Note 3 - Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Goodwill — Our goodwill is tested for impairment annually as of October 31 for all of our reporting units, and more frequently if events or circumstances warrant such a review. We estimate the fair value of the reporting units using discounted cash flow projections. In determining the fair value of the reporting units, we make significant assumptions and estimates about the extent and timing of future cash flows, including revenue growth rates, projected segment EBITDA, discount rates, and terminal growth rates. If the estimated fair value of the reporting unit exceeds its carrying value, the goodwill is considered not to be impaired. If the carrying value of the reporting unit exceeds its estimated fair value, a goodwill impairment charge is recorded for the difference, with the impairment loss limited to the total amount of goodwill allocated to that reporting unit.

We evaluated macro-economic conditions during the third quarter of 2022, including the impact of the Federal Reserve further increasing the risk-free interest rate, as well as the negative impact of sustained higher commodity costs, non-material cost increases and operational inefficiencies attributable to continued global supply chain disruptions. We believe that these conditions were factors in our market capitalization falling below the book value of net assets as of September 30, 2022. Accordingly, we concluded a triggering event had occurred and performed interim goodwill impairment analyses for our Commercial Vehicle and Off-Highway reporting units.

Based on the results of our interim impairment analyses, we concluded that the carrying value exceeded fair value of our Commercial Vehicle reporting unit and we recorded a goodwill impairment charge of $191, representing a full impairment of goodwill assigned to the Commercial Vehicle reporting unit. Our analysis for the Off-Highway reporting unit indicated that the fair value continues to exceed the carrying value by a substantial amount and, accordingly, no impairment charge was required. There was no impairment of indefinite-lived intangible assets in any of the periods presented. 

The remaining change in the carrying amount of goodwill in 2022 was due to currency fluctuation.

Changes in the carrying amount of goodwill by segment — 

	Light Vehicle		Commercial Vehicle			Off-Highway			Power Technologies		Total
Balance, December 31, 2021	$	—	$	201		$	281		$	—	$	482
Impairment				(191	)							(191	)
Currency impact				(10	)		(35	)				(45	)
Balance, September 30, 2022	$	—	$	—		$	246		$	—	$	246

Components of other intangible assets — 

		September 30, 2022							December 31, 2021
	Weighted Average Useful Life (years)	Gross Carrying Amount		Accumulated Impairment and Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Impairment and Amortization			Net Carrying Amount
Amortizable intangible assets
Core technology	8	$	152	$	(111	)	$	41	$	161	$	(110	)	$	51
Trademarks and trade names	13		28		(12	)		16		31		(12	)		19
Customer relationships	8		489		(415	)		74		519		(431	)		88
Non-amortizable intangible assets
Trademarks and trade names			69					69		75					75
		$	738	$	(538	)	$	200	$	786	$	(553	)	$	233

The net carrying amounts of intangible assets, other than goodwill, attributable to each of our operating segments at  September 30, 2022 were as follows: Light Vehicle — $17, Commercial Vehicle — $67, Off-Highway — $111 and Power Technologies — $5.

Amortization expense related to amortizable intangible assets — 

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Charged to cost of sales	$	3	$	2	$	7	$	7
Charged to amortization of intangibles		3		4		10		11
Total amortization	$	6	$	6	$	17	$	18

The following table provides the estimated aggregate pre-tax amortization expense related to intangible assets for each of the next five years based on September 30, 2022 exchange rates. Actual amounts may differ from these estimates due to such factors as currency translation, customer turnover, impairments, additional intangible asset acquisitions and other events.

	Remainder of 2022		2023		2024		2025		2026
Amortization expense	$	5	$	22	$	20	$	19	$	17