Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

NOTE 7. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The changes in the carrying amount of goodwill are as follows:

($ in millions)
Balance, January 1, 2019	$	1,139.5
Foreign currency translation and other	18.3
Balance, December 31, 2019	1,157.8
Impairment charge	(85.3)
Foreign currency translation and other	19.6
Balance, December 31, 2020	$	1,092.1

Impairment Charge

The results of our fourth quarter 2019 goodwill impairment testing indicated the excess of the estimated fair value over the carrying value (expressed as a percentage of carrying value) of our Telematics reporting unit was approximately 5%, and as such, management continued to monitor the performance of Telematics during the first quarter of 2020. In connection with management’s updated forecast for the Telematics reporting unit that indicated a decline in sales and operating profit to levels lower than previously forecasted, due in large part to the impacts of the COVID-19 pandemic, we performed a quantitative impairment assessment over the Telematics reporting unit on March 27, 2020.

We estimated the fair value of the Telematics reporting unit through an income approach, using the discounted cash flow method. The income approach was based on projected future (debt-free) cash flows that were discounted to present value and assumed a terminal growth value. The discount rate was based on the reporting unit’s weighted average cost of capital, taking into account market participant assumptions. Management’s revenue and profitability forecasts used in the valuation considered recent and historical performance of the reporting unit, strategic initiatives, industry trends, and the current and future expectations of the macroeconomic environment. Assumptions used in the valuation were similar to those that would be used by market participants performing independent valuations of this reporting unit.

Key assumptions developed by management and used in the quantitative analysis included the following:

•Near-term revenue declines in 2020 with later-term improvements over the projection period;

•Improved profitability over the projection period, trending consistent with revenues; and

•Market-based discount rates.

We did not consider the market approach in our fair value calculation given the near-term uncertainty in the market data and forecasts of the guideline companies upon which the approach relies.

As a result of the interim impairment testing performed, we concluded that the estimated fair value of our Telematics reporting unit was less than its carrying value as of March 27, 2020, and recorded a non-cash goodwill impairment charge of $85.3 million during the three months ended March 27, 2020. The charge is included in operating results and represents the accumulated impairment charges taken as of December 31, 2020. The carrying value of the Telematics reporting unit was $248.4 million as of December 31, 2020.

Refer to Note 2. Basis of Presentation and Summary of Significant Accounting Policies for discussion of our annual impairment test.

Intangible Assets

Finite-lived intangible assets are amortized over the shorter of their legal or estimated useful lives. The following summarizes the gross carrying value and accumulated amortization for each major category of intangible asset as of December 31:

		2020						2019
($ in millions)	Weighted Average Amortization Period	Gross Amount		Accumulated Amortization		Net Amount		Gross Amount		Accumulated Amortization		Net Amount
Finite-lived intangibles:
Patents and technology	6 years	$	75.1	$	(50.9)	$	24.2	$	70.2	$	(44.5)	$	25.7
Customer relationships and other intangibles	7 years	277.3		(152.5)		124.8		268.0		(125.3)		142.7
Total finite-lived intangibles		352.4		(203.4)		149.0		338.2		(169.8)		168.4
Indefinite-lived intangibles:
Trademarks and trade names		101.5		—		101.5		105.9		—		105.9
Total intangibles		$	453.9	$	(203.4)	$	250.5	$	444.1	$	(169.8)	$	274.3

Total intangible amortization expense for the years ended December 31, 2020, 2019 and 2018 was $29.0 million, $31.8 million and $30.6 million, respectively.

Based on the intangible assets recorded as of December 31, 2020, amortization expense is estimated to be as follows for the next five years and thereafter:

($ in millions)
2021	$	29.3
2022	24.9
2023	23.7
2024	22.6
2025	18.8
2026 and thereafter	29.7
Total	$	149.0