Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and other intangible assets included in the Consolidated Balance Sheets consisted of the following:


	December 31, 2022		January 1, 2022
Goodwill, net	$	305.9	$	297.3
Definite-lived intangible assets, net	118.4		147.6
Indefinite-lived intangible assets	15.5		26.5
Total goodwill and other intangible assets, net	$	439.8	$	471.5

Goodwill

The changes in the carrying amount of goodwill, by reporting segment, are as follows:


	Workplace Furnishings		Residential Building Products		Total
Balance as of January 2, 2021
Goodwill	$	168.5	$	197.0	$	365.5
Accumulated impairment losses	(72.9)		(0.1)		(73.0)
Net goodwill balance as of January 2, 2021	$	95.6	$	196.8	$	292.4

Goodwill acquired / measurement period adjustments	(6.2)		16.9		10.7
Impairment losses	(5.8)		—		(5.8)



Balance as of January 1, 2022
Goodwill	162.3		213.8		376.1
Accumulated impairment losses	(78.6)		(0.1)		(78.8)
Net goodwill balance as of January 1, 2022	$	83.6	$	213.7	$	297.3

Goodwill acquired (disposed) / measurement period adjustments	(13.6)		8.6		(5.0)
Accumulated impairment losses disposed	13.6		—		13.6


Balance as of December 31, 2022
Goodwill	148.7		222.4		371.1
Accumulated impairment losses	(65.0)		(0.1)		(65.2)
Net goodwill balance as of December 31, 2022	$	83.6	$	222.3	$	305.9

In 2022, goodwill and accumulated impairment losses were disposed of in conjunction with the retirement of the Maxon brand and the sale of Lamex. See "Note 4. Acquisitions and Divestitures" for additional information on transactions that resulted in changes in goodwill in the current year.

Definite-lived intangible assets

The table below summarizes amortizable definite-lived intangible assets, which are reflected in "Goodwill and Other Intangible Assets" in the Corporation’s Consolidated Balance Sheets:


	December 31, 2022						January 1, 2022
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net

Software	$	194.4	$	122.5	$	71.9	$	196.8	$	102.1	$	94.7
Trademarks and trade names	14.3		5.9		8.4		14.3		4.6		9.7
Customer lists and other	80.2		42.1		38.1		109.6		66.4		43.3
Net definite-lived intangible assets	$	288.8	$	170.4	$	118.4	$	320.7	$	173.0	$	147.6

The decrease in the gross balance of definite-lived intangible assets during the current year was primarily due to the sale of Lamex and the disposal of its fully amortized assets. The decrease in accumulated amortization related to the Lamex sale was partially offset by normal amortization expense.

Amortization expense is reflected in "Selling and administrative expenses" in the Consolidated Statements of Comprehensive Income and was as follows:


	2022		2021		2020
Capitalized software	$	24.4	$	23.6	$	19.3
Other definite-lived intangibles	$	6.5	$	6.5	$	5.0

The occurrence of events such as acquisitions, dispositions, or impairments may impact future amortization expense. Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the following five fiscal years is as follows:


	2023		2024		2025		2026		2027
Amortization expense	$	25.7	$	22.5	$	20.2	$	16.8	$	11.6

Indefinite-lived intangible assets

The Corporation also owns certain intangible assets, which are deemed to have indefinite useful lives because they are expected to generate cash flows indefinitely. These indefinite-lived intangible assets are reflected in "Goodwill and Other Intangible Assets" in the Consolidated Balance Sheets:


	December 31, 2022		January 1, 2022
Trademarks and trade names	$	15.5	$	26.5

In the third quarter of 2022, the Corporation sold its Lamex business which resulted in the disposal of the related indefinite-lived trade name.

Impairment Analysis

The Corporation evaluates its goodwill and indefinite-lived intangible assets for impairment on an annual basis during the fourth quarter, or whenever indicators of impairment exist. The Corporation also evaluates long-lived assets (which include definite-lived intangible assets) for impairment if indicators exist.

The Corporation elected to perform a qualitative assessment for purposes of its annual goodwill impairment testing in 2022. Based on this assessment, management concluded that for the majority of reporting units it was more likely than not that the fair value of each reporting unit was greater than its carrying value. For a small workplace furnishings reporting unit, management concluded that a quantitative assessment was required, which resulted in no identified impairment.

For the quantitative goodwill impairment testing, management utilized a combination of both a discounted cash flows approach and market approach. Projections used in the impairment model reflected management’s assumptions regarding revenue growth rates, economic and market trends, cost structure, investments required in support of strategic initiatives, and other expectations about the anticipated short-term and long-term operating results of the reporting unit. As a result of the impairment testing the reporting unit, which has goodwill of $33.6 million, was determined to have a fair value that exceeded carrying value by a reasonable margin. For this reporting unit, the corporation assumed a discount rate of 14 percent, near-term growth rates ranging from 4 percent to 12 percent, and a terminal growth rate of 3 percent. Holding other assumptions constant, a 100 basis point increase in the discount rate would result in a $5 million decrease in the estimated fair value of the reporting unit. Holding other assumptions constant, a 100 basis point decrease in the terminal growth rate would result in a $3 million decrease in the estimated fair value of the reporting unit. If there was both a 100 basis point decrease in the terminal growth rate and a 100 basis point increase to the discount rate, the estimated fair value of the reporting unit would still exceed the carrying value.

The Corporation also elected to perform a qualitative assessment for purposes of its annual impairment testing for certain indefinite-lived intangible assets in 2022. Based on this assessment, management concluded that it was more likely than not that the fair value of the respective assets was greater than carrying value. Quantitative impairment testing was performed for the remaining indefinite-lived intangible assets, with no impairments identified. Additionally, there were no material impairments identified with respect to long-lived assets in 2022.