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Goodwill & Intangibles | 12 Months Ended
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Dec. 31, 2018
Goodwill and Intangibles |
Goodwill & Intangibles | (7) Goodwill & Intangibles Goodwill The Company performs its annual goodwill impairment testing for each reporting unit as of fiscal October month end or earlier if there is a triggering event or circumstance that indicates an impairment loss may have occurred. As of the October 28, 2018 testing date, the Company had $544.3 million of goodwill on its balance sheet. In 2018, the Company had eight reporting units. One of these reporting units, Water Quality, had no goodwill. The Company performed a qualitative analysis for each of the seven remaining reporting units, which include Blücher, Dormont, US Drains, Europe, Residential and Commercial, Heating and Hot Water Solutions (“HHWS”) and APMEA. As a result of the qualitative analyses, the Company determined that the fair values of the reporting units were more likely than not greater than the carrying amounts. In 2018, the Company did not need to proceed beyond the qualitative analysis, and no goodwill impairments were recorded. In the fourth quarter of 2017, the Company performed a quantitative impairment analysis for the HHWS reporting unit in connection with the annual strategic plan and due to underperformance to budget, primarily caused by continuing softness in the condensing boiler market, weakness in the Company’s tankless water heater products and competitive pricing pressure. The Company estimated the fair value of the reporting unit using a weighted calculation of the income approach and the market approach. The income approach calculated the present value of expected future cash flows. The guideline public company method (market approach) calculated the estimated fair values based on valuation multiples derived from stock prices and enterprise values of publicly traded companies that are comparable to the reporting unit. The estimated fair value of the reporting unit exceeded the carrying value in 2017 and therefore, no impairment was recorded. The changes in the carrying amount of goodwill by geographic segment are as follows:
|  | December 31, 2018
|  | Gross Balance |  | Accumulated Impairment Losses |  | Net Goodwill
|  |  |  | Acquired |  | Foreign |  |  |  |  |  |  |  |  |  |  |
|  | Balance |  | During |  | Currency |  | Balance |  | Balance |  | Impairment |  | Balance |  |
|  | January 1, |  | the |  | Translation |  | December 31, |  | January 1, |  | Loss During |  | December 31, |  | December 31,
|  | 2018 |  | Period (1) |  | and Other |  | 2018 |  | 2018 |  | the Period |  | 2018 |  | 2018
|  | (in millions)
Americas |  | $ | 437.4 |  |  | 1.5 |  |  | (0.8) |  |  | 438.1 |  | $ | (24.5) |  |  | — |  |  | (24.5) |  |  | 413.6
Europe |  |  | 249.3 |  |  | — |  |  | (5.6) |  |  | 243.7 |  |  | (129.7) |  |  | — |  |  | (129.7) |  |  | 114.0
APMEA |  |  | 30.9 |  |  | — |  |  | (0.8) |  |  | 30.1 |  |  | (12.9) |  |  | — |  |  | (12.9) |  |  | 17.2
Total |  | $ | 717.6 |  |  | 1.5 |  |  | (7.2) |  |  | 711.9 |  | $ | (167.1) |  |  | — |  |  | (167.1) |  |  | 544.8
| (1) |  | Americas goodwill additions during 2018 relate to immaterial acquisitions.
|  | December 31, 2017
|  | Gross Balance |  | Accumulated Impairment Losses |  | Net Goodwill
|  |  |  | Acquired |  | Foreign |  |  |  |  |  |  |  |  |  |
|  | Balance |  | During |  | Currency |  | Balance |  | Balance |  | Impairment |  | Balance |  |
|  | January 1, |  | the |  | Translation |  | December 31, |  | January 1, |  | Loss During |  | December 31, |  | December 31,
|  | 2017 |  | Period |  | and Other |  | 2017 |  | 2017 |  | the Period |  | 2017 |  | 2017
|  | (in millions)
Americas |  | $ | 434.7 |  |  | 2.0 |  |  | 0.7 |  |  | 437.4 |  | $ | (24.5) |  |  | — |  |  | (24.5) |  |  | 412.9
Europe |  |  | 234.9 |  |  | — |  |  | 14.4 |  |  | 249.3 |  |  | (129.7) |  |  | — |  |  | (129.7) |  |  | 119.6
APMEA |  |  | 30.2 |  |  | — |  |  | 0.7 |  |  | 30.9 |  |  | (12.9) |  |  | — |  |  | (12.9) |  |  | 18.0
Total |  | $ | 699.8 |  |  | 2.0 |  |  | 15.8 |  |  | 717.6 |  | $ | (167.1) |  |  | — |  |  | (167.1) |  |  | 550.5
Long-Lived Assets Indefinite‑lived intangibles are tested for impairment at least annually or more frequently if events or circumstances, such as a change in business conditions, indicate that it is “more likely than not” that an intangible asset might be impaired. The Company performs its annual indefinite‑lived intangibles impairment assessment in the fourth quarter of each year. For the 2018, 2017 and 2016 impairment assessments, the Company performed quantitative assessments for all indefinite‑lived intangible assets. The methodology employed was the relief from royalty method, a subset of the income approach. Based on the results of the assessment, the Company did not recognize an impairment on any indefinite-lived intangibles in 2018 or 2017. In 2016, Company recognized non‑cash pre‑tax impairment charges of approximately $0.4 million related to a trade name in the Europe segment. Intangible assets with estimable lives and other long‑lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Recoverability of intangible assets with estimable lives and other long‑lived assets is measured by a comparison of the carrying amount of an asset or asset group to future net undiscounted pre-tax cash flows expected to be generated by the asset or asset group. If these comparisons indicate that an asset is not recoverable, the impairment loss recognized is the amount by which the carrying amount of the asset or asset group exceeds the related estimated fair value. Estimated fair value is based on either discounted future pre-tax operating cash flows or appraised values, depending on the nature of the asset. The Company determines the discount rate for this analysis based on the weighted average cost of capital using the market and guideline public companies for the related businesses and does not allocate interest charges to the asset or asset group being measured. Judgment is required to estimate future operating cash flows. In the fourth quarter of 2017, the Company recognized a $1.0 million impairment charge in the Americas segment for a technology asset as a change in market expectations indicated the carrying amount of this asset was no longer recoverable. In 2016, the Company recognized a $0.1 million impairment charge on long-lived assets. Intangible assets include the following:
|  | December 31, 2018 |  | December 31, 2017
|  | Gross |  |  |  |  | Net |  | Gross |  |  |  |  | Net
|  | Carrying |  | Accumulated |  | Carrying |  | Carrying |  | Accumulated |  | Carrying
|  | Amount |  | Amortization |  | Amount |  | Amount |  | Amortization |  | Amount
|  | (in millions)
Patents |  | $ | 16.1 |  | $ | (15.8) |  | $ | 0.3 |  | $ | 16.1 |  | $ | (15.4) |  | $ | 0.7
Customer relationships |  |  | 232.9 |  |  | (146.9) |  |  | 86.0 |  |  | 233.2 |  |  | (133.5) |  |  | 99.7
Technology |  |  | 54.6 |  |  | (27.3) |  |  | 27.3 |  |  | 53.9 |  |  | (23.1) |  |  | 30.8
Trade names |  |  | 26.1 |  |  | (11.5) |  |  | 14.6 |  |  | 25.5 |  |  | (9.7) |  |  | 15.8
Other |  |  | 4.3 |  |  | (3.5) |  |  | 0.8 |  |  | 6.9 |  |  | (6.0) |  |  | 0.9
Total amortizable intangibles |  |  | 334.0 |  |  | (205.0) |  |  | 129.0 |  |  | 335.6 |  |  | (187.7) |  |  | 147.9
Indefinite-lived intangible assets |  |  | 36.2 |  |  | — |  |  | 36.2 |  |  | 37.3 |  |  | — |  |  | 37.3
|  | $ | 370.2 |  | $ | (205.0) |  | $ | 165.2 |  | $ | 372.9 |  | $ | (187.7) |  | $ | 185.2
Aggregate amortization expense for amortized intangible assets for 2018, 2017 and 2016 was $19.6 million, $22.5 million and $20.8 million, respectively. Additionally, future amortization expense on amortizable intangible assets is expected to be $17.2 million for 2019, $16.2 million for 2020, $14.6 million for 2021, $13.5 million for 2022, and $11.6 million for 2023. Amortization expense is provided on a straight‑line basis over the estimated useful lives of the intangible assets. The weighted‑average remaining life of total amortizable intangible assets is 12.1 years. Patents, customer relationships, technology, trade names and other amortizable intangibles have weighted‑average remaining lives of 3.3 years, 11.0 years, 7.2 years, 13.7 years and 19.1 years, respectively. Indefinite‑lived intangible assets primarily include trade names and trademarks.

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- Definition The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
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