GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

The Company performed its annual impairment tests of goodwill at April 30, 2019 on 5 reporting units. As discussed in Note 6, Segment Information, effective in the first quarter of 2019, the Company realigned certain businesses between segments. As a result, the Company transferred goodwill between segments due to changes in the reporting units. Affected reporting units were tested for potential impairment of goodwill before the transfers. No goodwill impairment was identified due to the realignment.

To determine the fair value of the Company’s reporting units, the Company uses a discounted cash flow model with market-based support as its valuation technique to measure the fair value for its reporting units. The discounted cash flow model uses five- to ten- year forecasted cash flows plus a terminal value based on a multiple of earnings or by capitalizing the last period’s cash flows using a perpetual growth rate. In the development of the forecasted cash flows, the Company applies revenue, gross profit and operating expense assumptions taking into consideration historical trends as well as future expectations. These future expectations include, but are not limited to, new product development and distribution channel changes for the respective reporting units. The Company also considers the current and projected market conditions for dental and medical device industries, both in the U.S. and globally, when determining its assumptions. The total forecasted cash flows are discounted based on a range between 8.0% to 11.3%. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit’s ability to execute on the projected cash flows. The Company’s significant estimates in the discounted cash flow models include, but are not limited to, the weighted average cost of capital, long-term rate of growth and profitability of the reporting unit’s business and working capital effects. As a result of the annual impairment tests of goodwill, no impairment was identified. A change in any of these estimates and assumptions could produce a different fair value, which could have a material impact on the Company’s results of operations.

In addition, the Company assessed the annual impairment of indefinite-lived intangible assets at April 30, 2019, which largely consists of acquired tradenames and trademarks, in conjunction with the annual impairment tests of goodwill. The performance of the Company’s annual impairment test did not result in any impairment of the Company’s indefinite-lived intangible assets.

Unfavorable developments in the market for the dental or medical device industries, an increase in discount rates, unfavorable changes in earnings multiples or a decline in future cash flow projections, among other factors, may cause a change in circumstances indicating that the carrying value of the indefinite-lived assets and goodwill within the Company’s reporting units may not be recoverable.

A reconciliation of changes in the Company’s goodwill by reportable segment were as follows (the segment information below reflects the current structure for all periods shown):


(in millions)	Technologies & Equipment		Consumables		Total

Balance at December 31, 2018	$	2,579.8	$	851.5	$	3,431.3
Business unit transfers	(37.1)		37.1		—
Acquisition related additions	3.8		—		3.8
Divestiture of a business	(4.1)		—		(4.1)


Effects of exchange rate changes	(59.0)		(16.3)		(75.3)
Balance at September 30, 2019	$	2,483.4	$	872.3	$	3,355.7

The following provides the gross carrying amount of goodwill and the cumulative goodwill impairment:


	September 30, 2019										December 31, 2018
(in millions)	Gross Carrying Amount		Cumulative Impairment		Net Carrying Amount		Gross Carrying Amount		Cumulative Impairment		Net Carrying Amount

Technologies & Equipment	$	5,220.0	$	(2,736.6)	$	2,483.4	$	5,247.9	$	(2,668.1)	$	2,579.8
Consumables	872.3		—		872.3		920.0		(68.5)		851.5
Total effect of cumulative impairment	$	6,092.3	$	(2,736.6)	$	3,355.7	$	6,167.9	$	(2,736.6)	$	3,431.3

Identifiable definite-lived and indefinite-lived intangible assets were as follows:


	September 30, 2019										December 31, 2018
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount

Patents	$	1,318.3	$	(477.0)	$	841.3	$	1,376.4	$	(407.1)	$	969.3
Tradenames and trademarks	77.5		(61.9)		15.6		81.1		(62.5)		18.6
Licensing agreements	35.8		(27.3)		8.5		36.1		(26.3)		9.8
Customer relationships	1,047.1		(373.8)		673.3		1,085.3		(334.4)		750.9
Total definite-lived	$	2,478.7	$	(940.0)	$	1,538.7	$	2,578.9	$	(830.3)	$	1,748.6

Indefinite-lived tradenames and trademarks	$	629.0	$	—	$	629.0	$	671.7	$	—	$	671.7

Total identifiable intangible assets	$	3,107.7	$	(940.0)	$	2,167.7	$	3,250.6	$	(830.3)	$	2,420.3

During the three months ended March 31, 2019, the Company impaired $5.3 million of product tradenames and trademarks within the Technologies & Equipment segment. The impairment was the result of a change in forecasted sales related to divestitures of non-strategic product lines. During the three months ended September 30, 2019, the Company impaired $3.8 million of intangible assets related to discontinued product lines within the Consumables segment.