Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

The changes in the carrying amount of goodwill, for the year ended December 31, 2021, were as follows:


	December 31, 2020		Goodwill Resulting from Business Combinations (1)		Impairments (2)		Foreign Currency Translation		December 31, 2021
HVAC reportable segment
Gross goodwill	$	492.2	$	46.0	$	—	$	(9.3)	$	528.9
Accumulated impairments	(340.6)		—		—		6.5		(334.1)
Goodwill	151.6		46.0		—		(2.8)		194.8
Detection and Measurement reportable segment
Gross goodwill	351.5		78.7		—		(5.3)		424.9
Accumulated impairments	(134.5)		—		(28.2)		0.3		(162.4)
Goodwill	217.0		78.7		(28.2)		(5.0)		262.5
Total
Gross goodwill	843.7		124.7		—		(14.6)		953.8
Accumulated impairments	(475.1)		—		(28.2)		6.8		(496.5)
Goodwill	$	368.6	$	124.7	$	(28.2)	$	(7.8)	$	457.3

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(1) Reflects (i) goodwill acquired with the Sealite, ECS and Cincinnati Fan acquisitions of $47.7, $25.9 and $46.0, respectively, (ii) and increase in ULC's goodwill during 2021 of $3.1 resulting from revisions to the valuation of certain assets and liabilities and income tax accounts, and (iii) an increase in Sensors & Software's goodwill of $2.0 resulting from revisions to the valuation of certain assets and liabilities and income tax accounts. As indicated in Note 1, the acquired assets, including goodwill, and liabilities assumed in the Sealite, ECS and Cincinnati Fan acquisitions have been recorded at estimates of fair value and are subject to change upon completion of acquisition accounting.

(2) As indicated in Note 1, we concluded during the third quarter of 2021 that the operating and financial milestones related to the ULC contingent consideration would not be achieved, resulting in the reversal of the related liability of $24.3, with the offset to “Other operating expenses, net.” We also concluded that the lack of achievement of these milestones, along with lower than anticipated future cash flows, were indicators of potential impairment related to ULC’s goodwill and indefinite-lived intangible assets. As such, we tested ULC’s goodwill and indefinite-lived intangible assets for impairment during the quarter. Based on such testing, we determined that the carrying value of ULC’s net assets exceeded the implied fair value of the business. As a result, we recorded an impairment charge to “Other operating expenses, net” of $24.3 during the third quarter, with $23.3 related to goodwill and the remainder to trademarks. In connection with our annual impairment analysis of ULC's goodwill and indefinite-lived intangibles, during the fourth quarter of 2021, we determined that the carrying value of ULC's net assets exceeded the implied fair value of the business by $5.2. As a result, we recorded impairment charges of $4.9 and $0.3 related to the business's goodwill and trademarks, respectively.

The changes in the carrying amount of goodwill, for the year ended December 31, 2020, were as follows:


	December 31, 2019		Goodwill Resulting from Business Combinations (1)		Impairments		Foreign Currency Translation		December 31, 2020
HVAC reportable segment
Gross goodwill	$	480.0	$	0.8	$	—	$	11.4	$	492.2
Accumulated impairments	(332.5)		—		—		(8.1)		(340.6)
Goodwill	147.5		0.8		—		3.3		151.6
Detection and Measurement reportable segment
Gross goodwill	304.1		42.7		—		4.7		351.5
Accumulated impairments	(133.6)		—		—		(0.9)		(134.5)
Goodwill	170.5		42.7		—		3.8		217.0
Total
Gross goodwill	784.1		43.5		—		16.1		843.7
Accumulated impairments	(466.1)		—		—		(9.0)		(475.1)
Goodwill	$	318.0	$	43.5	$	—	$	7.1	$	368.6

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(1) Reflects goodwill acquired with the ULC and Sensors & Software acquisitions of $37.3 and $5.4, respectively, and a net increase in Patterson-Kelley's goodwill during 2020 of $0.4 resulting from revisions to the valuation of certain liabilities and tangible assets and an increase in SGS's goodwill during the first half of 2020 of $0.4 resulting from revisions to the valuation of certain income tax accounts.

Identifiable intangible assets were as follows:


	December 31, 2021						December 31, 2020
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value		Gross Carrying Value		Accumulated Amortization		Net Carrying Value
Intangible assets with determinable lives:(1)
Customer relationships	$	188.2	$	(26.7)	$	161.5	$	103.4	$	(16.2)	$	87.2
Technology	80.1		(11.9)		68.2		54.4		(6.8)		47.6
Patents	4.5		(4.5)		—		4.5		(4.5)		—
Other	31.6		(18.0)		13.6		18.8		(12.5)		6.3
	304.4		(61.1)		243.3		181.1		(40.0)		141.1
Trademarks with indefinite lives (2)	172.2		—		172.2		163.9		—		163.9
Total	$	476.6	$	(61.1)	$	415.5	$	345.0	$	(40.0)	$	305.0

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(1)The identifiable intangible assets associated with the Sealite, ECS and Cincinnati Fan acquisitions consist of customer backlog of $1.9, $0.8 and $4.3, respectively, customer relationships of $12.1, $12.6 and $61.7, respectively, technology of $6.6, $5.8 and $14.4, respectively, and definite-lived trademarks of $0.0, $1.2 and $4.7, respectively.

(2)Changes during 2021 related primarily to the acquisition of Sealite trademarks of $11.6 and, as previously discussed, the impairment charges of $1.3 related to ULC's trademarks during the third and fourth quarters of 2021.

Amortization expense was $21.6, $14.0 and $8.9 for the years ended December 31, 2021, 2020 and 2019, respectively. Estimated amortization expense is approximately $28.0 for 2022 and $23.0 over each of the four years thereafter related to these intangible assets.

At December 31, 2021, the net carrying value of intangible assets with determinable lives consisted of $106.2 in the HVAC reportable segment and $137.1 in the Detection and Measurement reportable segment. Trademarks with indefinite lives consisted of $105.4 in the HVAC reportable segment and $66.8 in the Detection and Measurement reportable segment.

As indicated in Note 1, we review goodwill and indefinite-lived intangible assets for impairment annually during the fourth quarter. In addition, we test goodwill for impairment on a more frequent basis if there are indications of potential impairment. In reviewing goodwill and indefinite-lived intangible assets for impairment, we initially perform a qualitative analysis. If there is an indication of impairment, we then perform a quantitative analysis. During the fourth quarter of 2021, we performed quantitative analyses on the goodwill and indefinite-lived intangible assets of our Cues and ULC reporting units. Based on such analysis, we determined that the fair value of Cues’ net assets exceeded the related carrying value by approximately 30%. Our quantitative analysis of the ULC reporting unit resulted in impairment charges of $5.2, with $4.9 related to goodwill and $0.3 to the ULC trademarks. After such impairment charges, ULC’s total goodwill was $12.0 as of December 31, 2021. A change in assumptions used in ULC's quantitative analysis (e.g., projected revenues and profit growth rates, discount rates, industry price multiples, etc.) could result in the reporting unit's estimated fair value being less than the carrying value of its net assets. In addition to ULC, the fair value of Sealite, ECS and Cincinnati Fan, acquisitions over the past 12 months, approximate their carrying value. If ULC, Sealite, ECS, or Cincinnati Fan are unable to achieve their respective current financial forecast, we may be required to record an impairment charge in a future period related to their respective goodwill.

Our quantitative analysis of trademarks is based on applying estimated royalty rates to projected revenues, with resulting cash flows discounted at a rate of return that reflects current market conditions. In addition to the $1.3 of 2021 impairment charges related to the ULC trademarks, during the fourth quarters of 2021 and 2020, we recorded impairment charges of $0.5 and $0.7, respectively, related to certain other trademarks.