Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The following table shows the carrying amount of goodwill by reportable segment as of December 31, 2022 and 2021:


	Ammonia		Granular Urea		UAN		AN		Other		Total
	(in millions)
Balance as of December 31, 2021	$	579	$	828	$	576	$	69	$	39	$	2,091

Effect of exchange rate changes	(2)		—		—		—		—		(2)
Balance as of December 31, 2022	$	577	$	828	$	576	$	69	$	39	$	2,089

Goodwill is not amortized, but is reviewed for impairment annually in the fourth quarter or more frequently whenever events or circumstances indicate that the carrying value may not be recoverable. During the third quarter of 2021, in light of the unprecedented increase in natural gas prices in the United Kingdom and its estimated impact on our U.K. operations, we identified a triggering event indicating possible impairment of goodwill within our U.K. Ammonia, U.K. AN and U.K. Other reporting units. Due to the triggering event, we performed an interim quantitative goodwill impairment analysis as of September 30, 2021 for our U.K. Ammonia, U.K. AN and U.K. Other reporting units. We estimated the fair value of the reporting units using the income approach described in Note 5—United Kingdom Operations Restructuring and Impairment Charges. Based on the evaluation performed, we determined that the carrying value of all three reporting units exceeded their fair value, which resulted in a goodwill impairment charge totaling $259 million in the third quarter of 2021. The goodwill impairment was calculated as the amount that the carrying value of the reporting unit, including any goodwill, exceeded its fair value, limited to the total amount of goodwill allocated to the reporting unit.

In the fourth quarter of 2021, the continued impacts of the U.K. energy crisis triggered an additional impairment test of goodwill, which resulted in an additional goodwill impairment charge of $26 million. As a result, we have no remaining goodwill related to our U.K. operations on our consolidated balance sheet as of December 31, 2021.

For the year ended December 31, 2021, goodwill impairment totaled $285 million, of which $9 million related to our Ammonia segment, $241 million related to our AN segment and $35 million related to our Other segment. See Note 5—United Kingdom Operations Restructuring and Impairment Charges for additional information.

Other Intangible Assets

All of our identifiable intangible assets have definite lives and are presented in other assets on our consolidated balance sheets at gross carrying amount, net of accumulated impairment, and net of accumulated amortization, as follows:


	December 31, 2022						December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
	(in millions)

Customer relationships(1)	$	50	$	(35)	$	15	$	84	$	(60)	$	24

Trade names(2)	—		—		—		31		(10)		21

Total intangible assets	$	50	$	(35)	$	15	$	115	$	(70)	$	45

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(1)As of December 31, 2022, the gross carrying amount for customer relationships is net of impairment charges related to our U.K. operations of $55 million, of which $6 million was recorded in 2022 and $49 million was recorded in 2021. As of December 31, 2021, the gross carrying amount for customer relationships is net of impairment charges of $49 million, which were recorded in 2021.

(2)As of December 31, 2022, trade names, which are related to our U.K. operations, had been written down to zero as a result of impairment charges of $18 million, including $17 million recorded in 2022, and $1 million recorded in 2021. At December 31, 2021, the gross carrying amount for trade names is net of impairment charges of $1 million, which were recorded in 2021.

Our customer relationships are being amortized over a weighted-average life of approximately 18 years. For the years ended December 31, 2022, 2021 and 2020, amortization expense of our identifiable intangible assets was $3 million, $8 million and $8 million, respectively. The gross carrying amount and accumulated amortization of our intangible assets reflected in the table above were also impacted by the effect of exchange rates. Total estimated amortization expense for each of the fiscal years from 2023 to 2027 is approximately $3 million.

In June 2022, we approved and announced our proposed plan to restructure our U.K. operations, including the planned permanent closure of our Ince facility and optimization of the remaining manufacturing operations at our Billingham facility. As a result, in the second quarter of 2022, we recorded an intangible asset impairment charge of $8 million related to trade names.

In the third quarter of 2022, the United Kingdom continued to experience extremely high and volatile natural gas prices. Given the increase in the price of natural gas in the United Kingdom and the lack of a corresponding increase in global nitrogen product market prices, in September 2022, we temporarily idled ammonia production at our Billingham complex. As a result, we concluded that an additional impairment test was triggered for the asset groups that comprise the continuing U.K. operations, which resulted in asset impairment charges of $87 million in our U.K. Ammonia and U.K. AN asset groups, of which $15 million related to intangible assets, consisting of $6 million related to customer relationships and $9 million related to trade names. As a result of these impairment charges, intangible assets related to our U.K. operations were fully written off. See Note 5—United Kingdom Operations Restructuring and Impairment Charges for additional information.

During the fourth quarter of 2021, as we had estimated that we had sufficient emission credits for our 2021 obligations, we sold excess U.K. emission credits, including those purchased in the third quarter of 2021, for approximately $46 million and recognized a corresponding gain of $27 million, which is included in other operating—net in our consolidated statement of operations for the year ended December 31, 2021.