Goodwill and Other Intangible Assets, net

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets, net

Changes in the carrying values of goodwill for the three months ended March 31, 2022, by segment, were as follows (in millions):


	Segment
	Electrical Solutions		Utility Solutions		Total
BALANCE DECEMBER 31, 2021	$	612.5	$	1,258.8	$	1,871.3


Foreign currency translation	(0.3)		(0.4)		(0.7)
BALANCE MARCH 31, 2022	$	612.2	$	1,258.4	$	1,870.6

The carrying value of other intangible assets included in Other intangible assets, net in the Condensed Consolidated Balance Sheets is as follows (in millions):


	March 31, 2022				December 31, 2021
	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
Definite-lived:
Patents, tradenames and trademarks	$	181.2	$	(69.8)	$	181.3	$	(67.6)
Customer relationships, developed technology and other	901.6		(389.6)		901.2		(374.0)
TOTAL DEFINITE-LIVED INTANGIBLES	$	1,082.8	$	(459.4)	$	1,082.5	$	(441.6)
Indefinite-lived:
Tradenames and other	40.8		—		40.6		—
TOTAL OTHER INTANGIBLE ASSETS	$	1,123.6	$	(459.4)	$	1,123.1	$	(441.6)

Amortization expense associated with definite-lived intangible assets was $17.5 million and $19.9 million during the three months ended March 31, 2022 and 2021, respectively. Future amortization expense associated with these intangible assets is estimated to be $52.3 million for the remainder of 2022, $65.4 million in 2023, $61.4 million in 2024, $57.3 million in 2025, $53.7 million in 2026, and $48.7 million in 2027. The Company amortizes intangible assets with definite lives using either an accelerated method that reflects the pattern in which economic benefits of the intangible assets are consumed and results in higher amortization in the earlier years of the assets useful life, or using a straight line method. Approximately 80% of the gross value of definite-lived intangible assets follow an accelerated amortization method.

The organizational changes described in Note 3 - Revenue resulted in a change in the Company's reporting units effective January 1, 2022 within the Electrical Solutions segment. As a result of the change in reporting units, the Company performed an interim goodwill impairment assessment prior to the change, for the reporting units within the Electrical Solutions segment. Because the changes did not affect the Utility Solutions segment, no interim goodwill impairment assessment was required for that segment.

For the three reporting units within the Electrical Solutions segment, the Company elected to utilize the quantitative goodwill impairment testing process, as permitted in the accounting guidance, by comparing the estimated fair value of the reporting units to their carrying values. If the estimated fair value of a reporting unit exceeds its carrying value, no impairment exists.

Goodwill impairment testing requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units and determining the fair value of each reporting unit. Significant judgment is required to estimate the fair value of reporting units including estimating future cash flows, determining appropriate discount rates and other assumptions, including assumptions about secular economic and market conditions, such as the potential continuing effects of the COVID-19 pandemic. The Company uses internal discounted cash flow models to estimate fair value. These cash flow estimates are derived from historical experience, third party end market data, and future long-term business plans and include assumptions of future sales growth, gross margin, operating margin, terminal growth rate, and the application of an appropriate discount rate. Significant changes in these estimates and assumptions could affect the determination of fair value and/or goodwill impairment for each reporting unit. The Company believes that its estimated aggregate fair value of its reporting units is reasonable when compared to the Company's market capitalization on the valuation date.

As of January 1, 2022, the impairment testing resulted in implied fair values for each reporting unit that significantly exceeded such reporting unit's carrying value, including goodwill. The Company did not have any reporting units at risk of failing the quantitative impairment test as the excess of the implied fair value significantly exceeded the carrying value of each of the reporting units. Additionally, the Company did not have any reporting units with zero or negative carrying amounts.