72 / Schnitzer Steel Industries, Inc. Form 10-K 2021 Note 7 - Goodwill and Other Intangible Assets, net Goodwill The Company evaluates goodwill for impairment annually on July 1 and upon the occurrence of certain triggering events or substantive changes in circumstances that indicate that the fair value of goodwill may be impaired. As of August 31, 2020, the balance of the Company’s goodwill was $170 million, and all but $1 million of such balance was carried by a single reporting unit within the AMR operating segment that existed at the time. The Company had last performed the quantitative impairment test of goodwill carried by this reporting unit in the fourth quarter of fiscal 2020 using a measurement date of July 1, 2020. The estimated fair value of the reporting unit exceeded its carrying amount by approximately 29% as of July 1, 2020. In the first quarter of fiscal 2021, the Company completed its transition to a new internal organizational and reporting structure reflecting a functionallybased, integrated model, resulting in a single operating segment, replacing the AMR and CSS operating segments. The change in structure led to the identification of components within the single operating segment based on disaggregation of financial information regularly reviewed by segment management. In accordance with the accounting guidance, the Company then reassigned the Company's goodwill to the reporting units affected based on the relative fair values of the elements transferred and the elements remaining within the original reporting units as of the date of the reassessment, September 1, 2020. The Company measured the relative fair values of such elements under the market approach based on earnings multiple data. Beginning on the date of reassessment of September 1, 2020, the Company's goodwill is carried by three reporting units comprising two separate regional groups of metals recycling operations and the Company’s retail auto parts stores. In connection with the segment realignment and redefinition of the Company's reporting units effective as of September 1, 2020, management evaluated if it was more likely than not that the fair value of any of the either legacy or new reporting units with allocated goodwill was below its carrying value as of September 1, 2020, which would indicate a triggering event requiring a goodwill impairment test. Based on management's assessment as of September 1, 2020, it was not more likely than not that the fair value of each reporting unit with allocated goodwill was below its carrying value. In the fourth quarter of fiscal 2021, the Company performed the annual goodwill impairment test as of July 1, 2021. As of the testing date, the balance of the Company’s goodwill was $171 million, and all but $1 million of such balance was carried by two reporting units comprising a regional group of metals recycling operations and the Company’s retail auto parts stores. The Company elected to first assess qualitative factors to determine whether the existence of events or circumstances led to a determination that it is more-likelythan-not that the estimated fair value of each reporting unit carrying goodwill is less than its carrying amount. As a result of the qualitative assessment, the Company concluded that it was not more-likely-than-not that the fair value of each reporting unit carrying goodwill was less than its carrying value as of the testing date, and, therefore, no further impairment testing was required. The gross change in the carrying amount of goodwill for the years ended August 31, 2021 and 2020 was as follows (in thousands): Goodwill Balance as of September 1, 2019 $ 169,237 Foreign currency translation adjustment 390 Balance as of August 31, 2020 169,627 Foreign currency translation adjustment 677 Balance as of August 31, 2021 $ 170,304 Accumulated goodwill impairment charges were $471 million as of each of August 31, 2021 and 2020.
RkJQdWJsaXNoZXIy NTIzOTM0