Goodwill and Other Intangible Assets

9 Months Ended

Oct. 02, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

A summary of the changes in goodwill for the nine-month period ended October 2, 2022 is as follows:


	Consumer Packaging		Industrial Paper Packaging		All Other		Total
Goodwill at December 31, 2021	$	572,416	$	367,780	$	384,305	$	1,324,501
2022 Acquisitions	366,098		5,414		—		371,512

Foreign currency translation	(22,001)		(17,584)		(5,293)		(44,878)
Measurement period adjustments	(9,187)		—		—		(9,187)
Goodwill at October 2, 2022	$	907,326	$	355,610	$	379,012	$	1,641,948

Goodwill activity reflected under the captions “2022 Acquisitions” and “Measurement period adjustments” relate to the January 26, 2022 acquisition of Metal Packaging and the August 31, 2022 acquisition of Nordeste. See Note 3 for additional information.

The Company assesses goodwill for impairment annually during the third quarter, or from time to time when warranted by the facts and circumstances surrounding individual reporting units or the Company as a whole. The Company completed its most recent annual goodwill impairment testing during the third quarter of 2022 and analyzed certain qualitative and quantitative factors in determining whether a goodwill impairment existed. The Company's assessments reflected a number of significant management assumptions and estimates including the Company's forecast of sales growth, gross profit margins, and discount rates. Changes in these assumptions could materially impact the Company's conclusions. Based on its assessments, the Company concluded that there was no impairment of goodwill for any of its reporting units.

Although no reporting units failed the annual impairment test, in management’s opinion the goodwill balances of the Plastics - Healthcare and Protexic reporting units are at risk of impairment in the near term if each reporting unit's operations do not perform in line with management's expectations, or if there is a negative change in the long-term outlook for the business or in other factors such as the discount rate.

In the annual goodwill impairment analysis completed during the third quarter of 2022, projected future cash flows for the Plastics - Healthcare reporting unit were discounted at 9.8% and its estimated fair value was determined to exceed its carrying value by approximately 18.0%. Based on the discounted cash flow model and holding other valuation assumptions constant, the discount rate would have to be increased to 11.0% in order for the estimated fair value of the reporting unit to fall below carrying value. Total goodwill associated with this reporting unit was $60,710 at October 2, 2022.

In the annual goodwill impairment analysis completed during the third quarter of 2022, projected future cash flows for the Protexic reporting unit were discounted at 9.5% and its estimated fair value was determined to exceed its carrying value by approximately 18.3%. Based on the discounted cash flow model and holding other valuation assumptions constant, the discount rate would have to be increased to 11.5% in order for the estimated fair value of the reporting unit to fall below carrying value. Total goodwill associated with this reporting unit was $29,051 at October 2, 2022.

During the time subsequent to the annual evaluation, and at October 2, 2022, the Company considered whether any events and/or changes in circumstances had resulted in the likelihood that the goodwill of any of its reporting units may have been impaired. It is management's opinion that no such events and/or changes in circumstances have occurred.

Other Intangible Assets

A summary of other intangible assets as of October 2, 2022 and December 31, 2021 is as follows:


	October 2, 2022		December 31, 2021
Other Intangible Assets, gross:
Patents	$	29,296	$	29,315
Customer lists	1,040,346		592,195
Trade names	31,641		32,043
Proprietary technology	57,608		22,846
Other	2,743		2,807
Total Other Intangible Assets, gross	$	1,161,634	$	679,206

Accumulated Amortization:
Patents	$	(17,497)	$	(16,275)
Customer lists	(392,932)		(347,274)
Trade names	(15,397)		(14,106)
Proprietary technology	(24,038)		(21,394)
Other	(2,047)		(2,014)
Total Accumulated Amortization	$	(451,911)	$	(401,063)
Other Intangible Assets, net	$	709,723	$	278,143

The acquisition of Metal Packaging on January 26, 2022 resulted in the addition of $498,000 of intangible assets, primarily customer lists and proprietary technology, which are expected to be amortized over their average useful lives of approximately 13.6 years. See Note 3 for additional information about the Metal Packaging acquisition.

Other Intangible Assets are amortized on a straight-line basis over their respective useful lives, which generally range from three to forty years. The Company has no intangible assets with indefinite lives.

Aggregate amortization expense was $20,690 and $12,257 for the three-month periods ended October 2, 2022 and October 3, 2021, respectively, and $60,361 and $37,117 for the nine-month periods ended October 2, 2022 and October 3, 2021, respectively. Amortization expense on other intangible assets is expected to total approximately $80,800 in 2022, $79,100 in 2023, $71,700 in 2024, $61,100 in 2025 and $57,800 in 2026.