Annual report pursuant to Section 13 and 15(d)

GOODWILL AND INTANGIBLE ASSETS, NET

GOODWILL AND INTANGIBLE ASSETS, NET

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

As discussed further in Note 2 to the Consolidated Financial Statements, during 2019 we adopted new accounting guidance and removed the second step of the goodwill impairment test. Under step two, an entity was required to determine the fair value of individual assets and liabilities of a reporting unit (including unrecognized assets and liabilities) using the procedure for determining fair values in a business combination. As a result, goodwill impairment is now measured at the amount by which a reporting unit’s carrying amount exceeds its fair value, with any impairment charge limited to the carrying amount of goodwill.

Goodwill was nil and $21.8 million at December 31, 2019 and December 31, 2018, respectively. Goodwill for these periods reflects accumulated impairment losses of $21.8 million and nil, respectively.

We evaluated our goodwill for impairment during the fourth quarter of 2019 in connection with our annual review. As part of our review, in the fourth quarter we assessed 2019 operating performance and its impact on the operating cash flows of our Specialty Wax reporting unit. We completed our annual impairment test of goodwill in accordance with ASC 350-20 Goodwill. We concluded based on this analysis that the estimates of fair value of our Specialty Wax reporting unit was lower than its book value, including goodwill. As a result, we recorded a non-cash impairment charge of $21.8 million in the fourth quarter of 2019, representing all of the the goodwill previously allocated to this reporting unit.

Intangible Assets

The following table summarizes the gross carrying amounts and accumulated amortization of intangible assets by major class (in thousands):



	December 31, 2019
Intangible assets subject to amortization (Definite-lived)	Gross		Accumulated Amortization			Net
Customer relationships	$	16,852	$	(5,898	)	$	10,954
Non-compete agreements	94		(94		)	—
Licenses and permits	1,471		(601		)	870
Developed technology	6,131		(3,219		)	2,912
	24,548		(9,812		)	14,736
Intangible assets not subject to amortization (Indefinite-lived)
Emissions Allowance	—		—			—
Trade name	—		—			—
Total	$	24,548	$	(9,812	)	$	14,736



	December 31, 2018
Intangible assets subject to amortization (Definite-lived)	Gross		Accumulated Amortization			Net
Customer relationships	$	16,852	$	(4,775	)	$	12,077
Non-compete agreements	94		(80		)	14
Licenses and permits	1,471		(495		)	976
Developed technology	6,131		(2,606		)	3,525
	24,548		(7,956		)	16,592
Intangible assets not subject to amortization (Indefinite-lived)
Emissions Allowance	197		—			197
Trade name	2,158		—			2,158
Total	$	26,903	$	(7,956	)	$	18,947

In connection with the impairment analysis discussed above, we determined the indefinite-lived intangible assets were also impaired as of December 31, 2019. We recorded a non-cash impairment charge of $2.4 million in the fourth quarter of 2019.

Amortization expense for intangible assets included in cost of sales for the years ended December 31, 2019, 2018, and 2017, was approximately $1,856,000, $1,861,000, and $1,861,000 respectively.

Based on identified intangible assets that are subject to amortization as of December 31, 2019, we expect future amortization expenses for each period to be as follows (in thousands):



	Total		2020		2021		2022		2023		2024		Thereafter
Customer relationships	$	10,954	$	1,123	$	1,123	$	1,123	$	1,123	$	1,123	$	5,339
Licenses and permits	870		106		101		86		86		86		405
Developed technology	2,912		613		613		613		613		460		—
Total future amortization expense	$	14,736	$	1,842	$	1,837	$	1,822	$	1,822	$	1,669	$	5,744