GOODWILL AND INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

5. GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table sets forth the changes in the carrying value of goodwill by reportable segment for the periods presented:


	EES		CSS		UBS		Total
(In thousands)
Balance as of January 1, 2020	$	573,447	$	235,711	$	949,882	$	1,759,040
Adjustments to goodwill for acquisitions (Note 6)(1) (2) (3)	264,538		868,936		250,553		1,384,027
Foreign currency exchange rate changes	15,471		10,853		17,778		44,102
Balance as of December 31, 2020	$	853,456	$	1,115,500	$	1,218,213	$	3,187,169
Adjustments to goodwill for acquisitions (Note 6)(4)	1,124		8,603		4,215		13,942
Foreign currency exchange rate changes and other	6,378		(2,391)		3,235		7,222
Balance as of December 31, 2021	$	860,958	$	1,121,712	$	1,225,663	$	3,208,333

(1) Adjustments to goodwill include the final allocation of the purchase price paid to acquire SLS, as disclosed in Note 6, "Acquisitions and Disposals", which is reflected in the EES segment.

(2) Adjustments to goodwill include an increase of $33.9 million resulting from the out-of-period adjustment related to inventory cost absorption accounting, as described in Note 2, "Accounting Policies", which affected the EES, CSS and UBS segments by $20.2 million, $2.0 million, and $11.7 million, respectively.

(3) Adjustments to goodwill include $26.1 million that was classified as held for sale on the UBS segment as of December 31, 2020, as disclosed in Note 7, "Assets and Liabilities Held For Sale". Such amount was disposed in the first quarter of 2021 as part of the Canadian divestitures disclosed in Note 6, "Acquisitions and Disposals".

(4) Includes the effect on goodwill of the adjustments to the assets acquired and liabilities assumed in the merger with Anixter since their initial measurement, as described in Note 6, "Acquisitions and Disposals".

Intangible Assets

The components of intangible assets are as follows:


		December 31, 2021						December 31, 2020
	Life (in years)	Gross Carrying Amount (1)		Accumulated Amortization (1)		Net Carrying Amount		Gross Carrying Amount (1)		Accumulated Amortization (1)		Net Carrying Amount
		(In thousands)
Intangible assets:
Trademarks(2)	Indefinite	$	795,065	$	—	$	795,065	$	833,793	$	—	$	833,793
Customer relationships(3)	10 - 20	1,431,251		(308,180)		1,123,071		1,434,554		(227,585)		1,206,969
Distribution agreements(3)	15 - 19	29,212		(22,714)		6,498		29,212		(21,040)		8,172
Trademarks(2)(3)	1 - 12	38,758		(20,058)		18,700		24,898		(11,415)		13,483
Non-compete agreements	2	4,300		(3,493)		807		4,462		(1,384)		3,078
		$	2,298,586	$	(354,445)	$	1,944,141	$	2,326,919	$	(261,424)	$	2,065,495

(1)Excludes the original cost and related accumulated amortization of fully-amortized intangible assets.

(2)As disclosed in Note 2, "Accounting Policies", the Company assigned remaining estimated useful lives to certain trademarks, including those that previously had indefinite lives.

(3)The net carrying amount as of December 31, 2020 excluded $1.0 million of trademarks, $3.3 million of customer relationships and $1.4 million of distribution agreements that were classified as held for sale and disposed in the first quarter of 2021 as part of the Canadian divestitures disclosed in Note 7, "Assets and Liabilities Held For Sale".

Amortization expense related to intangible assets totaled $119.6 million, $66.5 million and $35.5 million for the years ended December 31, 2021, 2020 and 2019, respectively. For the year ended December 31, 2021, amortization expense includes $32.0 million resulting from the changes in estimated useful lives of certain legacy trademarks that are migrating to the Company's master brand architecture, as described in Note 2, "Accounting Policies".

The following table sets forth the remaining estimated amortization expense for intangible assets for the next five years and thereafter:


For the year ending December 31,	(In thousands)
2022	$	92,593
2023	83,287
2024	80,827
2025	77,710
2026	60,834
Thereafter	753,825

The Company performed its annual impairment tests of goodwill and indefinite-lived intangible assets during the fourth quarter of 2021 by assessing qualitative factors to determine whether it was more likely than not that the fair values of its reporting units and indefinite-lived intangible assets were less than their respective carrying amounts. In performing this qualitative assessment, the Company assessed relevant events and circumstances, including macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, other relevant events such as changes in key personnel, changes in the composition or carrying amount of the net assets of a reporting unit, and changes in share price. As a result of this assessment, the Company determined that it was more likely than not that the fair values of its reporting units and indefinite-lived intangible assets continued to exceed their respective carrying amounts and, therefore, a quantitative impairment test was unnecessary.

The annual impairment tests of goodwill and indefinite-lived intangible assets involve the assessment of factors, events and circumstances at a point in time that are subject to change. As a result, there can be no assurance that the fair values of the Company's reporting units and indefinite-lived intangible assets will exceed their carrying values in the future, and that goodwill and indefinite-lived intangible assets will be fully recoverable.