9. Goodwill and Identifiable Intangible Assets

Goodwill

Effective in the first quarter of 2017, as a result of the Esselte Acquisition, the Company realigned its operating structure, which impacted its determination of its business segments for financial reporting purposes. As a result, the Company no longer reports the results of its Computer Products Group as a separate segment. See "Note 16. Information on Business Segments" for further details on the realigned segments. The Company's three realigned segments are as follows:



Operating Segment		Geography
ACCO Brands North America		United States and Canada
ACCO Brands EMEA		Europe, Middle East and Africa
ACCO Brands International		Australia, Latin America and Asia-Pacific

As part of the realignment, the Company performed a quantitative goodwill impairment test ("Step-1") to reallocate the goodwill among the realigned segments based on their relative fair values. There were no impairment charges recognized as a result of this change.

We have restated our reportable segments for the period presented below to reflect this change.

Changes in the net carrying amount of goodwill by segment were as follows:



(in millions of dollars)	ACCO Brands North America			ACCO Brands EMEA			ACCO Brands International			Total
(in millions of dollars)	ACCO Brands North America			ACCO Brands EMEA			ACCO Brands International			Total
Balance at December 31, 2016	380.7			39.5			166.9			587.1
Esselte Acquisition	(5.1		)	113.2			(1.6		)	106.5
Translation	—			(23.3		)	—			(23.3		)
Balance at December 31, 2017	$	375.6		$	129.4		$	165.3		$	670.3

The goodwill balance includes $215.1 million of accumulated impairment losses, which occurred prior to December 31, 2016.

Goodwill has been recorded on our Consolidated Balance Sheet related to the Esselte Acquisition and represents the excess of the cost of the Esselte Acquisition when compared to the fair value estimate of the net assets acquired on January 31, 2017 (the date of the Esselte Acquisition). See "Note 3. Acquisitions", for details on the calculation of the goodwill acquired in the Esselte Acquisition.

The authoritative guidance on goodwill and other intangible assets requires that goodwill be tested for impairment at a reporting unit level. We have determined that our reporting units are ACCO Brands North America, ACCO Brands EMEA and ACCO Brands International. We test goodwill for impairment at least annually and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. The Company performed this annual assessment, on a qualitative basis, as allowed by GAAP, in the second quarter of 2017 and concluded that no impairment existed.

A considerable amount of management judgment and assumptions are required in performing the impairment tests, principally in determining the fair value of each reporting unit and the indefinite lived intangible assets. While we believe our judgments and assumptions are reasonable, different assumptions could change the estimated fair values and, therefore, impairment charges could be required. Significant negative industry or economic trends, disruptions to our business, loss of significant customers, inability to effectively integrate acquired businesses, unexpected significant changes or planned changes in the use of the assets or in entity structure and divestitures may adversely impact the assumptions used in the valuations and ultimately result in future impairment charges.

Identifiable Intangibles

We test indefinite-lived intangibles for impairment at least annually and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. We performed this annual assessment, on a qualitative (Step-Zero) basis, as allowed by GAAP, for the majority of indefinite-lived trade names in the second quarter of 2017 and concluded that no impairment existed. For two of our indefinite-lived trade names that are not substantially above their carrying values, Mead^® and Hilroy^®, we performed quantitative tests (Step 1) in the second quarter of 2017. The following long-term growth rates and discount rates were used, 1.5% and 10.5% for Mead^®, and 1.5% and 11.0% for Hilroy^®, respectively. We concluded that neither the Mead^® nor Hilroy^® trade names were impaired. The fair value of the Mead^® trade name was less than 30% above its carrying value as of the second quarter of 2017 Step-1 test. As of December 31, 2017, the carrying value of the Mead^® trade name was $113.3 million.

As of June 1, 2017, we changed the indefinite-lived Hilroy trade name to an amortizable intangible asset. The change was made as a result of decisions regarding the Company's future use of the trade name. The Company commenced amortizing the Hilroy trade name June 1, 2017 on a straight-line basis over a life of 30 years.

The identifiable intangible assets of $277.0 million acquired in the Esselte Acquisition include amortizable customer relationships, indefinite lived and amortizable trade names and patents, which have been recorded at their estimated fair values. The fair value of the trade names and patents was determined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The fair value of the customer relationships was determined using the multi-period excess earnings method, which is based on the present value of the projected after-tax cash flows.

Amortizable customer relationships, trade names and patents are expected to be amortized over lives ranging from 10 to 30 years from the Esselte Acquisition date of January 31, 2017. The customer relationships will be amortized on an accelerated basis. The allocations of the acquired identifiable intangibles acquired in the Esselte Acquisition are as follows:



(in millions of dollars)	Fair Value		Remaining Useful Life Ranges
Trade name - indefinite lived	$	116.8	Indefinite
Trade names - amortizable	53.2		15-30 Years
Customer relationships	102.4		15 Years
Patents	4.6		10 Years
Total identifiable intangibles acquired	$	277.0

The identifiable intangible assets of $58.0 million acquired in the PA Acquisition include amortizable customer relationships and trade names and were recorded at their estimated fair values. The values assigned were based on the estimated future discounted cash flows attributable to the assets. These future cash flows were estimated based on the historical cash flows and then adjusted for anticipated future changes, primarily expected changes in sales volume or price.

Amortizable customer relationships and trade names are being amortized over lives ranging from 12 to 30 years from the PA Acquisition date of May 2, 2016. The customer relationships are being amortized on an accelerated basis. The allocations of the identifiable intangibles acquired in the PA Acquisition are as follows:



(in millions of dollars)	Fair Value		Remaining Useful Life Ranges
Trade names - amortizable	$	22.0	12-30 Years
Customer relationships	36.0		12 Years
Total identifiable intangibles acquired	$	58.0

The gross carrying value and accumulated amortization by class of identifiable intangible assets as of December 31, 2017 and 2016 were as follows:



	December 31, 2017								December 31, 2016
(in millions of dollars)	Gross Carrying Amounts		Accumulated Amortization				Net Book Value		Gross Carrying Amounts		Accumulated Amortization				Net Book Value
Indefinite-lived intangible assets:
Trade names	$	599.5	$	(44.5	)	⁽¹⁾	$	555.0	$	483.3	$	(44.5	)	⁽¹⁾	$	438.8
Amortizable intangible assets:
Trade names	195.3		(59.4		)		135.9		121.2		(48.8		)		72.4
Customer and contractual relationships	243.0		(99.3		)		143.7		127.5		(73.8		)		53.7
Patents	5.8		(0.5		)		5.3		0.8		—				0.8
Subtotal	444.1		(159.2		)		284.9		249.5		(122.6		)		126.9
Total identifiable intangibles	$	1,043.6	$	(203.7	)		$	839.9	$	732.8	$	(167.1	)		$	565.7


(1)	Accumulated amortization prior to the adoption of authoritative guidance on goodwill and other intangible assets, at which time further amortization ceased.

The Company’s intangible amortization was $35.6 million, $21.6 million and $19.6 million for the years ended December 31, 2017, 2016 and 2015, respectively.

Estimated amortization expense for amortizable intangible assets for the next five years is as follows:



(in millions of dollars)	2018		2019		2020		2021		2022
Estimated amortization expense⁽²⁾	$	34.3	$	30.8	$	27.3	$	23.8	$	20.3


(2)	Actual amounts of amortization expense may differ from estimated amounts due to changes in foreign currency exchange rates, additional intangible asset acquisitions, impairment of intangible assets, accelerated amortization of intangible assets and other events.