GOODWILL

3 Months Ended

Mar. 31, 2020

GOODWILL

3. GOODWILL

ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test of Goodwill Impairment", establishes accounting and reporting requirements for goodwill and other intangible assets.  Goodwill was $50.5 million as of both March 31, 2020 and December 31, 2019.  Of this amount, goodwill was $7.9 million as of both March 31, 2020 and December 31, 2019 for the Company's CoreCivic Safety segment, and was $42.6 million as of both March 31, 2020 and December 31, 2019 for its CoreCivic Community segment.  This goodwill was established in connection with multiple business combination transactions.  

Under the provisions of ASU 2017-04, CoreCivic performs a qualitative assessment to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.  If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing a quantitative impairment test is not necessary.  If a quantitative test is required, CoreCivic performs an assessment to identify the existence of impairment and to measure the excess of a reporting unit's carrying amount over its fair value by using a combination of various common valuation techniques, including market multiples and discounted cash flows under valuation methodologies that include an income approach and a market approach.  The income approach valuation includes certain significant assumptions impacting projected future cash flows, such as projected revenue, projected operating costs, and the weighted average cost of capital, which are affected by expectations about future market or economic conditions.  These impairment tests are required to be performed at least annually.  CoreCivic performs its impairment tests during the fourth quarter, in connection with its annual budgeting process and whenever circumstances indicate the carrying value of goodwill may not be recoverable.   

Because of the potential impact of the coronavirus ("COVID-19") on the recoverability of goodwill, CoreCivic performed a qualitative assessment for its goodwill allocated to the Company’s CoreCivic Safety and Community segments, and concluded that no impairments had occurred as of March 31, 2020.   However, the long-term impacts of COVID-19, if any, on future cash flows are difficult to predict.  The Company can provide no assurance that goodwill impairments will not occur in the future as a result of the impact of COVID-19 or otherwise.  The Company will conduct additional impairment tests if, and when, warranted by the impact of COVID-19 on the Company's business segments.