Goodwill and Other Intangible Assets, Net
A summary of changes in the Company’s goodwill by reportable business segment is as follows for 2013 and 2012 (in millions):
|
| | | | | | | | | | | | | | | |
Segment | December 31, 2012 Balance | Acquisitions | Other Adjustments(1) | Foreign Currency | December 31, 2013 Balance |
Writing | $ | 1,145.4 |
| $ | — |
| $ | (7.7 | ) | $ | 23.8 |
| $ | 1,161.5 |
|
Home Solutions | 226.9 |
| — |
| (21.2 | ) | — |
| 205.7 |
|
Tools | 482.2 |
| — |
| — |
| 2.3 |
| 484.5 |
|
Commercial Products | 387.7 |
| — |
| — |
| 0.1 |
| 387.8 |
|
Baby & Parenting | 128.0 |
| — |
| — |
| (6.4 | ) | 121.6 |
|
| $ | 2,370.2 |
| $ | — |
| $ | (28.9 | ) | $ | 19.8 |
| $ | 2,361.1 |
|
|
| | | | | | | | | | | | | | | |
Segment | December 31, 2011 Balance | Acquisitions | Other Adjustments(1) | Foreign Currency | December 31, 2012 Balance |
Writing | $ | 1,137.3 |
| $ | — |
| $ | 4.1 |
| $ | 4.0 |
| $ | 1,145.4 |
|
Home Solutions | 226.9 |
| — |
| — |
| — |
| 226.9 |
|
Tools | 480.3 |
| — |
| — |
| 1.9 |
| 482.2 |
|
Commercial Products | 387.5 |
| — |
| — |
| 0.2 |
| 387.7 |
|
Baby & Parenting | 134.0 |
| — |
| (3.4 | ) | (2.6 | ) | 128.0 |
|
| $ | 2,366.0 |
| $ | — |
| $ | 0.7 |
| $ | 3.5 |
| $ | 2,370.2 |
|
| |
(1) | The other adjustment for 2013 for Home Solutions includes the goodwill of the cabinet and drapery hardware business that was written off in connection with the sale of the Hardware business in 2013. The other adjustment for 2013 for Writing represents the goodwill of the Teach business that was deemed impaired in connection with plans to divest the business. The other adjustment for Baby & Parenting in 2012 was due to the settlement of a contingency that was initially recorded in conjunction with the acquisition of Aprica in 2008. |
The Company performs its annual impairment tests of goodwill and indefinite-lived intangibles as of the first day of the Company’s third quarter because it coincides with the Company’s annual strategic planning process. Effective in the fourth quarter of 2012, the Company, as part of Project Renewal, implemented changes to its organizational structure that resulted in an increase in the number of reportable segments, from three to six, and reporting units, from nine to 15. Based on the Company’s plans to divest the Hardware and Teach businesses, the goodwill of these reporting units was evaluated for impairment each reporting period subsequent to the Company committing to dispose of these businesses, which occurred in the first quarter of 2013. The Company concluded the goodwill of the Teach reporting unit was impaired in the first quarter of 2013, and the goodwill of the Hardware reporting unit was not impaired. Upon further reorganization in the first quarter of 2013 and excluding the Hardware and Teach reporting units, the number of reportable segments was reduced to five, and the number of reporting units was reduced to 13. Other than the tests of impairment of the Hardware and Teach reporting units in connection with the Company’s plans to divest these businesses, there were no other impairment tests of goodwill and indefinite-lived intangible assets during 2013 other than the annual impairment tests.
During 2011, the Company recorded non-cash impairment charges of $317.9 million in continuing operations and $64.7 million in discontinued operations in 2011 as a result of its annual impairment tests, principally related to goodwill impairments in the Company’s Baby & Parenting and Hardware businesses, respectively. The impairments generally resulted from declines in sales projections relative to previous estimates due to economic and market factors based in large part on actual declines in sales in the first six months of 2011, which adversely impacted projected operating margins and net cash flows for these reporting units. The decline in anticipated future cash flows adversely affected the estimated fair value of the reporting units calculated using the discounted cash flow approach and resulted in the estimated fair values of the Baby & Parenting and the Hardware reporting units being less than their net assets (including goodwill). In addition to $370.2 million of goodwill impairments, the Company recorded $12.4 million of non-cash impairment charges relating to impairments of trade names and other assets.
Cumulative impairment charges relating to goodwill since January 1, 2002, were $1,642.4 million as of December 31, 2013 and 2012. Of these amounts, $538.0 million was included in cumulative effect of accounting change, and $363.6 million was included in discontinued operations.
Other intangible assets, net consisted of the following as of December 31, (in millions):
|
| | | | | | | | | | | | | | | | | | | |
| 2013 | | 2012 |
| Gross Carrying Amount | Accumulated Amortization | Net Book Value | | Gross Carrying Amount | Accumulated Amortization | Net Book Value |
Trade names — indefinite life | $ | 312.4 |
| $ | — |
| $ | 312.4 |
| | $ | 311.1 |
| $ | — |
| $ | 311.1 |
|
Trade names — other | 37.0 |
| (25.9 | ) | 11.1 |
| | 42.1 |
| (28.0 | ) | 14.1 |
|
Capitalized software | 446.8 |
| (194.9 | ) | 251.9 |
| | 429.9 |
| (160.7 | ) | 269.2 |
|
Patents | 89.5 |
| (75.6 | ) | 13.9 |
| | 92.2 |
| (68.2 | ) | 24.0 |
|
Customer lists | 108.6 |
| (83.4 | ) | 25.2 |
| | 113.5 |
| (77.9 | ) | 35.6 |
|
Other | 2.3 |
| (2.3 | ) | — |
| | 3.1 |
| (3.0 | ) | 0.1 |
|
| $ | 996.6 |
| $ | (382.1 | ) | $ | 614.5 |
| | $ | 991.9 |
| $ | (337.8 | ) | $ | 654.1 |
|
The table below summarizes the Company’s amortization periods using the straight-line method for other intangible assets, including capitalized software, as of December 31, 2013:
|
| | |
| Weighted-Average Amortization Period (in years) | Amortization Periods (in years) |
Trade names — indefinite life | N/A | N/A |
Trade names — other | 10 | 3 – 20 years |
Capitalized software | 10 | 3 – 12 years |
Patents | 7 | 3 – 14 years |
Customer lists | 8 | 3 – 10 years |
Other | 5 | 3 – 5 years |
| 9 | |
Amortization expense for intangible assets, including capitalized software, for continuing operations was $56.2 million, $55.7 million and $48.6 million in 2013, 2012 and 2011, respectively.
As of December 31, 2013, the aggregate estimated intangible amortization amounts for the succeeding five years are as follows (in millions):
|
| | | | |
2014 | 2015 | 2016 | 2017 | 2018 |
$51.6 | $45.6 | $41.2 | $38.7 | $34.5 |
Actual amortization expense to be reported in future periods could differ materially from these estimates as a result of acquisitions, changes in useful lives and other relevant factors.
