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Goodwill, Long-Lived and Identifiable Intangible Assets, Net
12 Months Ended
Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill, Long-Lived and Identifiable Intangible Assets, Net Goodwill, Long-Lived and Identifiable Intangible Assets, Net

Goodwill

We review goodwill for impairment on a reporting unit basis annually during the fourth quarter of each year, using a measurement date of October 1st, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The Company performed a qualitative assessment by reporting unit as of October 1, 2019, during the fourth quarter of 2019. This assessment included consideration of key factors including macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity-and reporting unit-specific events. We concluded it was more likely than not that the fair value of each reporting unit exceeded its carrying amount. As such, it was not necessary to perform a quantitative goodwill impairment test. There have been no significant events or circumstances affecting the valuation of goodwill subsequent to the qualitative assessment performed as of October 1, 2019.

As noted above, it was determined under a qualitative assessment that it was not more likely than not that the fair value of any reporting unit was less than its carrying amount. Therefore, there was no impairment of goodwill. However, if events or circumstances change in future periods, the Company may be required to perform a quantitative test. If we were required to perform a quantitative test, the amount of the impairment charge to be recognized would be the amount by which the carrying value exceeded the estimated fair value at a reporting unit level.

The future occurrence of a potential indicator of impairment, such as a decrease in expected net earnings, adverse equity market conditions, a decline in current market multiples, a decline in our common stock price, a significant adverse change in legal factors or business climates, an adverse action or assessment by a regulator, unanticipated competition, strategic decisions made in response to economic or competitive conditions, or a more likely than not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of, could require an interim assessment for some or all of the reporting units before the next required annual assessment. In the event of significant adverse changes of the nature described above, we might have to recognize a non-cash impairment of goodwill, which could have a material adverse effect on our consolidated financial condition and results of operations.

Allocation of Goodwill to Reporting Segments

The following table shows our goodwill balances by operating segment that are aggregated into one reportable segment:

(in millions)
 
North America
 
Europe
 
Total
Gross carrying value at December 31, 2017 (Predecessor)
 
$
260.0

 
$
100.3

 
$
360.3

Currency translation
 

 
(4.6
)
 
(4.6
)
Gross carrying value at December 31, 2018 (Predecessor)
 
260.0

 
95.7

 
355.7

Currency translation
 

 
(2.5
)
 
(2.5
)
Gross carrying value at June 2, 2019 (Predecessor)
 
260.0

 
93.2

 
353.2

 
 
 
 
 
 
 
Fair value adjustment due to the Ranpak Business Combination
 
342.3

 
104.9

 
447.2

Additions to goodwill
 
0.7

 

 
0.7

Currency translation
 

 
0.9

 
0.9

Gross carrying value at December 31, 2019 (Successor)
 
$
343.0

 
$
105.8

 
$
448.8


Identifiable Intangible Assets, net

Finite-lived intangible assets consist of patented and unpatented technology and customer/distributor relationships.

Customer/Distributor relationships

The company maintains relationships with a network of distributors worldwide. The distributors agree to exclusively supply the Company's paper systems as their only paper-based solution, and in turn, benefit from training, sales support and custom-engineered solutions. Historically, customer/distributor relationships intangible assets have estimated economic lives approximating 10 years and are amortized on a straight-line basis.

Patented and Unpatented Technology

The Company is a provider of protective paper packaging systems. The patented and unpatented technology enables the Company to provide products and systems, including cushioning, void-fill and wrapping to its customers worldwide.

Indefinite-lived intangible assets consist of trademarks and tradenames.

Trademarks/Tradenames

Trademarks/tradenames are accounted for as indefinite-lived intangible assets and, accordingly, are not subject to amortization. The Company performs an annual test of these assets at October 1, or more frequently if impairment indicators arise. The impairment reviews performed, confirmed that the fair value of the Company's trademark/tradename portfolio exceeded the carrying value, and accordingly, there was no impairment of such indefinite-lived intangible assets for that period. The Company's estimated fair value of trademarks/tradenames as of its impairment testing date are based on various assumptions and estimates, including an estimated weighted-average cost of capital, royalty rate, residual growth rate and forecasted operating results. If the Company is not able to achieve forecasted operating results in future periods, its estimate of fair values of trademarks/tradenames could be adversely impacted.

Impairment of Long-lived Assets

The Company reviews its long-lived assets, including finite-lived intangible assets and property, plant and equipment, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. For long-lived assets, except goodwill and indefinite lived assets, an impairment loss is indicated when the undiscounted cash flows estimated to be generated by the asset group are not sufficient to recover the unamortized balance of the asset group. If indicators exist, the loss is measured as the excess of carrying value over the asset groups' fair value, as determined based on discounted future cash flows, asset appraisal and market values of similar assets.

The following tables summarize our identifiable intangible assets, net with definite and indefinite useful lives: 

 
 
Successor
 
Predecessor
 
 
December 31, 2019
 
December 31, 2018
(In millions)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
Customer/distributor relationships
 
$
199.5

 
$
(7.9
)
 
$
191.6

 
$
259.1

 
$
(110.1
)
 
$
149.0

Patented/unpatented technology
 
164.5

 
(8.5
)
 
156.0

 
153.0

 
(64.5
)
 
88.5

In-process research and development
 
5.0

 

 
5.0

 

 

 

Total intangible assets with definite lives
 
369.0

 
(16.4
)
 
352.6

 
412.1

 
(174.6
)
 
237.5

Trademarks/tradenames with indefinite lives
 
106.0

 

 
106.0

 
56.2

 

 
56.2

Total identifiable intangible assets, net
 
$
475.1

 
$
(16.4
)
 
$
458.6

 
$
468.3

 
$
(174.6
)
 
$
293.7



At December 31, 2019, intangible assets increased due to Ranpak Business Combination. See Note 8, "Acquisitions," to the Notes to consolidated financial statements for additional information related to this transaction.

The following table shows the remaining estimated amortization expense for our finite intangible assets at December 31, 2019:

(in millions)
 
 
Year
 
Amount
2020
 
$
28.0

2021
 
28.0

2022
 
28.0

2023
 
28.0

2024
 
28.0

Thereafter
 
207.6


Amortization expense was $16.3 million in the Successor period of June 3, 2019 through December 31, 2019, $17.0 million in the Predecessor period from January 1, 2019 through June 2, 2019, $41.6 million in 2018 and $40.8 million in 2017.

The following table shows the remaining weighted-average useful life of our definite lived intangible assets as of December 31, 2019:

(in millions)
 
Remaining Weighted-Average Useful Life
Customer/distributor relationships
 
14.4
Patented/unpatented technology
 
10.6
Total identifiable assets, net with definite lives
 
13.3