GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in the carrying amount of goodwill for the nine-month period ended September 30, 2019 were as follows:



	Codman Specialty Surgical			Orthopedics and Tissue Technologies			Total
	(In thousands)
Goodwill at December 31, 2018	$	625,760		$	300,715		$	926,475
Arkis Acquisition	27,297			—			27,297
Foreign currency translation	(5,843		)	(2,647		)	(8,490		)
Goodwill at September 30, 2019	$	647,214		$	298,068		$	945,282

The components of the Company’s identifiable intangible assets were as follows:



	September 30, 2019
	Weighted Average Life	Cost		Accumulated Amortization			Net
	(Dollars in thousands)
Completed technology	19 years	$	873,973	$	(201,067	)	$	672,906
Customer relationships	13 years	221,580		(114,498		)	107,082
Trademarks/brand names	28 years	103,463		(27,433		)	76,030
Codman tradename	Indefinite	160,841		—			160,841
Supplier relationships	27 years	34,721		(17,590		)	17,131
All other	4 years	10,727		(4,367		)	6,360
		$	1,405,305	$	(364,955	)	$	1,040,350



	December 31, 2018
	Weighted Average Life	Cost		Accumulated Amortization			Net
	(Dollars in thousands)
Completed technology	19 years	$	855,679	$	(167,384	)	$	688,295
Customer relationships	13 years	231,448		(106,859		)	124,589
Trademarks/brand names	28 years	104,061		(24,764		)	79,297
Codman tradename	Indefinite	162,054		—			162,054
Supplier relationships	27 years	34,721		(16,519		)	18,202
All other	4 years	10,958		(3,899		)	7,059
		$	1,398,921	$	(319,425	)	$	1,079,496

Goodwill and Intangible Assets with Indefinite Lives

The Company tests goodwill and intangible assets with indefinite lives for impairment annually in the third quarter in accordance with ASC Topic 350. Additionally, the Company may perform interim tests if an event occurs or circumstances change that could potentially reduce the fair value of a reporting unit or indefinite lived intangible asset below its carrying amount. The carrying value of each reporting unit is determined by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units.

The Company tests goodwill for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors, including reporting unit specific operating results as well as industry, market and general economic conditions, to determine whether it is more likely than not that the fair values of a reporting unit is less than its carrying amount, including goodwill. The Company may elect to bypass this qualitative evaluation for some or all of its reporting units and perform a quantitative test. During the third quarter of 2019 the Company began with the qualitative evaluation, which was sufficient to find no impairment.

For intangible assets with indefinite lives, the Company elected to bypass the qualitative evaluation for its Codman tradename intangible asset and perform a quantitative test during the third quarter 2019. In performing this test, the Company utilized a discount rate of 12.5%. The assumptions used in evaluating the Codman tradename for impairment are subject to change and are tracked against historical results by management. Based on the results of the quantitative test, the Company recorded no impairment to the Codman tradename intangible asset.

Definite Lived Intangible Assets

Product rights and other definite-lived intangible assets are tested periodically for impairment in accordance with ASC Topic 360 when events or changes in circumstances indicate that an asset’s carrying value may not be recoverable. The impairment testing involves comparing the carrying amount of the asset or asset group to the forecasted undiscounted future cash flows. In the event the carrying value of the asset exceeds the undiscounted future cash flows, the carrying value is considered not recoverable and an impairment exists. An impairment loss is measured as the excess of the asset’s carrying value over its fair value, calculated using discounted future cash flows. The computed impairment loss is recognized in the period that the impairment occurs.

During the third quarter of 2018, the Company recorded an impairment charge of $4.9 million in cost of goods sold related to completed technology assets acquired from Koby Ventures II, L.P dba Metasurg ("Metasurg Technology") due to recent contract negotiations and revised future projections. The remaining net book value of these intangible assets total $2.3 million as of September 30, 2018. Metasurg Technology is included in the Orthopedic and Tissue Technology segment. Of the total impairment charge of $4.9 million, $2.5 million was related to an out-of-period adjustment included in the three and nine months ended September 30, 2018. The out-of-period adjustment is attributed to the timing of performing the impairment test based on the contract termination associated with the intangible asset. The Company determined that the adjustment was not material to the consolidated financial statements for any previously reported annual or interim period and the adjustment to correct the misstatements is not material to the three or nine months ended September 30, 2018.

In April 2019, a contract manufacturing customer of the private label product line received a notification from the FDA ordering them to remove their product from the market. During the second quarter of 2019, the Company recorded an impairment charge of $5.8 million in intangible asset amortization in the consolidated statement of operations related to the customer relationship intangible asset acquired from TEI Biosciences, Inc. and TEI Medical Inc. (collectively "TEI") due to revised future projections based on a pending contract termination.

Based on quarter-end exchange rates, amortization expense (including amounts reported in cost of product revenues) is expected to be approximately $16.6 million for the remainder of 2019, $66.6 million in 2020, $65.5 million in 2021, $62.0 million in 2022, $61.1 million in 2023, $60.3 million in 2024 and $549.0 million thereafter.