Goodwill

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

The following table reflects changes in the carrying amount of goodwill for the years ended December 31, 2021 and 2020:


In thousands	Device Solutions		Networked Solutions		Outcomes		Total Company

Goodwill balance at January 1, 2020	$	54,930	$	908,088	$	140,889	$	1,103,907

Goodwill allocated to business sold	(3,000)		—		—		(3,000)
Effect of change in exchange rates	1,284		25,726		3,999		31,009
Goodwill balance at December 31, 2020	53,214		933,814		144,888		1,131,916

Goodwill reclassified to held for sale	(12,800)		—		—		(12,800)
Goodwill acquired	—		5,440		—		5,440
Effect of change in exchange rates	(1,037)		(21,249)		(3,295)		(25,581)

Goodwill balance at December 31, 2021	$	39,377	$	918,005	$	141,593	$	1,098,975

The accumulated goodwill impairment losses at December 31, 2021 and 2020 were $676.5 million. The goodwill impairment losses were originally recognized in 2011 and 2013.

On October 12, 2021, we acquired SELC Group Limited (SELC), from Sensus Metering Systems (LUXCO3) S.ár.l. The purchase resulted in the recognition of $5.4 million in goodwill allocated to our Networked Solutions segment. Refer to Note 4: Intangible Assets and Liabilities for additional information on the transaction.

On November 2, 2021, Itron entered into an agreement to sell certain of its Gas device businesses and operations to Dresser. The asset disposal group, which includes $12.8 million of goodwill, was classified as held for sale during the fourth quarter of 2021. Refer to Note 18: Sale of Businesses for additional information on the transaction.

We recognized a $3.0 million reduction in Device Solutions goodwill as part of our loss on sale of business in 2020. Refer to Note 18: Sale of Businesses for additional information on the transaction.

We test goodwill for impairment each year as of October 1, or more frequently should a significant impairment indicator occur. As part of the impairment test, we may elect to perform an assessment of qualitative factors. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit, including goodwill, is less than its carrying amount, or if we elect to bypass the qualitative assessment, we would then proceed with the impairment test. The impairment test involves comparing the fair values of the reporting units to their carrying amounts. If the carrying amount of a reporting unit exceeds its fair value, we first evaluate the long-lived assets within the reporting unit for impairment and then recognize a goodwill impairment loss in an amount equal to any excess.

Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. We forecast discounted future cash flows at the reporting unit level using risk-adjusted discount rates and estimated future revenues and operating costs, which take into consideration factors such as existing backlog, expected future orders, supplier contracts, and expectations of competitive, business and economic environments. We also identify similar publicly traded companies and develop a correlation, referred to as a multiple, to apply to the operating results of the reporting units. These combined fair values are then reconciled to the aggregate market value of our common stock on the date of valuation, while considering a reasonable control premium.

Changes in market demand, fluctuations in the markets in which we operate, the volatility and decline in the worldwide equity markets, and a decline in our market capitalization could unfavorably impact the remaining carrying value of our goodwill, which could have a significant effect on our current and future results of operations and financial position. Based on the results of the annual impairment testing for our reporting units performed as of October 1, 2021, no adjustments to the carrying value of goodwill were required.