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Long-Lived Asset and Goodwill Impairment | 9 Months Ended
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Sep. 30, 2020
Property, Plant and Equipment [Abstract] |
Long-Lived Asset And Goodwill Impairment | Long-Lived Asset and Goodwill Impairment Long-Lived Asset Impairment As a result of the impacts of COVID-19, the Company determined that sufficient indicators existed to trigger the performance of an interim long-lived asset impairment analysis as of March 31, 2020. In the first quarter of 2020, the Company performed undiscounted cash flow analyses on it's long-lived assets, including retail stores at an individual store level. Based on these undiscounted cash flow analyses, the Company determined that certain long-lived assets had net carrying values that exceeded their estimated undiscounted future cash flows. The Company estimated the fair values of these long-lived assets based on their discounted cash flows or market rent assessments. The Company compared these estimated fair values to the net carrying values. Additionally, the Company recognized long-lived asset impairment charges of $4.0 million for the three months ended September 30, 2020, included within the North America operating segment. The Company recognized $87.8 million of long-lived asset impairment charges for the nine months ended September 30, 2020. The long-lived impairment charge was recorded within restructuring and impairment charges on the unaudited consolidated statements of operations and as a reduction to the related asset balances on the unaudited consolidated balance sheets. The long-lived asset impairment charges are included within the Company's operating segments as follows: $47.4 million recorded in North America, $25.5 million recorded in Asia-Pacific, $12.8 million recorded in Latin America, and $2.1 million recorded in EMEA for the nine months ended September 30, 2020. The significant estimates used in the fair value methodology, which are based on Level 3 inputs, include: the Company's expectations for future operations and projected cash flows, including net revenue, gross profit and operating expenses and market conditions, including estimated market rent. Additionally, the Company recognized $290.8 million of long-lived asset impairment charges related to the Company's New York City flagship store, which was recorded in connection with the Company's 2020 Restructuring Plan for the nine months ended September 30, 2020. Refer to Note 3 for further discussion of the restructuring and related impairment charges. Goodwill Impairment As a result of the impacts of COVID-19, the Company determined that sufficient indicators existed to trigger an interim goodwill impairment analysis for all of the Company’s reporting units as of March 31, 2020. In the first quarter of 2020, the Company performed discounted cash flow analyses and determined that the estimated fair values of the Latin America reporting unit and the Canada reporting unit, within the North America operating segment, no longer exceeded its carrying value, resulting in an impairment of goodwill. The Company recognized goodwill impairment charges of $51.6 million for the nine months ended September 30, 2020 for these reporting units. The goodwill impairment charge was recorded within restructuring and impairment charges on the unaudited consolidated statements of operations and as a reduction to the goodwill balance on the unaudited consolidated balance sheets. There were no triggering events or goodwill impairment charges recorded for the three months ended September 30, 2020. The determination of the Company’s reporting units' fair value includes assumptions that are subject to various risks and uncertainties. The significant estimates used in the discounted cash flow analyses, which are based on Level 3 inputs, include: the Company’s weighted average cost of capital, adjusted for the risk attributable to the geographic regions of the reporting unit's business, long-term rate of growth and profitability of the reporting unit's business, working capital effects, and changes in market conditions, consumer trends or strategy. As of March 31, 2020, the fair value of each of the Company's other reporting units substantially exceeded its carrying value with the exception of the EMEA reporting unit. The fair value of the EMEA reporting unit exceeded its carrying value by 16%. Holding all other assumptions used in the fair value measurement of the EMEA reporting unit constant, a reduction in the growth rate of revenue by 1.5 percentage points or a reduction in the growth rate of net income by 2.3 percentage points would eliminate the headroom. No events occurred during the three and nine months ended September 30, 2020 that indicated it was more likely than not that goodwill was impaired for this reporting unit. The following table summarizes changes in the carrying amount of the Company’s goodwill by reportable segment as of the periods indicated:
(In thousands) |  | North America |  | EMEA |  | Asia-Pacific |  | Latin America |  | Connected Fitness |  | Total
Balance as of December 31, 2019 |  | 318,288 |  |  | 106,066 |  |  | 79,168 |  |  | 46,656 |  |  | — |  |  | 550,178 |
Effect of currency translation adjustment |  | (1,572) |  |  | 1,076 |  |  | 5,950 |  |  | (10,426) |  |  | — |  |  | (4,972) |
Impairment |  | (15,345) |  |  | — |  |  | — |  |  | (36,230) |  |  |  |  | (51,575) |
Balance as of September 30, 2020 |  | $ | 301,371 |  |  | $ | 107,142 |  |  | $ | 85,118 |  |  | $ | — |  |  | $ | — |  |  | $ | 493,631 |

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