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Goodwill
9 Months Ended
Sep. 30, 2020
Goodwill And Intangible Assets Disclosure [Abstract]  
Goodwill

7. Goodwill

The changes to the carrying amount of goodwill for the nine months ended September 30, 2020 were as follows:

 

(millions) (unaudited)

 

Commercial

 

 

Aviation

 

 

Total

 

Net book value as of December 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

377.0

 

 

$

209.0

 

 

$

586.0

 

Accumulated impairment losses

 

 

 

 

 

 

 

 

 

Total

 

$

377.0

 

 

$

209.0

 

 

$

586.0

 

Impairment

 

 

 

 

 

(59.5

)

 

 

(59.5

)

Foreign currency translation

 

 

(0.1

)

 

 

 

 

 

(0.1

)

Net book value as of September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

Goodwill

 

$

376.9

 

 

$

209.0

 

 

$

585.9

 

Accumulated impairment losses

 

 

 

 

 

(59.5

)

 

 

(59.5

)

Total

 

$

376.9

 

 

$

149.5

 

 

$

526.4

 

 

In July 2020, the Company changed its internal reporting structure. All prior periods presented have been reclassified to reflect the new internal reporting structure. See Note 14. Business Unit Segment Information for further discussion.

 

As discussed in Note 1. Significant Accounting Policies and Practices, due to the impacts of COVID-19, revenues for certain markets in which the Company operates have dropped significantly as compared to the expectations as of the October 1, 2019 annual impairment test. The Company does not know how long the COVID-19 pandemic and its effects will continue to impact results of the Company. In addition, certain Aviation contracts were terminated during August 2020. The termination of these contracts and the ongoing impacts of COVID-19 on the Company’s expected future operating cash flows triggered the Company to complete a quantitative goodwill impairment analysis as of August 31, 2020 for the Aviation reporting unit. Accordingly, the Company determined the carrying value for the Aviation reporting unit was higher than its implied fair value. The implied fair value was determined based on cash flow projections that assume certain future revenue and cost levels, comparable marketplace data, assumed discount rates based upon current market conditions and other valuation factors. As a result, the Company recorded $59.5 million of impairment charges during the three and nine months ended September 30, 2020, that were recognized in Impairment of goodwill and intangible assets in the Condensed Consolidated Statements of Income. If the impacts from the COVID-19 pandemic exceed the Company’s current expectations, additional impairment charges could be recorded in future periods. The fair value of goodwill was classified as Level 3 in the fair value hierarchy. No impairment charges were recorded during the three and nine months ended September 30, 2019.