Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Note 9 - Goodwill and Other Intangible Assets

The Company tests goodwill and indefinite-lived intangible assets for impairment at least annually, performing its annual impairment test as of October 1st. Furthermore, goodwill and indefinite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

In connection with the adoption of new reportable segments, goodwill was reallocated to new reporting units based on relative fair value at the reporting unit level. The Engineered Bearings segment has one reporting unit and the Industrial Motion segment has six reporting units.

The changes in the carrying amount of goodwill for the three months ended March 31, 2023 were as follows:


	Engineered Bearings		Industrial Motion		Total
Beginning balance	$	679.8	$	418.5	$	1,098.3

Impairment loss	—		(28.3)		(28.3)
Foreign currency translation adjustments and other changes	(0.5)		6.3		5.8
Ending balance	$	679.3	$	396.5	$	1,075.8

During the first quarter of 2023, the Company reviewed goodwill for impairment for its reporting units due to the change in reporting segments that went into effect January 1, 2023. The Company utilizes both an income approach and a market approach in testing goodwill for impairment. The Company utilized updated forecasts for the income approach as part of the goodwill impairment review. Based on the earnings and cash flow forecasts for the Belts & Chain reporting unit within the Industrial Motion segment, the Company determined that the reporting unit could not support the carrying value of its goodwill. As a result, the Company recorded a pretax impairment loss of $28.3 million during the first quarter of 2023, which was reported in impairment and restructuring charges on the Consolidated Statement of Income.

The following table displays intangible assets as of March 31, 2023 and December 31, 2022:


	Balance at March 31, 2023						Balance at December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible assets subject to amortization:
Customer relationships	$	567.1	$	(190.6)	$	376.5	$	561.5	$	(183.2)	$	378.3
Technology and know-how	272.0		(85.3)		186.7		273.1		(80.4)		192.7
Trade names	31.8		(9.1)		22.7		18.4		(8.7)		9.7
Capitalized software	290.0		(268.0)		22.0		288.4		(266.3)		22.1
Other	7.7		(4.3)		3.4		3.3		(2.3)		1.0
	$	1,168.6	$	(557.3)	$	611.3	$	1,144.7	$	(540.9)	$	603.8
Intangible assets not subject to amortization:
Trade names	$	135.3			$	135.3	$	152.8			$	152.8
FAA air agency certificates	8.7				8.7		8.7				8.7
	$	144.0			$	144.0	$	161.5			$	161.5
Total intangible assets	$	1,312.6	$	(557.3)	$	755.3	$	1,306.2	$	(540.9)	$	765.3

Amortization expense for intangible assets was $15.1 million and $12.7 million for the three months ended March 31, 2023 and 2022, respectively. Amortization expense related to intangible assets acquired as part of a business combination is reported in amortization of intangible assets on the Consolidated Statement of Income, and amortization expense related to capitalized software is reported in cost of products sold or selling, general and administrative expenses on the Consolidated Statement of Income. Amortization expense for intangible assets is projected to be $56.2 million in 2023; $51.5 million in 2024; $50.6 million in 2025; $49.1 million in 2026; and $47.3 million in 2027.