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GOODWILL AND INTANGIBLE ASSETS
 12 Months Ended
Dec. 31, 2020
Goodwill and Intangible Assets Disclosure [Abstract]  
GOODWILL AND INTANGIBLE ASSETS
5. GOODWILL AND INTANGIBLE ASSETS
Goodwill
The following table sets forth the changes in the carrying value of goodwill:
Year Ended December 31, 2020
 
EES
CSSUBSTotal
 (In thousands)
Beginning balance January 1, 2020
$573,447 $235,711 $949,882 $1,759,040 
Adjustments to goodwill for acquisitions (Note 6)(1) (2) (3) (4)
264,538 868,936 250,553 1,384,027 
Foreign currency exchange rate changes15,471 10,853 17,778 44,102 
Ending balance December 31, 2020(4)
$853,456 $1,115,500 $1,218,213 $3,187,169 
(1)    Adjustments to goodwill include the final allocation of the purchase price paid for SLS, which is reflected in the EES segment.
(2)    Adjustments to goodwill include an increase of $33.9 million resulting from the out-of-period adjustment related to inventory cost absorption accounting, as described in Note 2, "Accounting Policies", which affected the EES, CSS and UBS segments by $20.2 million, $2.0 million, and $11.7 million, respectively.
(3)    The effect of the merger with Anixter on the Company's reportable segments is disclosed in Note 17, "Business Segments".
(4)    Adjustments to goodwill include $26.1 million that is classified as held for sale on the UBS segment , as disclosed in Note 7, "Assets and Liabilities Held for Sale".

Year Ended December 31, 2019
 
EES
CSSUBSTotal
 (In thousands)
Beginning balance January 1, 2019
$542,704 $234,449 $945,450 $1,722,603 
Adjustments to goodwill for acquisitions (Note 6)5,767 — — 5,767 
Foreign currency exchange rate changes24,976 1,262 4,432 30,670 
Ending balance December 31, 2019
$573,447 $235,711 $949,882 $1,759,040 
Certain triggering events occurred during the first quarter of 2020, including the effect of the ongoing macroeconomic disruption and uncertainty caused by the COVID-19 pandemic, as well as the decline in the Company's share price and market capitalization, both of which indicated that the carrying value of goodwill and indefinite-lived intangible assets may not be recoverable. Accordingly, the Company performed an interim test for impairment as of March 31, 2020. There were no impairment losses identified as a result of this interim test.
As disclosed in Note 2, "Accounting Policies", the Company identified new operating segments during the third quarter of 2020, which changed the composition of its reporting units. Accordingly, the Company reassigned goodwill to the new reporting units using a relative fair value allocation approach. The Company performed a goodwill impairment test immediately before and after it reorganized its reporting structure. Goodwill was tested for impairment on a reporting unit level and the evaluation involved comparing the fair value of each reporting unit to its carrying value. The fair values of the Company's reporting units were determined using a discounted cash flow analysis, and consideration was also given to market multiples. In performing the quantitative assessments, management used expected operating margins supported by a combination of historical results, current forecasts, market data and recent economic events, which are categorized within Level 3 of the fair value hierarchy. The Company used a discount rate that reflects market participants' cost of capital. There were no impairment losses identified as a result of these tests. Although all of the Company's reorganized reporting units had fair values that exceeded the respective carrying values, the EES reporting unit with goodwill of $809.9 million had an estimated fair value that exceeded its respective carrying value by less than 10%. As a result, the EES reporting unit is more susceptible to impairment risk from adverse macroeconomic conditions and if such conditions were to persist the underlying cash flows used to estimate fair value may impact the recoverability of goodwill.
The Company performed its annual impairment tests of goodwill and indefinite-lived intangible assets during the fourth quarter by assessing qualitative factors to determine whether it was more likely than not that the fair value of a reporting unit was less than its carrying amount. In performing this qualitative assessment, the Company assessed relevant events and circumstances, including macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, other relevant events such as changes in key personnel, changes in the composition or carrying amount of the net assets of a reporting unit, and sustained decreases in share price. As a result of this assessment, the Company determined that the fair values of its reporting units continued to exceed the respective carrying amounts and, therefore, a quantitative impairment test was unnecessary.
The determination of fair value of the reporting units involves significant management judgment, particularly as it relates to the underlying assumptions and factors around expected operating margins and discount rate. Due to the ongoing uncertainty surrounding the current macroeconomic environment and conditions in the markets in which WESCO operates, as well as the risk that the Company may not fully realize cost savings, operating synergies or revenue improvement as a result of its acquisition of Anixter, there can be no assurance that the fair values of the Company's reporting units will exceed their carrying values in the future, and that goodwill and indefinite-lived intangible assets will be fully recoverable.
Intangible Assets
The components of intangible assets are as follows:
 December 31, 2020December 31, 2019
Life (in years)
Gross Carrying
Amount (1)
Accumulated
Amortization (1)
Net
Carrying
Amount
Gross Carrying
Amount (1)
Accumulated
Amortization (1)
Net
Carrying
Amount
 (In thousands)
Intangible assets:      
TrademarksIndefinite$833,793 $— $833,793 $98,699 $— $98,699 
Customer relationships(2)
10 - 20
1,434,554 (227,585)1,206,969 358,341 (201,962)156,379 
Distribution agreements(2)
10 - 19
29,212 (21,040)8,172 37,371 (25,294)12,077 
Trademarks(2)
10 - 15
24,898 (11,415)13,483 24,800 (9,319)15,481 
Non-compete agreements
2 - 5
4,462 (1,384)3,078 196 (180)16 
Patents
10
— — — 48,310 (43,687)4,623 
  $2,326,919 $(261,424)$2,065,495 $567,717 $(280,442)$287,275 
(1)Excludes the original cost and related accumulated amortization of fully-amortized intangible assets.
(2)The net carrying amount as of December 31, 2020 excludes $1.0 million of trademarks, $3.3 million of customer relationships and $1.4 million of distribution agreements that are classified as held for sale, as disclosed in Note 7, "Assets and Liabilities Held for Sale".
Amortization expense related to intangible assets totaled $66.5 million, $35.5 million and $35.9 million for the years ended December 31, 2020, 2019 and 2018, respectively.
The following table sets forth the estimated amortization expense for intangible assets for the next five years and thereafter:
For the year ending December 31,(In thousands)
2021$86,619 
202283,628 
202381,400 
202480,087 
202576,829 
Thereafter823,139