Goodwill And Intangible Assets, Net

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill and intangible assets, net, consist of the following:



	March 31, 2020			December 31, 2019
Goodwill	$	1,183.6		$	1,501.9

Franchise rights - indefinite-lived	$	509.0		$	566.5
Other intangibles	21.2			23.4
	530.2			589.9
Less: accumulated amortization	(7.9		)	(8.3		)
Other intangible assets, net	$	522.3		$	581.6

Goodwill for our reporting units and our franchise rights are tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that impairment may have occurred.

On March 11, 2020, the World Health Organization declared the current novel coronavirus disease 2019 (“COVID-19”) outbreak to be a global pandemic. As a result of the impacts of the COVID-19 pandemic, we had significant declines in new and used vehicle unit sales during the last two weeks of March 2020, and our parts and service business was operating below full capacity. In addition, our stock price, along with the U.S. stock market in general, was adversely impacted by the COVID-19 pandemic. As a result, our market capitalization as of March 31, 2020, decreased significantly compared to our market capitalization as of the date of our last annual impairment test.

In light of the uncertainty surrounding the COVID-19 pandemic and the decrease in our market capitalization as of March 31, 2020, we concluded that a triggering event had occurred potentially indicating that the fair values of our reporting units were less than their carrying values as of March 31, 2020. Therefore, we performed quantitative goodwill impairment tests for each of our reporting units as of March 31, 2020. As a result of these impairment tests, during the three months ended March 31, 2020, we recorded non-cash goodwill impairment charges totaling $318.3 million, of which $257.4 million related to our Premium Luxury reporting unit, $41.6 million related to our Collision Centers reporting unit, and $19.3 million related to our Parts Center reporting unit. The non-cash impairment charges are reflected as Goodwill Impairment in the accompanying Unaudited Condensed Consolidated Statements of Operations. See Note 11 of the Notes to Unaudited Condensed Consolidated Financial Statements for information about our quantitative goodwill impairment test.

Goodwill allocated to our reporting units and changes in the carrying amount of goodwill for the three months ended March 31, 2020, were as follows:



	Domestic		Import			Premium Luxury			Collision Centers			Parts Centers			Consolidated
Goodwill at January 1, 2020 ⁽¹⁾	$	227.3	$	498.9		$	714.9		$	41.7		$	19.1		$	1,501.9
Acquisitions, dispositions, and other adjustments, net ⁽²⁾	—		(0.1		)	—			(0.1		)	0.2			—
Impairment	—		—			(257.4		)	(41.6		)	(19.3		)	(318.3		)
Goodwill at March 31, 2020 ⁽¹⁾⁽³⁾	$	227.3	$	498.8		$	457.5		$	—		$	—		$	1,183.6


⁽¹⁾	Net of accumulated impairment losses of $1.47 billion associated with our single reporting unit (prior to September 30, 2008, our reporting unit structure was comprised of a single reporting unit) and $140.0 million associated with our Domestic reporting unit, both of which were recorded during the year ended December 31, 2008.


⁽²⁾	Includes amounts reclassified to held for sale and related adjustments, which are presented in Other Current Assets in our Consolidated Balance Sheet as of period end.


⁽³⁾	Net of accumulated impairment losses of $257.4 million associated with our Premium Luxury reporting unit, $41.6 million associated with our Collision Centers reporting unit, and $19.3 million associated with our Parts Centers reporting unit, each of which were recorded during the three months ended March 31, 2020.

We also concluded that, as a result of the impacts from the COVID-19 pandemic, a triggering event had occurred that indicated the fair values of our franchise rights may have been less than their carrying values as of March 31, 2020. We performed quantitative impairment tests as of March 31, 2020, and as a result, we identified eight stores with franchise rights carrying values that exceeded their fair values, and we recorded non-cash franchise rights impairment charges of $57.5 million. The non-cash impairment charges are reflected as Franchise Rights Impairment in the accompanying Unaudited Condensed Consolidated Statements of Operations. See Note 11 of the Notes to Unaudited Condensed Consolidated Financial Statements for information about our quantitative franchise rights impairment test.

We are scheduled to perform our annual goodwill and franchise rights impairment tests as of April 30, 2020, during the second quarter of 2020.