GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2021

GOODWILL AND OTHER INTANGIBLES [Abstract]

Grainger completed its annual impairment testing of goodwill and intangible assets during the fourth quarter of 2021 and 2020. Based on the results of that testing, the Company concluded that it was more likely than not that the fair value of the reporting units exceeded their carrying amounts at each respective period.

High-Touch Solutions N.A. – Canada Business

In the second quarter of 2020, qualitative tests indicated the existence of impairment indicators for the Canada business given the slowdowns in global oil markets and the economic repercussions from the COVID-19 pandemic in Canada. As such, a quantitative test was performed to evaluate whether any impairment of goodwill was necessary. Based on the result of the quantitative test, the Company concluded there was no impairment of goodwill.

During the subsequent annual impairment testing of the Canada business goodwill in 2020 and 2021, the Company performed qualitative assessments, which included evaluations of changes in key assumptions, notably projections of revenue growth, factors that could impact the discount rate used in the analysis, and the improvement in operating leverage since the performance of the last quantitative impairment test. As part of this assessment, Grainger compared the current results to the forecasted expectations of the most recent quantitative analysis, along with analyzing macroeconomic conditions, current industry trends and transactions, and other market data of industry peers. The Company did not identify any significant events or changes in circumstances that indicated the existence of impairment indicators, as such, additional quantitative assessments were not required and concluded that it was more likely than not that the fair value of the Canada business reporting unit exceeded its carrying amount. At December 31, 2021, the reporting unit's goodwill balance was $129 million.

The Company balances and changes in the carrying amount of Goodwill (net of cumulative goodwill impairments) by segment are as follows (in millions of dollars):


	High-Touch Solutions N.A.		Endless Assortment		Other		Total
Balance at January 1, 2020	$	318	$	52	$	59	$	429
Acquisition	—		15		—		15
Impairment	—		—		(58)		(58)
Translation	3		3		(1)		5
Balance at December 31, 2020	321		70		—		391


Translation	—		(7)		—		(7)
Balance at December 31, 2021	$	321	$	63	$	—	$	384

The cumulative goodwill impairments as of December 31, 2021, were $137 million and consisted of $32 million within High-Touch Solutions N.A. and $105 million in Other.

During the first quarter of 2020, the Company recorded $58 million of impairment charges in SG&A, in connection with the impairment of Fabory's goodwill. The impairment is presented in Other in the table above. The Company divested the Fabory business during the second quarter of 2020. Grainger's current business portfolio had no impairments to goodwill for the twelve months ended December 31, 2021, and December 31, 2020, respectively.

The balances and changes in intangible assets, net are as follows (in millions of dollars):


		As of December 31,
		2021						2020
	Weighted average life	Gross carrying amount		Accumulated amortization/ impairment		Net carrying amount		Gross carrying amount		Accumulated amortization/impairment		Net carrying amount
Customer lists and relationships	11.8 years	$	221	$	176	$	45	$	223	$	171	$	52
Trademarks, trade names and other	14.1 years	36		24		12		36		22		14
Non-amortized trade names and other	Indefinite	25		—		25		28		—		28
Capitalized software	4.4 years	525		369		156		461		327		134
Total intangible assets	6.9 years	$	807	$	569	$	238	$	748	$	520	$	228

Amortization expense of intangible assets presented in SG&A, excluding impairment charges was $63 million, $60 million, and $78 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Estimated amortization expense for future periods is as follows (in millions of dollars):


Year	Expense
2022	$	54
2023	41
2024	31
2025	24
2026	19
Thereafter	44
Total	$	213