INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets consisted of the following as of March 31, 2020 and December 31, 2019 (in thousands):


	March 31, 2020														December 31, 2019
	Gross		Impairment		Accumulated Amortization		Net		Gross		Impairment		Accumulated Amortization		Net
Goodwill	$	49,371	$	(19,100)	—		$	30,271	$	92,361	$	(42,990)	$	—	$	49,371
Indefinite-lived intangible assets:
Trade names	58,216		(1,000)		—		57,216		58,216		—		—		58,216
Finite-lived intangible assets:
Licenses	15,847		—		(10,400)		5,447		15,847				(10,287)		5,560
Trade names	43,262		—		(17,787)		25,475		43,986				(17,337)		26,649
Customer relationships	174,561		—		(42,693)		131,868		176,602				(40,605)		135,997
Other	6,482		—		(1,986)		4,496		6,546				(1,868)		4,678
Total	$	347,739	$	(20,100)	$	(72,866)	$	254,773	$	393,558	$	(42,990)	$	(70,097)	$	280,471

As a result of the economic downturn caused by the COVID-19 pandemic, the Company concluded that a triggering event had occurred and performed an interim impairment test of goodwill and certain intangible assets as of March 31, 2020

Goodwill

Pursuant to the applicable authoritative literature, the Company performed an interim impairment test of the goodwill in the U.S. reporting unit by comparing its fair value with its carrying value. The analysis was performed by using a discounted cash flow and market multiple method. Based upon the analysis performed, the Company recognized a non-cash goodwill impairment charge of $19.1 million during the three months ended March 31, 2020. The goodwill impairment charge resulted from, among other factors, the uncertain market conditions arising from the COVID-19 pandemic, which impacted the Company's market capitalization, as well as a reduction of forecasted future cash flows associated with the effects of the COVID-19 pandemic. The fair value of the U.S. reporting unit was approximately 3.9% below its carrying value.

Management’s projections used to estimate the cash flows included organic net sales growth and net sales growth through new customer channels as well as continued operating efficiencies in future periods. Changes in any of the significant assumptions used in the valuation of the reporting unit could materially affect the expected cash flows, and such impacts could potentially result in a material non-cash impairment charge.

Indefinite-lived trade names

As a result of the economic decline caused by the COVID-19 pandemic, the Company determined its indefinite-lived trade names had indicators for impairment. As a result, the Company bypassed the optional qualitative impairment analysis for its indefinite-lived trade names and performed an interim quantitative impairment analysis by comparing the fair value of the indefinite-lived trade names to their respective carrying values.

The Company values its indefinite-lived trade names using a relief-from-royalty approach, which assumes the value of the trade name is the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the trade name and instead licensed the trade name from another company.

As a result of the impairment testing performed in connection with the COVID-19 pandemic triggering event, the Company determined that certain of its indefinite-lived intangible assets in the U.S. segment were impaired. As a result, the Company recorded a $1.0 million non-cash impairment charge during the three months ended March 31, 2020.

In addition, several of the Company's other indefinite-lived trade names tested for impairment as of March 31, 2020 were determined to either be recorded at fair value or with fair values within 10% of the associated carrying values. While the Company believes the estimates and assumptions used as inputs in calculating the fair value of its indefinite-lived intangible assets are reasonable and were based on facts and circumstances known at that time, it is possible new events may occur or actual events may result in differing forecasted cash flows, revenue and earnings that differ from those that formed the basis of the Company’s estimates and assumptions.

The Company believes the circumstances and global disruption caused by COVID-19 will affect its sales, operating results, cash flows and financial condition. In addition, there are some inherent estimates and assumptions used in determining fair value of indefinite-lived intangible assets and reporting units that are outside the control of management, such as interest rates, cost of capital, tax rates, industry growth, credit ratings, foreign exchange rates, labor inflation and tariffs including the current trade negotiations with China. Accordingly, the Company may be required to perform additional impairment testing based on further deterioration of the global economic environment, disruptions to the Company’s business, declines in operating results of the Company’s reporting units and/or trade names, further sustained deterioration of the Company’s market capitalization, and other factors, which could result in impairment charges in the future. Although management cannot predict when improvements in macroeconomic conditions will occur, if consumer confidence and consumer spending decline significantly in the future or if commercial and industrial economic activity or the market capitalization experiences a sustained deterioration significantly from current levels, it is reasonably likely the Company will be required to record impairment charges in the future.