Goodwill and Identifiable Intangible Assets

3 Months Ended

Mar. 31, 2019

Goodwill and Identifiable Intangible Assets

We had goodwill of $2,084.0 million and $2,080.3 million as of March 31, 2019 and December 31, 2018, respectively. The change in the net carrying amount of goodwill by segment was as follows:

(In millions)	Cabinets		Plumbing		Doors & Security		Total Goodwill
Goodwill at December 31, 2018 (a)	$	924.0	$	743.7	$	412.6	$	2,080.3
Year-to-date translation adjustments		0.8		2.3		0.3		3.4
Acquisition-related adjustments		—		—		0.3		0.3
Goodwill at March 31, 2019 (a)	$	924.8	$	746.0	$	413.2	$	2,084.0

(a)	Net of accumulated impairment losses of $399.5 million in the Doors & Security segment.

We also had net identifiable intangible assets, principally tradenames, of $1,239.7 million and $1,246.8 million as of March 31, 2019 and December 31, 2018, respectively. The $4.4 million increase in gross identifiable intangible assets was primarily due

to foreign translation adjustments.

The gross carrying value and accumulated amortization by class of identifiable intangible assets as of March 31, 2019 and December 31, 2018 were as follows:

	As of March 31, 2019							As of December 31, 2018
(In millions)	Gross Carrying Amounts		Accumulated Amortization			Net Book Value		Gross Carrying Amounts		Accumulated Amortization			Net Book Value
Indefinite-lived tradenames	$	675.8	$	—		$	675.8	$	673.9	$	—		$	673.9
Amortizable intangible assets
Tradenames		20.1		(12.2	)		7.9		19.8		(11.9	)		7.9
Customer and contractual relationships		802.5		(270.5	)		532.0		800.3		(260.2	)		540.1
Patents/proprietary technology		73.5		(49.5	)		24.0		73.5		(48.6	)		24.9
Total		896.1		(332.2	)		563.9		893.6		(320.7	)		572.9
Total identifiable intangibles	$	1,571.9	$	(332.2	)	$	1,239.7	$	1,567.5	$	(320.7	)	$	1,246.8

Amortizable identifiable intangible assets, principally tradenames and customer relationships, are subject to amortization over their estimated useful life, ranging from 2 to 30 years, based on the assessment of a number of factors that may impact useful life. These factors include historical and tradename performance with respect to consumer name recognition, geographic market presence, market share, plans for ongoing tradename support and promotion, customer attrition rates and other relevant factors.

In the first quarter of 2019, no events or circumstances occurred that would have required us to perform interim impairment tests of goodwill or indefinite-lived tradenames. During the third and fourth quarters of 2018, we recognized impairment charges related to two tradenames in the Cabinets segment. Accordingly, a further reduction in the estimated fair value of these tradenames could trigger an impairment. As of December 31, 2018, the total carrying value of these tradenames was approximately $152 million. Factors influencing our fair value estimates of the tradenames are described in the following paragraph.

The events and/or circumstances that could have a potential negative effect on the estimated fair value of our reporting units and indefinite-lived tradenames include: actual new construction and repair and remodel growth rates that fall below our assumptions, actions of key customers, increases in discount rates, continued economic uncertainty, higher levels of unemployment, weak consumer confidence, lower levels of discretionary consumer spending, a decrease in royalty rates and decline in the trading price of our common stock. We cannot predict the occurrence of certain events or changes in circumstances that might adversely affect the carrying value of goodwill and indefinite-lived intangible assets.