Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets

Goodwill and Intangible Assets

7. Goodwill and Intangible Assets

Goodwill

The changes in the carrying amount of goodwill for the years ended December 31, 2022, 2021, and 2020 are as follows:

	Europe		Americas		Total
Balance as of January 1, 2020	$	859	$	1,075	$	1,934
Translation effects		74		(57)		17
Balance as of December 31, 2020		933		1,018		1,951
Divestiture related adjustments				(3)		(3)
Reclassified as held for sale				(18)		(18)
Translation effects		(67)		(23)		(90)
Balance as of December 31, 2021		866		974		1,840
Translation effects		(48)		21		(27)
Balance as of December 31, 2022	$	818	$	995	$	1,813

Goodwill is tested for impairment annually as of October 1 (or more frequently if impairment indicators arise) by comparing the business enterprise value (“BEV”) of each reporting unit with its carrying value. The BEV is computed based on estimated future cash flows, discounted at the weighted average cost of capital of a hypothetical third-party buyer. If the BEV is less than the carrying value for any reporting unit, then any excess of the carrying value over the BEV will be recorded as an impairment loss. The calculations of the BEV of the Company’s reporting units were determined based on valuation techniques using the best available information of significant unobservable inputs, primarily future cash flows of the reporting units, discount rates, terminal business values, and are classified as Level 3 in the fair value hierarchy.

During the fourth quarter of 2022, the Company completed its annual impairment testing and determined that no impairment existed.

There can be no assurance that anticipated financial results will be achieved and the goodwill balances remain susceptible to future impairment charges. The goodwill related to the North America reporting unit, which was $442 million and is included in the Americas segment above, was determined to have the greatest risk of future impairment charges given the difference (13%) between the BEV and carrying value of this reporting unit as of October 1, 2022. The BEVs of the Company’s Europe and Latin America reporting units substantially exceeded their carrying values as of October 1, 2022. If the Company’s projected future cash flows were lower, or if the assumed weighted average cost of capital were higher, the testing performed in the fourth quarter of 2022 may have indicated an impairment of the goodwill related to one or more of the Company’s reporting units. Any impairment charges that the Company may take in the future could be material to its consolidated results of operations and financial condition.

During the time subsequent to the annual evaluation, and at December 31, 2022, the Company considered whether any events and/or changes in circumstances had resulted in the likelihood that the goodwill of any of its reporting units may have been impaired and has determined that no such events have occurred.

Goodwill for the Americas segment is net of accumulated impairment losses of $595 million as of December 31, 2022 and 2021.

Intangible Assets

Customer list intangible assets are amortized using the accelerated amortization method over their 20 year lives. Net intangible asset values were $262 million and $286 million, which included accumulated amortization of $284 million and $251 million, for the years ended December 31, 2022 and 2021, respectively. Amortization expense for intangible assets was $33 million, $34 million and $33 million for the years ended December 31, 2022, 2021, and 2020, respectively. Estimated amortization related to intangible assets through 2027 is as follows: 2023, $28 million; 2024, $26 million; 2025, $24 million; 2026, $23 million and 2027, $21 million. No impairment existed on these assets at December 31, 2022.

The Company has determined that the fair value measurements related to the customer list intangible assets are based on significant unobservable inputs and are classified as Level 3 in the fair value hierarchy.