Goodwill And Intangible Assets, Net

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS, NET

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


	September 30, 2020		December 31, 2019
Goodwill	$	1,186.5	$	1,501.9

Franchise rights - indefinite-lived	$	509.0	$	566.5
Other intangibles	21.2		23.4
	530.2		589.9
Less: accumulated amortization	(8.4)		(8.3)
Other intangible assets, net	$	521.8	$	581.6

Goodwill

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

During the first quarter of 2020, our stock price, along with the U.S. stock market in general, was adversely impacted by the market reaction to the novel coronavirus disease 2019 (“COVID-19”) pandemic. 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 Centers reporting unit. The non-cash impairment charges are reflected as Goodwill Impairment in the accompanying Unaudited Condensed Consolidated Statements of Operations for the nine months ended September 30, 2020. See Note 11 of the Notes to Unaudited Condensed Consolidated Financial Statements for information about our quantitative goodwill impairment test.

For our April 30, 2020 annual impairment test, we chose to make a qualitative evaluation about the likelihood of goodwill impairment, and we determined that it was not more likely than not that the fair values of our reporting units were less than their carrying amounts.

Goodwill allocated to our reporting units and changes in the carrying amount of goodwill for the nine months ended September 30, 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)		3.2		(0.3)		(0.1)		0.2		2.9
Impairment	—		—		(257.4)		(41.6)		(19.3)		(318.3)
Goodwill at September 30, 2020 ⁽¹⁾⁽³⁾	$	227.2	$	502.1	$	457.2	$	—	$	—	$	1,186.5

⁽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 and from held for sale and related adjustments, which are presented in Other Current Assets in our Unaudited Condensed Consolidated Balance Sheets.

⁽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.

Other Intangible Assets

Our principal identifiable intangible assets are individual store rights under franchise agreements with vehicle manufacturers, which have indefinite lives and are tested for impairment annually as of April 30 or more frequently when events or changes in circumstances indicate that impairment may have occurred.

During the first quarter of 2020, we 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 estimated 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 for the nine months ended September 30, 2020.

For our April 30, 2020 annual impairment test, we elected to perform quantitative franchise rights impairment tests, and no additional impairment charges resulted from these quantitative tests. See Note 11 of the Notes to Unaudited Condensed Consolidated Financial Statements for information about our quantitative franchise rights impairment test.