Goodwill and Other Intangible Assets, Net

Goodwill

During the first quarter of 2019, in connection with the Separation, Distribution, and Acquisition, we made changes to our organizational and reporting structure. With these changes, we revised our reportable segments and goodwill was reallocated to the new reporting segments. See Note 18 - Segment Data.

In August 2019, we released our results for the three and six months ended June 30, 2019 which failed to meet expectations and included a downward revision to our previously provided full-year guidance for the year ended December 31, 2019. We experienced a sustained decline in our share price and a resulting decrease in our market capitalization. These events triggered an interim impairment review as of August 31, 2019. We tested for goodwill impairment by quantitatively comparing the fair values of our reporting units to their carrying amounts. See Note 10 - Fair Value for further information.

Based on our analysis, we determined that the carrying value of our reporting units exceeded their fair values, and we recorded a non-tax-deductible goodwill impairment charge totaling $938 million for the year ended December 31, 2019. Our annual impairment review was performed during the fourth quarter of 2019 using a qualitative approach, and we determined that there was no additional goodwill impairment as of December 31, 2019.

The changes in the Goodwill balances by segment for the years ended December 31, 2019 and December 29, 2018 were as follows:



	North America			Europe			APAC & Emerging Markets			Total
Balance at December 31, 2017 ^(a)	$	528		$	182		$	50		$	760
Foreign currency translation	(1		)	(11		)	(1		)	(13		)
Goodwill additions	2			1			—			3
Balance at December 29, 2018 ^(a)	529			172			49			750
Foreign currency translation	—			(8		)	(1		)	(9		)
Goodwill additions ^(b)	1,280			57			16			1,353
Goodwill impairment	(653		)	(221		)	(64		)	(938		)
Divestitures and related adjustments ^(c)	(2		)	—			—			(2		)
Balance at December 31, 2019	$	1,154		$	—		$	—		$	1,154

(a) Recast to conform to 2019 presentation
(b) Includes goodwill adjustments of $34 million related to Vets First Choice; see Note 2 - Business Acquisitions
(c) Attributable to scil; see Note 3 - Held for Sale

	North America			Europe			APAC & Emerging Markets			Total
Accumulated impairment at December 29, 2018	$	—		$	—		$	—		$	—
Accumulated impairment at December 31, 2019	$	(653	)	$	(221	)	$	(64	)	$	(938	)

Other Intangible Assets, Net

We periodically review our long-lived assets for indications of impairment to determine if the carrying value is recoverable and exceeds fair value. The carrying amount of long-lived assets is not recoverable if it exceeds the sum of undiscounted cash flows expected as a result from use and eventual disposition of the asset.

Because an interim goodwill assessment was completed, we also performed an interim assessment of long-lived assets as of August 31, 2019. The results of our analysis indicated that the long-lived assets were recoverable as of the assessment date and did not require further impairment review.

Definite-lived intangible assets consisted of the following as of:



	December 31, 2019
	Cost		Accumulated Amortization			Net
Customer relationships	$	503	$	(234	)	$	269
Trademarks	60		(28		)	32
Patents	30		(24		)	6
Product development	406		(71		)	335
Non-compete agreements	2		(1		)	1
Total	$	1,001	$	(358	)	$	643



	December 29, 2018
	Cost		Accumulated Amortization			Net
Customer relationships	$	368	$	(193	)	$	175
Trademarks	41		(23		)	18
Patents	30		(20		)	10
Product development	6		(3		)	3
Non-compete agreements	4		(2		)	2
Total	$	449	$	(241	)	$	208

Other intangible assets were established through business acquisitions. We amortize intangible assets on a straight-line basis over their estimated useful lives. Non-compete agreements represent amounts paid primarily to key employees and prior owners of acquired businesses, as well as certain salespersons, in exchange for placing restrictions on their ability to pose a competitive risk to us. Such amounts are amortized on a straight-line basis over the respective non-compete period which generally commences upon termination of employment or separation from Covetrus.

The table below sets forth amortization of intangible assets for the years ended:



Location	December 31, 2019		December 29, 2018		December 30, 2017
Cost of sales	$	4	$	—	$	—
Selling, general and administrative	123		49		46
Total amortization	$	127	$	49	$	46

The estimated future amortization of intangible assets is as follows:



2020	$	134
2021	130
2022	126
2023	112
2024	59
Thereafter	82
Total	$	643