GOODWILL (Notes)

6 Months Ended

Jun. 30, 2020

Goodwill and Intangible Assets Disclosure

5. GOODWILL AND INTANGIBLE ASSETS

The following table sets forth the changes in the carrying value of goodwill:


	Six Months Ended
	June 30
	2020
	WESCO⁽¹⁾		Anixter⁽²⁾		Total
	(In thousands)
Beginning balance January 1	$	1,759,040	$	—	$	1,759,040
Adjustments to goodwill for acquisitions (Note 4)	5,817		1,367,981		1,373,798
Foreign currency exchange rate changes	(26,511)		929		(25,582)
Ending balance June 30	$	1,738,346	$	1,368,910	$	3,107,256

⁽¹⁾Adjustments to goodwill resulted from the final allocation of the purchase price paid for SLS, as described in Note 4, to the respective assets acquired and liabilities assumed.

⁽²⁾The effect of the merger with Anixter on the Company's determination of reportable segments is disclosed in Note 14.

Certain triggering events occurred during the first quarter of 2020, including the effect of the ongoing macroeconomic disruption and uncertainty caused by the COVID-19 pandemic, as well as the decline in the Company's share price and market capitalization, both of which indicated that the carrying value of goodwill and indefinite-lived intangible assets may not be recoverable. Accordingly, the Company performed an interim test for impairment as of March 31, 2020. Goodwill was tested for impairment on a reporting unit level and the evaluation involved comparing the fair value of each reporting unit to its carrying value. The fair values of the Company's reporting units were determined using a combination of a discounted cash flow analysis and market multiples. WESCO evaluated the recoverability of indefinite-lived intangible assets using the relief-from-royalty method based on projected financial information. There were no impairment losses identified as a result of this interim test.

During the three months ended June 30, 2020, the Company did not note any triggering events or substantive changes, particularly as it relates to the underlying assumptions and factors around its expected operating margins and discount rate, which would require an interim evaluation of impairment of goodwill or indefinite-lived intangible assets. Due to the ongoing significant uncertainty surrounding the current macroeconomic environment and conditions in the markets in which WESCO operates, there can be no assurance that the carrying values of the Company's reporting units will exceed their fair values in the future, and that goodwill and indefinite-lived intangible assets will be fully recoverable.

The components of intangible assets are as follows:


		June 30, 2020										December 31, 2019
(In thousands)		Gross Carrying Amount ⁽¹⁾		Accumulated Amortization ⁽¹⁾		Net Carrying Amount		Gross Carrying Amount ⁽¹⁾		Accumulated Amortization ⁽¹⁾		Net Carrying Amount
Intangible assets:	Life
Trademarks	Indefinite	$	831,496	$	—	$	831,496	$	98,699	$	—	$	98,699
Trademarks	10 - 15	24,800		(10,350)		14,450		24,800		(9,319)		15,481
Non-compete agreements	2 - 5	4,196		(66)		4,130		196		(180)		16
Customer relationships	10 - 20	1,442,235		(210,147)		1,232,088		358,341		(201,962)		156,379
Distribution agreements	10 - 19	37,371		(26,266)		11,105		37,371		(25,294)		12,077
Patents	10	48,310		(46,099)		2,211		48,310		(43,687)		4,623
		$	2,388,408	$	(292,928)	$	2,095,480	$	567,717	$	(280,442)	$	287,275

⁽¹⁾Excludes the original cost and related accumulated amortization of fully-amortized intangible assets.

Amortization expense related to intangible assets totaled $10.1 million and $8.5 million for the three months ended June 30, 2020 and 2019, respectively, and $18.6 million and $17.1 million for the six months ended June 30, 2020 and 2019, respectively.

The following table sets forth the remaining estimated amortization expense for intangible assets for the next five years and thereafter:


For year ending December 31,	(In thousands)
2020	$	53,892
2021	99,853
2022	96,049
2023	94,739
2024	91,352
Thereafter	828,099