangible Assets

The following summarizes the Company’s goodwill and other intangible assets:

 

 

 

January 30,

 

 

February 1,

 

 

 

2021

 

 

2020

 

 

 

(millions)

 

Non-amortizing intangible assets

 

 

 

 

 

 

 

 

Goodwill

 

$

9,290

 

 

$

9,290

 

Accumulated impairment losses

 

 

(8,462

)

 

 

(5,382

)

 

 

 

828

 

 

 

3,908

 

Tradenames

 

 

403

 

 

 

403

 

 

 

$

1,231

 

 

$

4,311

 

Amortizing intangible assets

 

 

 

 

 

 

 

 

Favorable leases and other contractual assets

 

$

5

 

 

$

5

 

Tradenames

 

 

43

 

 

 

43

 

 

 

 

48

 

 

 

48

 

Accumulated amortization

 

 

 

 

 

 

 

 

Favorable leases and other contractual assets

 

 

(1

)

 

 

(1

)

Tradenames

 

 

(13

)

 

 

(11

)

 

 

 

(14

)

 

 

(12

)

 

 

$

34

 

 

$

36

 

Capitalized software

 

 

 

 

 

 

 

 

Gross balance

 

$

1,136

 

 

$

1,262

 

Accumulated amortization

 

 

(645

)

 

 

(620

)

 

 

$

491

 

 

$

642

 

 

 

As a result of the sustained decline in the Company's market capitalization and changes in the Company's long-term projections driven largely by the impacts of the COVID-19 pandemic, the Company determined a triggering event had occurred that required an interim impairment assessment for all of its reporting units and indefinite lived intangible assets during the first quarter of 2020. The Company determined the fair value of each of its reporting units using a market approach or a combination of a market approach and income approach, as appropriate. Relative to the Company’s 2019 assessment, as part of this 2020 assessment, it was determined that an increase in the discount rate applied in the valuation was required to align with market-based assumptions and company-specific risk. This higher discount rate, in conjunction with revised long-term projections, resulted in lower fair values of the reporting units. As a result, the Company recognized $2,982 million and $98 million of goodwill impairment for the Macy's and bluemercury reporting units, respectively, primarily during the first quarter of 2020.

 

As of May 2, 2020, the Company elected to perform a qualitative impairment test on its intangible assets with

indefinite lives and concluded that it is more likely than not that the fair values exceeded the carrying values and the intangible assets with indefinite lives were not impaired.

 

For the Company's annual impairment assessment as of the end of fiscal May, the Company elected to perform a qualitative impairment test on its goodwill and intangible assets with indefinite lives and concluded that it is more likely than not that the fair values exceeded the carrying values and goodwill and intangible assets with indefinite lives were not impaired.

 

Finite lived tradenames are being amortized over their respective useful lives of 20 years. Favorable lease intangible assets are being amortized over their respective lease terms.

Other contractual assets and tradenames amortization expense amounted to $2 million for 2020 and $3 million for 2019, while favorable leases, other contractual assets, and tradenames amortization expense amounted to $10 million for 2018.  Capitalized software amortization expense amounted to $268 million for 2020, $285 million for 2019 and $296 million for 2018.

Future estimated amortization expense for assets, excluding in-process capitalized software of $65 million not yet placed in service as of January 30, 2021, is shown below:

 

 

 

 

 

Amortizing

 

 

Capitalized

 

 

 

 

 

intangible assets

 

 

Software

 

 

 

 

 

(millions)

 

Fiscal year

 

 

 

 

 

 

 

 

 

 

2021

 

 

$

2

 

 

$

214

 

 

2022

 

 

 

2

 

 

 

132

 

 

2023

 

 

 

2

 

 

 

63

 

 

2024

 

 

 

2

 

 

 

17

 

 

2025

 

 

 

2