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Goodwill and Identifiable Intangible Assets | 12 Months Ended
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Dec. 31, 2021
Goodwill And Intangible Assets Disclosure [Abstract] |
Goodwill and Identifiable Intangible Assets | 5. Goodwill and Identifiable Intangible Assets We had goodwill of $2,465.1 million and $2,394.8 million as of December 31, 2021 and 2020, respectively. The change in the net carrying amount of goodwill by segment was as follows:
(In millions) |  | Plumbing |  |  |  | Outdoors & Security |  |  |  | Cabinets |  |  |  | Total Goodwill |
Balance at December 31, 2019(a) |  | $ | 747.3 |  |  |  | $ | 417.4 |  |  |  | $ | 925.5 |  |  |  | $ | 2,090.2 |
2020 translation adjustments |  |  | 2.8 |  |  |  |  | 0.3 |  |  |  |  | 0.6 |  |  |  |  | 3.7 |
Acquisition-related adjustments |  |  | — |  |  |  |  | 300.9 |  |  |  |  | — |  |  |  |  | 300.9 |
Balance at December 31, 2020(a) |  | $ | 750.1 |  |  |  | $ | 718.6 |  |  |  | $ | 926.1 |  |  |  | $ | 2,394.8 |
2021 translation adjustments |  |  | (1.3 | ) |  |  |  | 0.1 |  |  |  |  | 0.1 |  |  |  |  | (1.1 | )
Acquisition-related adjustments |  |  | 65.3 |  |  |  |  | 6.1 |  |  |  |  | — |  |  |  |  | 71.4 |
Balance at December 31, 2021(a) |  | $ | 814.1 |  |  |  | $ | 724.8 |  |  |  | $ | 926.2 |  |  |  | $ | 2,465.1 |
(a) Net of accumulated impairment losses of $399.5 million in the Outdoors & Security segment. The gross carrying value and accumulated amortization by class of intangible assets as of December 31, 2021 and 2020 were as follows:
|  |  | As of December 31, 2021 |  |  |  | As of December 31, 2020 |
(In millions) |  |  | Gross Carrying Amounts |  |  | Accumulated Amortization |  |  | Net Book Value |  |  |  | Gross Carrying Amounts |  |  | Accumulated Amortization |  |  | Net Book Value |
Indefinite-lived tradenames |  |  | $ | 711.1 |  |  | $ | — |  |  | $ | 711.1 |  |  |  | $ | 711.0 |  |  | $ | — |  |  | $ | 711.0 |
Amortizable intangible assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tradenames |  |  |  | 36.4 |  |  |  | (15.5 | ) |  |  | 20.9 |  |  |  |  | 34.8 |  |  |  | (14.0 | ) |  |  | 20.8 |
Customer and contractual relationships |  |  |  | 975.7 |  |  |  | (388.2 | ) |  |  | 587.5 |  |  |  |  | 973.2 |  |  |  | (337.3 | ) |  |  | 635.9 |
Patents/proprietary technology |  |  |  | 133.1 |  |  |  | (68.8 | ) |  |  | 64.3 |  |  |  |  | 109.6 |  |  |  | (57.0 | ) |  |  | 52.6 |
Total |  |  |  | 1,145.2 |  |  |  | (472.5 | ) |  |  | 672.7 |  |  |  |  | 1,117.6 |  |  |  | (408.3 | ) |  |  | 709.3 |
Total identifiable intangibles |  |  | $ | 1,856.3 |  |  | $ | (472.5 | ) |  | $ | 1,383.8 |  |  |  | $ | 1,828.6 |  |  | $ | (408.3 | ) |  | $ | 1,420.3 |
We had identifiable intangible assets, principally tradenames and customer relationships, of $1,383.8 million and $1,420.3 million as of December 31, 2021 and 2020, respectively. The $27.7 million increase in gross identifiable intangible assets was primarily due to the consolidation of Flo. Amortizable intangible assets, principally customer relationships, are subject to amortization on a straight-line basis over their estimated useful life, ranging from 5 to 30 years, based on the assessment of a number of factors that may impact useful life which include customer attrition rates and other relevant factors. We expect to record intangible amortization of approximately $62 million in 2022, $60 million in 2023, $60 million in 2024, $60 million in 2025, and $59 million in 2026. During the second quarter of 2020, extended closures of luxury plumbing showrooms associated with COVID-19 led to lower than expected sales related to an indefinite-lived tradename within the Plumbing segment, which combined with the updated financial outlook compared to previous forecasts and the continued uncertainty of the pandemic on the sales and profitability related to the tradename led us to conclude that it was more likely than not that the indefinite-lived tradename was impaired. Therefore, we performed an interim impairment test as of June 30, 2020, and as a result we recognized a pre-tax impairment charge of $13.0 million related to this tradename. We also performed an evaluation of the useful life of this tradename and determined it was no longer indefinite-lived due to changes in long-term management expectations and future operating plans. As a result, the remaining carrying value of this tradename is being amortized over its estimated useful life of 30 years. In the first quarter of 2020, we recognized an impairment charge of $9.5 million related to an indefinite-lived tradename in our Cabinets segment. This charge was primarily the result of lower expected sales of custom cabinetry products related to the impact of COVID-19. In the fourth quarter of 2019, we recognized an impairment charge of $12.0 million related to the same indefinite-lived tradename, which was the result of a strategic shift associated with new segment leadership and acceleration of our capacity rebalancing initiatives from custom cabinetry products to value-based cabinetry products as a result of lower than expected sales of custom cabinetry products compared to prior forecasts. As of December 31, 2021, the carrying value of this tradename was $29.1 million. In the third quarter of 2019, we recognized an impairment charge of $29.5 million related to a second indefinite-lived tradename in our Cabinets segment, which was primarily the result of a continuing shift in consumer demand from semi-custom cabinetry products to value-priced cabinetry products, which led to consecutive downward adjustments of internal sales forecasts and future growth rates associated with the tradename. As of December 31, 2021, the carrying value of this tradename was $85.0 million. The fair values of the impaired tradenames were measured using the relief-from-royalty approach, which estimates the present value of royalty income that could be hypothetically earned by licensing the tradename to a third party over its remaining useful life. Some of the more significant assumptions inherent in estimating the fair values include forecasted revenue growth rates, assumed royalty rates, and market-participant discount rates that reflect the level of risk associated with the tradenames’ future revenues and profitability. We selected the assumptions used in the financial forecasts using historical data, supplemented by current and anticipated market conditions, estimated growth rates, and management plans. These assumptions represent level 3 inputs of the fair value hierarchy (refer to Note 9). A reduction in the estimated fair value of any of our tradenames could trigger impairment charges in future periods. Events or circumstances that could have a potential negative effect on the estimated fair value of our reporting units and indefinite-lived tradenames include: lower than forecasted revenues, more severe impacts of the COVID-19 pandemic than currently expected, 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 a 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 assets. There were no impairments for the year ended December 31, 2021. The significant assumptions used to estimate the fair values of the tradenames impaired during the years ended December 31, 2020 and 2019 were as follows:
|  | 2020 |  |  | 2019 |
Unobservable Input |  | Minimum |  |  | Maximum |  |  | Weighted Average(a) |  |  | Minimum |  |  | Maximum |  |  | Weighted Average(a) |
Discount rates |  |  | 14.8 | % |  |  | 15.8 | % |  |  | 15.1 | % |  |  | 13.0 | % |  |  | 13.5 | % |  |  | 13.3 | %
Royalty rates(b) |  |  | 4.0 | % |  |  | 5.0 | % |  |  | 4.3 | % |  |  | 3.0 | % |  |  | 4.0 | % |  |  | 3.3 | %
Long-term revenue growth rates(c) |  |  | 1.0 | % |  |  | 3.0 | % |  |  | 1.6 | % |  |  | 3.0 | % |  |  | 3.0 | % |  |  | 3.0 | %
(a) Weighted by relative fair value of the impaired tradenames. (b) Represents estimated percentage of sales a market-participant would pay to license the impaired tradenames. (c) Selected long-term revenue growth rate within 10-year projection period of the impaired tradenames.

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