Note 7 Goodwill and Identifiable Intangible Assets

Goodwill

We review goodwill for impairment on a reporting unit basis annually during the fourth quarter of each year, using a measurement date of October 1^st, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. While we are permitted to conduct a qualitative assessment to determine whether it is necessary to perform a two-step quantitative goodwill impairment test, for our 2015 and 2014 annual goodwill impairment test performed in the fourth quarter of each applicable year, we performed a quantitative test for all of our reporting units.

The goodwill impairment test involves a two-step process. In step one, we compare the fair value of each of our reporting units to its carrying value, including the goodwill allocated to the reporting unit. If the fair value of the reporting unit exceeds its carrying value, there is no indication of impairment and no further testing is required. If the fair value of the reporting unit is less than the carrying value, we must perform step two of the impairment test to measure the amount of impairment loss, if any. In step two, the reporting unit’s fair value is allocated to all of the assets and liabilities of the reporting unit, including any unrecognized intangible assets, in a hypothetical analysis that calculates the implied fair value of goodwill in the same manner as if the reporting unit was being acquired in a business combination. If the implied fair value of the reporting unit’s goodwill is less than the carrying value, the difference is recorded as an impairment loss.

2015, 2014 and 2013 Annual Impairment Test

During the fourth quarters of 2015, 2014 and 2013, we completed step one of our annual goodwill impairment test for our reporting units. We concluded that the fair values of these reporting units were above their carrying values and, therefore, there was no indication of impairment in either year.

We estimated the fair value of these reporting units using a weighting of fair values derived from an income and market approaches. Under the income approach, we determine the fair value of a reporting unit based on the present value of estimated future cash flows. Cash flow projections are based on management’s estimates of revenue growth rates and operating margins, taking into consideration industry and market conditions. The discount rate used is based on a weighted average cost of capital adjusted for the relevant risk associated with the characteristics of the business and the projected cash flows. The market approaches estimate fair value based on market multiples of current and forward 12-month operating performance results, as applicable derived from comparable publicly traded companies with similar operating and investment characteristics as the reporting unit.

Allocation of Goodwill to Reporting Units

The following table shows our goodwill balances by our segment reporting structure:

(In millions)	Food Care			Diversey Care			Product Care			Other⁽²⁾			Total
Gross Carrying Value at December 31, 2014⁽¹⁾	$	811.1		$	1,900.8		$	1,371.2		$	4.8		$	4,087.9
Accumulated impairment		(208.0	)		(883.0	)		—			—			(1,091.0	)
Carrying Value at December 31, 2014⁽¹⁾	$	603.1		$	1,017.8		$	1,371.2		$	4.8		$	2,996.9
Acquisition		6.7			6.7			6.3			—			19.7
Dispositions		—			—			(3.1	)		—			(3.1	)
Other		3.2			—			—			(3.2	)		—
Currency translation		(16.7	)		(86.6	)		(0.7	)		—			(104.0	)
Gross Carrying Value at December 31, 2015		804.3			1,820.9			1,373.7			1.6			4,000.5
Accumulated impairment		(208.0	)		(883.0	)		—			—			(1,091.0	)
Carrying Value at December 31, 2015	$	596.3		$	937.9		$	1,373.7		$	1.6		$	2,909.5

⁽¹⁾	Excludes North American foam trays and absorbent pads and European food trays business goodwill. Refer to Note 3, “Divestitures and Acquisitions” of the notes to Consolidated Financial Statements for further details.

⁽²⁾	Represents goodwill of our Medical Applications reporting unit.

The excess of estimated fair values over carrying value, including goodwill for each of our reporting units that had goodwill as of the 2015 annual impairment test were the following:


	% by Which Estimated Fair value
Reporting Unit	exceeds Carrying Value
Food Care — Packaging Solutions		410	%
Food Care — Hygiene Solutions		488	%
Diversey Care		55	%
Product Care		121	%
Medical Applications⁽¹⁾		819	%

⁽¹⁾	Included in the “Other” category for segment reporting purposes – See Note 4 for a description of our reportable segments.

As noted above, the fair value determined under step one of the goodwill impairment test completed in the fourth quarter of 2015 exceeded the carrying value for each reporting unit. Therefore, there was no impairment of goodwill. However, if the fair value decreases in future periods, the Company may fail step one of the goodwill impairment test and be required to perform step two. In performing step two, the fair value would have to be allocated to all of the assets and liabilities of the reporting unit. Therefore, any potential goodwill impairment charge would be dependent upon the estimated fair value of the reporting unit at that time and the outcome of step two of the impairment test. The fair values of the assets and liabilities of the reporting unit, including the intangible assets could vary depending on various factors.

The future occurrence of a potential indicator of impairment, such as a decrease in expected net earnings, adverse equity market conditions, a decline in current market multiples, a decline in our common stock price, a significant adverse change in legal factors or business climates, an adverse action or assessment by a regulator, unanticipated competition, strategic decisions made in response to economic or competitive conditions, or a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of, could require an interim assessment for some or all of the reporting units before the next required annual assessment. In the event of significant adverse changes of the nature described above, we might have to recognize a non-cash impairment of goodwill, which could have a material adverse effect on our consolidated financial condition and results of operations.

Identifiable Intangible Assets

The following tables summarize our identifiable intangible assets with definite and indefinite useful lives:

	December 31, 2015										December 31, 2014⁽²⁾
	Gross										Gross
	Carrying		Accumulated			Accumulated					Carrying		Accumulated			Accumulated
(In millions)	Value		Amortization			Impairment			Net		Value		Amortization			Impairment			Net
Customer relationships	$	846.2	$	(249.4	)	$	(148.9	)	$	447.9	$	890.8	$	(210.8	)	$	(148.9	)	$	531.1
Trademarks and tradenames		1.7		(0.4	)		—			1.3		1.3		(0.2	)		—			1.1
Capitalized software		143.0		(125.3	)		—			17.7		140.7		(113.8	)		—			26.9
Technology		141.9		(65.0	)		(22.2	)		54.7		125.7		(53.2	)		(22.2	)		50.3
Contracts		42.8		(31.2	)		—			11.6		40.6		(28.9	)		—			11.7
Total intangible assets with definite lives		1,175.6		(471.3	)		(171.1	)		533.2		1,199.1		(406.9	)		(171.1	)		621.1
Trademarks and tradenames with indefinite lives⁽¹⁾		881.3		—			(630.2	)		251.1		881.3		—			(630.2	)		251.1
Total identifiable intangible assets	$	2,056.9	$	(471.3	)	$	(801.3	)	$	784.3	$	2,080.4	$	(406.9	)	$	(801.3	)	$	872.2

⁽¹⁾	The intangible assets include $251 million of trademarks that we have determined to have indefinite useful lives, primarily acquired in connection with the acquisition of Diversey.

⁽²⁾	Excludes North American foam trays and absorbent pads business intangible assets. Refer to Note 3, “Divestitures and Acquisitions” of the notes to Consolidated Financial Statements for further details.

The following table shows the remaining estimated future amortization expense at December 31, 2015.

Year	Amount (in millions)
2016	$	83.4
2017		76.9
2018		63.9
2019		56.3
Thereafter		252.7
Total	$	533.2

Amortization expense was $88.7 million in 2015, $118.9 million in 2014 and $123.2 million in 2013.

The following table shows the remaining weighted average useful life of our definite lived intangible assets as of December 31, 2015.

	Remaining weighted average useful lives
Customer relationships		8.8
Trademarks and trade names		5.7
Technology		4.0
Contracts		5.6
Total intangible assets with definite lives		8.1