GOODWILL AND OTHER INTANGIBLES

12 Months Ended

Jun. 27, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

The changes in the carrying amount of goodwill by reportable segment for the years presented are as follows:


	U.S. Foodservice Operations		International Foodservice Operations		SYGMA		Other		Total
	(In thousands)
Carrying amount as of June 30, 2018	$	1,260,900	$	2,440,821	$	32,607	$	221,157	$	3,955,485
Goodwill acquired during year	10,428		9,127		—		—		19,555
Currency translation/other	(5,843)		(74,016)		—		1,045		(78,814)
Carrying amount as of June 29, 2019	$	1,265,485	$	2,375,932	$	32,607	$	222,202	$	3,896,226
Goodwill acquired during year	90,477		—		—		—		90,477
Impairment	—		(169,007)		—		(34,199)		(203,206)
Currency translation/other	2,162		(53,164)		—		(26)		(51,028)
Carrying amount as of June 27, 2020	$	1,358,124	$	2,153,761	$	32,607	$	187,977	$	3,732,469

Amortizable intangible assets acquired during fiscal 2020 were $39.9 million, with a weighted-average amortization period of 6.0 years. Amortizable intangible assets acquired during fiscal 2020 by category were customer relationships and non-compete of $26.6 million and $13.3 million respectively, with a weighted-average amortization period of 7.0 years and 5.0 years respectively.

Fully amortized intangible assets have been removed in the period fully amortized in the table below, which presents the company’s amortizable intangible assets in total by category as follows:


	Jun. 27, 2020										Jun. 29, 2019
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
	(In thousands)
Customer relationships	$	1,048,702	$	(434,262)	$	614,440	$	1,052,608	$	(358,592)	$	694,016
Non-compete agreements	23,252		(10,182)		13,070		11,827		(8,556)		3,271
Trademarks	13,691		(5,816)		7,875		14,785		(5,736)		9,049
Other	—		—		—		185		(148)		37
Total amortizable intangible assets	$	1,085,645	$	(450,260)	$	635,385	$	1,079,405	$	(373,032)	$	706,373

The table below presents the company’s indefinite-lived intangible assets by category as follows:


	Jun. 27, 2020		Jun. 29, 2019
	(In thousands)
Trademarks	$	143,820	$	149,962
Licenses	966		966
Total indefinite-lived intangible assets	$	144,786	$	150,928

Amortization expense for 2020, 2019 and 2018 was $95.3 million, $92.3 million and $114.7 million, respectively. The estimated future amortization expense for the next five fiscal years on intangible assets outstanding as of June 27, 2020 is shown below:


	Amount
	(In thousands)
2021	$	96,877
2022	95,042
2023	91,867
2024	88,022
2025	79,739

Goodwill impairment

The Company had approximately $3.7 billion of goodwill at June 27, 2020. The Company tests goodwill for impairment annually in our fiscal fourth quarter, or more frequently if events or circumstances indicate that they could be impaired. Potential impairment indicators include (but are not limited to) macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, other relevant entity-specific events, specific events affecting the reporting unit or sustained decrease in share price.

During the second half of fiscal 2020, the company experienced significant deterioration of macroeconomic conditions and declines in equity valuations, as well as regulatory restrictions implemented in response to the COVID-19 pandemic. In the third quarter of fiscal 2020, the company determined that certain reporting units were more sensitive than others to these declines and the company performed interim quantitative goodwill impairment tests for these reporting units using a combination of discounted cash flow and earnings or revenue multiple models. As part of the annual test in the fiscal fourth quarter, the company performed further quantitative goodwill impairment tests, updating the estimates and assumptions of long-term impact resulting from the pandemic that had been applied in the fiscal third quarter tests, where necessary. As a result, in the third quarter of fiscal 2020 the company recorded impairments to goodwill for the Pacific Star and Cake reporting units of $34.9 million and $34.2 million, respectively, which represented the full balance of goodwill for those reporting units. During the fiscal fourth quarter, the company recorded partial impairments to goodwill for the France Group and Fresh Direct reporting units of $108.7 million and $25.4 million respectively, for total fiscal 2020 impairment charges of $203.2 million, which are included within operating expenses in the consolidated results of operations.

In the annual fiscal 2020 assessment, impairment charges would have been applicable for two reporting units if our estimates of fair value were decreased by ranges of 17% to 29%, with goodwill of $369.5 million in the aggregate as of June 27, 2020, recorded for these reporting units.The company estimated the fair value of these reporting units using a combination of discounted cash flow and earnings or revenue multiple models. For the purposes of the discounted cash flow models, fair value was determined based on the present value of estimated future cash flows, discounted at an appropriate risk adjusted rate. The fair value conclusions as of June 27, 2020 for the reporting units are highly sensitive to changes in the assumptions used in the income approach, which include forecasted revenues, perpetual growth rates, and long-term discount rates, among others, all of which require significant judgments by management. Fair value of the reporting unit is therefore determined using significant unobservable inputs, or level 3 in the fair value hierarchy. The company has used recent historical performance, current forecasted financial information, and broad-based industry and economic statistics as a basis to estimate the key assumptions utilized in the discounted cash flow model. These key assumptions are inherently uncertain and require a high degree of estimation and judgment and are subject to change based on future changes, industry and global economic and geo-political conditions, and the timing and success of the implementation of current strategic initiatives. The impact of the COVID-19 pandemic on estimated future cash flows is uncertain and will largely depend on the outcome of future events, which could result in further goodwill impairments going forward.