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Goodwill & Intangibles
6 Months Ended
Jun. 28, 2020
Goodwill & Intangibles  
Goodwill & Intangibles

4. Goodwill & Intangibles

The Company operates in three geographic segments: Americas, Europe, and APMEA. The changes in the carrying amount of goodwill by geographic segment are as follows:

June 28, 2020

Gross Balance

Accumulated Impairment Losses

Net Goodwill

Acquired

Foreign

Balance

During

Currency

Balance

Balance

Impairment

Balance

January 1,

the

Translation

June 28,

January 1,

Loss During

June 28,

June 28,

    

2020

    

Period

    

and Other

    

2020

    

2020

    

the Period

    

2020

    

2020

(in millions)

Americas

$

476.8

$

(0.4)

$

476.4

$

(24.5)

$

(24.5)

$

451.9

Europe

 

241.4

 

 

0.2

 

241.6

 

(129.7)

 

 

(129.7)

 

111.9

APMEA

 

30.0

 

 

(0.8)

 

29.2

 

(12.9)

 

 

(12.9)

 

16.3

Total

$

748.2

$

(1.0)

$

747.2

$

(167.1)

$

(167.1)

$

580.1

December 31, 2019

Gross Balance

Accumulated Impairment Losses

Net Goodwill

Acquired

Foreign

Balance

During

Currency

Balance

Balance

Impairment

Balance

January 1,

the

Translation

December 31,

January 1,

Loss During

December 31,

December 31,

    

2019

    

Period

    

and Other

    

2019

    

2019

    

the Period

    

2019

    

2019

(in millions)

Americas

$

438.1

$

38.3

$

0.4

$

476.8

$

(24.5)

$

$

(24.5)

$

452.3

Europe

 

243.7

 

 

(2.3)

 

241.4

 

(129.7)

 

 

(129.7)

 

111.7

APMEA

 

30.1

 

 

(0.1)

 

30.0

 

(12.9)

 

 

(12.9)

 

17.1

Total

$

711.9

$

38.3

$

(2.0)

$

748.2

$

(167.1)

$

$

(167.1)

$

581.1

Goodwill and indefinite-lived intangible assets are tested for impairment at least annually or more frequently if events or circumstances indicate that it is “more likely than not” that they might be impaired, such as from a change in business conditions. The Company performs its annual goodwill and indefinite-lived intangible assets impairment assessment in the fourth quarter of each year. At the most recent annual impairment test date of October 27, 2019, the Company performed qualitative fair value assessments, including an evaluation of certain key assumptions for all seven of its reporting units. The Company concluded that the fair value of all seven reporting units exceed its carrying value at that time.

As a result of the impact of the COVID-19 global pandemic, the Company reviewed the guidance outlined in ASC 350 to determine if there was an event or change in circumstance to indicate it is more likely than not that an impairment loss has been incurred during the first six months of 2020. The Company performed an analysis of the decline in stock price when compared to December 31, 2019, assessed other market risk factors, and performed a market capitalization reconciliation of its reporting units. The Company concluded a triggering event did not occur as of June 28, 2020 and it was not “more likely than not” that the Company’s reporting units might be impaired.

Additionally, the Company noted the Heating and Hot Water Solutions (“HHWS”) reporting unit had a goodwill balance of $218.9 million as of June 28, 2020, which holds the greatest amount of goodwill and the least amount of excess of fair value over carrying value. While the Company concluded that a triggering event did not occur during the second quarter and six months ended June 28, 2020, the impact of a prolonged COVID-19 pandemic could impact the results of

operations due to changes to assumptions utilized in the determination of the estimated fair values of the HHWS reporting unit that may be significant enough to trigger an impairment determination.

Intangible assets include the following:

June 28, 2020

December 31, 2019

Gross

Net

Gross

Net

Carrying

Accumulated

Carrying

Carrying

Accumulated

Carrying

    

Amount

    

Amortization

    

Amount

    

Amount

    

Amortization

    

Amount

(in millions)

Patents

$

16.1

$

(15.9)

$

0.2

$

16.1

$

(15.9)

$

0.2

Customer relationships

 

232.5

 

(160.9)

 

71.6

 

232.8

 

(156.3)

 

76.5

Technology

 

56.8

 

(33.8)

 

23.0

 

56.9

 

(31.6)

 

25.3

Trade names

 

25.9

 

(13.8)

 

12.1

 

26.0

 

(13.1)

 

12.9

Other

 

4.3

 

(3.7)

 

0.6

 

4.3

 

(3.6)

 

0.7

Total amortizable intangibles

 

335.6

 

(228.1)

 

107.5

 

336.1

 

(220.5)

 

115.6

Indefinite-lived intangible assets

 

35.9

 

 

35.9

 

35.8

 

 

35.8

$

371.5

$

(228.1)

$

143.4

$

371.9

$

(220.5)

$

151.4

Aggregate amortization expense for amortized intangible assets for the second quarters ended June 28, 2020 and June 30, 2019 was $3.8 million and $3.9 million, respectively, and for the first six months of 2020 and 2019 was $7.6 million and $7.8 million, respectively.