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Impairment Charges | 12 Months Ended
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Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract] |
Impairment Charges | Impairment Charges Pretax impairment charges are reported in “Impairments” in the Consolidated Statements of Operations. We had pretax impairment charges of $443.7 in the year ended December 31, 2023 as discussed below. There were no impairment charges in 2022 or 2021.
Other long-lived assets As discussed in Note A, we test other long-lived assets for recoverability at year end and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We had a triggering event to review long-lived assets for impairment late in the fourth quarter of 2023. Weak demand and changing market dynamics in the bedding industry have created disruption and financial instability with some of our customers. While sales and earnings have been lower as compared to acquisition-date estimates for the customer bases associated with Elite Comfort Solutions (ECS) and Kayfoam (acquired in 2019 and 2021, respectively), estimated undiscounted cash flows for these asset groups exceeded their carrying amounts until the fourth quarter of 2023. Late in the fourth quarter of 2023, certain of our ECS and Kayfoam customers notified us of efforts to improve their financial position, which could adversely impact our future cash flow forecasts. In early January 2024, we conducted an evaluation and determined that our sales and earnings forecasts should be reduced, and, as a result, we performed a recoverability test for these asset groups. Because the forecasted undiscounted cash flows had fallen below the carrying value for these asset groups, we tested for impairment by comparing the estimated fair value of long-lived assets to their carrying values, which resulted in a non-cash charge of $443.7 for long-lived asset impairments (primarily customer relationships, technology, and trademark intangibles) in the Bedding Products segment during the fourth quarter of 2023. This impairment was unrelated to the Restructuring Plan discussed in Note T. Fair value of the long-lived assets and the resulting impairment charges noted above were determined using the following methodologies. •Customer relationships were valued using an excess earnings method with various inputs, such as the estimated customer attrition rate, revenue growth rate, operating margins, the amount of contributory asset charges, and an appropriate discount rate. •Technology, trademarks, and trade names were valued using a relief-from-royalty method with various inputs, such as comparable market royalty rates for items of similar value, future earnings forecast, an appropriate discount rate, and a replacement rate for technology. This impairment represents substantially all of the intangibles associated with the asset groups noted above. We believe the estimates and assumptions utilized in our impairment testing are reasonable and are comparable to those that would be used by other market participants. However, if actual results differ materially from estimates used in these calculations, we could incur future impairment charges. Goodwill Impairment Testing As discussed in Note A, we test goodwill for impairment at the reporting unit level (the business groups that are one level below the operating segments) when triggering events occur, or at least annually. We perform our annual goodwill impairment testing in the second quarter. The annual goodwill impairment testing indicated no impairments for the periods presented. Significant assumptions used in the annual goodwill impairment testing in the second quarter are presented in the tables below. If actual results differ materially from estimates used in these calculations, we could incur future impairment charges.
2023
Fair Value over Carrying Value divided by Carrying Value |  | December 31, 2023 Goodwill Value |  | Compound Annual Growth Rate (CAGR) Range for Sales |  | Terminal Values Long-term Growth Rate for Debt-Free Cash Flow |  | Discount Rate Ranges
Less than 50% |  | $ | 1,018.1 |  |  | 1-17% |  | 3 | % |  | 10-12%
50-100% |  | 99.6 |  |  | < 1 |  | 3 |  |  | 8
101-300% |  | 372.1 |  |  | 3-6 |  | 3 |  |  | 8-10
|  | $ | 1,489.8 |  |  | < 1-17% |  | 3 | % |  | 8-12%
2022
Fair Value over Carrying Value divided by Carrying Value |  | December 31, 2022 Goodwill Value |  | CAGR Range for Sales |  | Terminal Values Long-term Growth Rate for Debt-Free Cash Flow |  | Discount Rate Ranges
Less than 50% |  | $ | 107.8 |  |  | 4-9% |  | 3 | % |  | 12%
50-100% |  | 998.7 |  |  | 3-5 |  | 3 |  |  | 10
101-300% |  | 248.3 |  |  | 1-3 |  | 3 |  |  | 10
Greater than 300% |  | 119.6 |  |  | 8 |  | 3 |  |  | 12
|  | $ | 1,474.4 |  |  | 1-9% |  | 3 | % |  | 10-12%
The fourth quarter 2023 activities resulting in the long-lived asset impairments discussed above were also considered a triggering event for goodwill impairment testing of the Bedding reporting unit, and no impairments were indicated. No other reporting units had triggering events in the periods presented. Reporting units where fair value exceeded carrying value by less than 100% are summarized in the table below:
| Fair value in excess of carrying value for the goodwill impairment testing performed during |  | Goodwill
| Triggering event Fourth quarter 2023 |  | Annual testing Second quarter 2023 |  | Annual testing Second quarter 2022 |  | As of December 31, 2023 |  | As of December 31, 2022
Reporting unit with a triggering event |  |  |  |  |  |
Bedding 1 | 19 | % |  | 40 | % |  | 54 | % |  | $ | 906.5 |  |  | $ | 900.3 |
Reporting units with no triggering event |  |  |  |
Work Furniture |  |  | 74 |  |  | 78 |  |  | 99.6 |  |  | 98.4 |
Aerospace Products |  |  | 44 |  |  | 40 |  |  | 67.0 |  |  | 66.3 |
Hydraulic Cylinders 2 |  |  | 18 |  |  | 32 |  |  | 44.6 |  |  | 41.5 |
1 The fourth quarter 2023 testing for the Bedding reporting unit included the impacts of the long-lived asset impairments discussed above. It also assumed a compound annual growth rate for sales of 2% and a discount rate of 10%.
2 At the time of our annual goodwill impairment testing in second quarter 2022, there was no goodwill associated with this reporting unit, but an August 2022 (see Note Q) acquisition added goodwill.

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- Definition The entire disclosure for the details of the charge against earnings resulting from the aggregate write down of all assets from their carrying value to their fair value. Disclosure may also include a description of the impaired asset and facts and circumstances leading to the impairment, amount of the impairment loss and where the loss is located in the income statement, method(s) for determining fair value, and the segment in which the impaired asset is reported. + References No definition available. + Details
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