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Goodwill & Intangibles

6 Months Ended

Jun. 28, 2020

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

Impairment

Balance

January 1,

the

Translation

June 28,

January 1,

Loss During

June 28,

2020

Period

and Other

2020

the Period

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.