GOODWILL AND OTHER INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2024

GOODWILL AND OTHER INTANGIBLE ASSETS

GOODWILL AND OTHER INTANGIBLE ASSETS

6. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Goodwill arises from the Company’s acquisitions and represents the excess of the fair value of the purchase consideration exchanged over the fair value of net assets acquired. The Company’s reporting units are its eight operating segments. The Company assesses goodwill for impairment on an annual basis during the second quarter. If circumstances change or events occur that demonstrate it is more likely than not that the carrying amount of a reporting unit exceeds its fair value, the Company completes an interim goodwill assessment of that reporting unit prior to the next annual assessment. If the results of an annual or interim goodwill assessment demonstrate the carrying amount of a reporting unit is greater than its fair value, the Company will recognize an impairment loss for the amount by which the reporting unit’s carrying amount exceeds its fair value, but not to exceed the carrying amount of goodwill assigned to that reporting unit. There has been no impairment of goodwill in any of the periods presented.

The changes in the carrying amount of goodwill for each of the Company's reportable segments during the first quarter ended March 31, 2024 were as follows:

			Global		Global		Global
	Global		Institutional		Healthcare &		Pest
(millions)	Industrial		& Specialty		Life Sciences		Elimination		Other		Total
December 31, 2023		$4,140.6		$610.0		$3,158.4		$-		$239.2		$8,148.2
Segment changes (a)		102.9		-		-		136.3		(239.2)		-
December 31, 2023 recast		4,243.5		610.0		3,158.4		136.3		-		8,148.2
Effect of foreign currency translation		(26.0)		(0.8)		(9.8)		(0.2)		-		(36.8)
March 31, 2024		$4,217.5		$609.2		$3,148.6		$136.1		$-		$8,111.4

(a) Relates to reclassifications made to reportable segments in the current year. Effective January 1, 2024, the Company’s former Textile Care and Colloidal Technologies Group (“CTG”) operating segments are now part of the Water operating segment which continues to remain in the Global Industrial reportable segment. Additionally, the Pest Elimination operating segment, formerly aggregated with the Textile Care and CTG operating segments within Other, is now reported as the stand-alone Global Pest Elimination reportable segment. After these changes, the Company has eight operating segments aligned with eight reporting units. Refer to Note 15 for further information.

Other Intangible Assets

The Nalco trade name is the Company’s only indefinite life intangible asset, which is tested for impairment on an annual basis during the second quarter. Based on the ongoing performance of the Company’s reporting units associated with the Nalco trade name, an interim indefinite life intangible asset impairment assessment was not performed during the first quarter of 2024. There has been no impairment of the Nalco trade name intangible since it was acquired.

The Company’s intangible assets subject to amortization include customer relationships, trademarks, patents and other technologies primarily acquired through business acquisitions. The fair value of intangible assets acquired in business acquisitions are estimated primarily using discounted cash flow valuation methods at the time of acquisition. Intangible assets are amortized on a straight-line basis over their estimated lives. Total amortization expense related to intangible assets during the first quarter of 2024 and 2023 was $77.8 million and $75.6 million, respectively. Amortization expense related to intangible assets for the remaining nine-month period of 2024 is expected to be approximately $224 million.