Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Cost in Excess of Net Assets of Companies Acquired and Intangible Assets, Net

Goodwill and Intangible AssetsGoodwill represents the excess of the cost of an acquisition over the fair value of the net assets acquired. The company tests goodwill and other indefinite-lived intangible assets for impairment annually as of the first day of the fourth quarter, or more frequently if indicators of potential impairment exist.

Goodwill of companies acquired, allocated to the company's business segments, is as follows:

	Global Components		Global ECS		Total
Balance as of December 31, 2018 (a)	$	1,437,501	$	1,187,189	$	2,624,690
Impairments and dispositions	(570,175)		(1,386)		(571,561)
Foreign currency translation adjustment	16,170		(7,977)		8,193
Balance as of December 31, 2019 (b)	$	883,496	$	1,177,826	$	2,061,322
Foreign currency translation adjustment	11,479		42,668		54,147
Balance as of December 31, 2020 (b)	$	894,975	$	1,220,494	$	2,115,469

(a)     The total carrying value of goodwill of companies acquired as of December 31, 2018 in the table above is reflected net of $1,018,780 of accumulated impairment charges, of which $716,925 was recorded in the global components business segment and $301,855 was recorded in the global ECS business segment.

(b)     The total carrying value of goodwill of companies acquired as of December 31, 2020 and December 31, 2019 in the table above is reflected net of $1,588,955 of accumulated impairment charges, of which $1,287,100 was recorded in the global components business segment and $301,855 was recorded in the global ECS business segment.

As of the first day of the fourth quarters of 2020, 2019, and 2018, the company's annual impairment testing did not result in any additional impairment of goodwill of companies acquired.

During the first quarter of 2020, as a result of significant declines in macroeconomic conditions and equity valuations, and the implementation of regulatory restrictions brought forth by the COVID-19 pandemic, and due to historically low head-room, the company determined that it was more likely than not that an impairment may exist within the Americas components and eInfochips reporting units. The company performed a quantitative goodwill impairment test for these reporting units and determined goodwill was not impaired.

During the second quarter of 2019, as a result of the company's downward revision of forecasted future earnings and the decision to wind down the company's personal computer and mobility asset disposition business, the company determined that it was more likely than not that an impairment may exist within the Americas components and Asia-Pacific components reporting units. The company evaluated its other four reporting units and concluded an interim impairment analysis was not required based on the results of those reporting units and historical levels of headroom in each of those reporting units. The interim goodwill impairment analysis resulted in a partial goodwill impairment charge of $509,000 ($457,806 net of tax) with approximately $600,000 of goodwill remaining within the Americas components reporting unit and a full impairment charge of $61,175 ($61,175 net of tax) within the Asia-Pacific components reporting unit.

Intangible assets, net, are comprised of the following as of December 31, 2020:

	Weighted-Average Life	Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	12 years	$	335,027	$	(157,151)	$	177,876
Amortizable trade name	8 years	74,008		(18,065)		55,943
		$	409,035	$	(175,216)	$	233,819

Intangible assets, net, are comprised of the following as of December 31, 2019:

	Weighted-Average Life	Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	12 years	$	354,305	$	(148,632)	$	205,673
Amortizable trade name	8 years	76,407		(10,177)		66,230
		$	430,712	$	(158,809)	$	271,903

During the second quarter of 2019, the company initiated actions to further integrate two global components businesses. These businesses held indefinite-lived trade names with a carrying value of $101,000. As a result of the company's decision to integrate these brands, we determined the useful lives of the trade names were no longer indefinite. Subsequent to the second quarter of 2019, the company began amortizing these trade names over their estimated remaining useful lives. The trade names were tested for impairment during the second quarter of 2019 as a result of the change in estimated useful lives. The company estimated the fair value of the trade names to be $55,000 using the relief from royalty method and recorded a non-cash impairment charge of $46,000 ($34,653 net of tax). The drivers of the impairment were primarily due to the shortened useful lives of the asset and a decline of the forecasted revenues attributable to the trade names as integration to the Arrow brand occurs over the estimated remaining useful lives.

In December 2018, the company completed an asset acquisition of a $20,000 customer relationship intangible asset with an assigned useful life of 10 years. The intangible asset is included in the company's global components business segment.

Amortization expense related to identifiable intangible assets was $38,417, $48,097, and $49,356 for the years ended December 31, 2020, 2019, and 2018, respectively. Amortization expense for each of the years 2021 through 2025 is estimated to be approximately $37,288, $35,830, $31,833, $30,095, and $20,525, respectively.