Goodwill and intangible assets with indefinite lives are reviewed for impairment annually during the fourth quarter of each fiscal year, or more frequently if impairment indicators arise.

During the first quarter of 2025, a triggering event occurred as a result of a reduction in our market capitalization due to a decline in stock price and changes in the macroeconomic environment, which affected consumer discretionary spending. We used a discounted cash flow approach to determine the fair value of our reporting units. The determination of discounted cash flows of the reporting units and assets and liabilities within the reporting units requires significant estimates and assumptions. These estimates and assumptions primarily include, but are not limited to, the discount rate, terminal growth rates, earnings before depreciation and amortization, and capital expenditures forecasts. Due to the inherent uncertainty involved in making these estimates, actual results could differ from those estimates. We evaluate the merits of each significant assumption, both individually and in the aggregate, used to determine the fair value of the reporting units, as well as the fair values of the corresponding assets and liabilities within the reporting units.

We have three reporting units, representing our operating segments of North America, EMEA, and Asia Pacific. Our first quarter 2025 quantitative analysis determined that the fair value of the North America reporting unit exceeded its carrying value of $521 million by 9%. However, the EMEA and Asia Pacific reporting units had fair values that were below their carrying values. We recorded a full impairment to the EMEA reporting unit of  $29 million and a partial impairment of $81 million on the Asia Pacific reporting unit. The goodwill amount, after the impairment charge, that is attributable to the Asia Pacific reporting unit was $140 million as of  May 3, 2025. Goodwill is net of accumulated impairment charges of $277 million as of  May 3, 2025 and $167 million for all prior periods.

Intangible assets with indefinite lives are tested for impairment if impairment indicators arise and, at a minimum, annually. In conjunction with the goodwill impairment triggering event, we assessed our other intangible assets for impairment. We calculated the fair value using a discounted cash flow method, based on the relief from royalty method, and compared the fair value to the carrying value to determine if the asset is impaired. In the first quarter of 2025, in light of recent operating results and a decline in future cash flow projections for the WSS banner, we recorded a $140 million impairment on the WSS tradename. The charge was reflective of lower forecasted cash flows coupled with a reduction in the royalty rate. In addition, we performed a qualitative review of the atmos tradename and concluded that no impairment was necessary.