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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 | 10. Goodwill and Identifiable Intangible Assets Goodwill We test goodwill for impairment at least annually and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has incurred. Historically, we performed this annual test using June 30th as the measurement date. During the second quarter of 2021, we elected to change the measurement date of our annual impairment test from June 30th to May 31st. A measurement date of May 31st is preferable as it better aligns with the timing of our forecasting process. During the second quarter of 2021, we completed the annual goodwill impairment assessment, on a quantitative basis, for goodwill for each of our three reporting units. The result of our annual assessment was that the fair value of the North America, International and EMEA reporting units exceeded their carrying values as of our measurement date of May 31, 2021 and we concluded that no impairment existed. Estimating the fair value of each reporting unit requires us to make assumptions and estimates regarding our future. We utilized a combination of both a discounted cash flows and market approach. The financial projections used in the valuation models reflected management's assumptions regarding revenue growth rates, economic and market trends, cost structure, and other expectations about the anticipated short-term and long-term operating results for each of our three reporting units. In management’s opinion, the goodwill balance for our ACCO Brands International reporting unit could be at risk for impairment if operating performance does not recover as expected from the current impacts of COVID-19, if we experience negative changes to the long-term outlook for the business, or if changes in factors and assumptions occur which impact the fair value such as low or declining revenue growth rates, depressed operating margins or adverse changes to the discount rates impacting this reporting unit. . Changes in the net carrying amount of goodwill by segment were as follows:
(in millions) | ACCO Brands North America |  | ACCO Brands EMEA |  | ACCO Brands International |  | Total
Balance at December 31, 2019 | $ | 375.6 |  |  | $ | 165.7 |  |  | $ | 177.3 |  |  | $ | 718.6 |
Acquisitions(1) | 85.6 |  |  | — |  |  | 3.9 |  |  | 89.5 |
Foreign currency translation | — |  |  | 22.5 |  |  | (3.2) |  |  | 19.3 |
Balance at December 31, 2020 | 461.2 |  |  | 188.2 |  |  | 178.0 |  |  | 827.4 |
Acquisitions(1) | (14.5) |  |  | 2.0 |  |  | — |  |  | (12.5) |
Foreign currency translation | — |  |  | (11.6) |  |  | (0.8) |  |  | (12.4) |
Balance at December 31, 2021 | $ | 446.7 |  |  | $ | 178.6 |  |  | $ | 177.2 |  |  | $ | 802.5 |
(1)Goodwill has been recorded on our Consolidated Balance Sheet related to the Franken acquisition, which is part of our EMEA segment, and represents the excess of the cost of the Franken acquisition when compared to the fair value estimate of the net assets acquired on April 1, 2021 (the date of the Franken acquisition). Goodwill has been recorded on our Consolidated Balance Sheet related to the PowerA acquisition and represents the excess of the cost of the PowerA acquisition when compared to the fair value estimate of the net assets acquired on December 17, 2020 (the date of the PowerA acquisition) and includes a working capital adjustment of $18.2 million recorded in the first quarter of 2021 as a reduction to the purchase price, partially offset by purchase accounting adjustments of $3.7 million. See "Note 3. Acquisitions" for details on the calculation of the goodwill acquired in the acquisitions. The goodwill balance includes $215.1 million of accumulated impairment losses, which occurred prior to December 31, 2016. Identifiable Intangibles Acquired Identifiable Intangibles PowerA Acquisition The valuation of identifiable intangible assets of $235.4 million acquired in the PowerA acquisition includes amortizable customer relationships, vendor relationships, trade names and developed technology, which have been recorded at their estimated fair values. The fair value of the customer relationships was determined using the multi-period excess earnings method which is based on the present value of the projected after-tax cash flows. The fair value of the vendor relationships was determined using the lost income method. The fair value of the trade name and the developed technology was determined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The determination of the acquisition date fair value of the intangible assets required the Company to make significant estimates and assumptions regarding future revenue growth rates, future cost of sales, operating expenses and earnings before income tax, attrition rate, future cash flows without vendor relationships and discount rates. The amortizable trade name, customer and vendor relationships are being amortized over 15 years while the developed technology is being amortized over 5 years on a straight-line basis. The allocation of the identifiable intangibles acquired in the PowerA acquisition was as follows:
(in millions) | Fair Value |  | Remaining Useful Life
Trade name | $ | 21.6 |  |  | 15 years
Customer relationships | 128.6 |  |  | 15 years
Vendor relationships | 82.4 |  |  | 15 years
Developed technology | 2.8 |  |  | 5 years
Total identifiable intangibles acquired | $ | 235.4 |  |  |
Foroni Acquisition The valuation of identifiable intangible assets of $11.1 million acquired in the Foroni Acquisition includes an amortizable trade name, "Foroni®," which has been recorded at its estimated fair value. The fair value of the trade name was determined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The Foroni® trade name is being amortized over 23 years on a straight-line basis. Cumberland Asset Acquisition The valuation of identifiable intangible assets of $3.2 million acquired in the Cumberland Asset Acquisition includes an amortizable trade name and amortizable customer relationships, which have been recorded at their estimated fair values. The fair value of the trade name was determined using the relief from royalty method, which is based on the present value of royalty fees derived from projected revenues. The fair value of the customer relationships was determined using the multi-period excess earnings method which is based on the present value of the projected after-tax cash flows. The amortizable trade name is being amortized over 10 years on a straight-line basis while the customer relationships are being amortized on an accelerated basis over 7 years from January 31, 2019, the date the Cumberland assets were acquired by the Company. The allocation of the identifiable intangibles acquired in the Cumberland Asset Acquisition was as follows:
(in millions) | Fair Value |  | Remaining Useful Life Ranges
Trade name - amortizable | $ | 0.8 |  |  | 10 years
Customer relationships | 2.4 |  |  | 7 years
Total identifiable intangibles acquired | $ | 3.2 |  |  |
The gross carrying value and accumulated amortization by class of identifiable intangible assets as of December 31, 2021 and 2020 were as follows:
| December 31, 2021 |  | December 31, 2020
(in millions) | Gross Carrying Amounts |  | Accumulated Amortization |  | Net Book Value |  | Gross Carrying Amounts |  | Accumulated Amortization |  | Net Book Value
Indefinite-lived intangible assets: |  |  |  |  |  |  |  |  |  |  |
Trade names | $ | 417.6 |  |  | $ | (44.5) |  | (1) | $ | 373.1 |  |  | $ | 467.5 |  |  | $ | (44.5) |  | (1) | $ | 423.0 |
Amortizable intangible assets: |  |  |  |  |  |  |  |  |  |  |
Trade names | 373.2 |  |  | (110.5) |  |  | 262.7 |  |  | 343.5 |  |  | (97.7) |  |  | 245.8 |
Customer and contractual relationships | 366.5 |  |  | (182.4) |  |  | 184.1 |  |  | 376.8 |  |  | (162.9) |  |  | 213.9 |
Vendor relationships | 82.4 |  |  | (5.7) |  |  | 76.7 |  |  | 87.7 |  |  | (0.2) |  |  | 87.5 |
Patents | 8.6 |  |  | (3.0) |  |  | 5.6 |  |  | 8.9 |  |  | (2.1) |  |  | 6.8 |
Subtotal | 830.7 |  |  | (301.6) |  |  | 529.1 |  |  | 816.9 |  |  | (262.9) |  |  | 554.0 |
Total identifiable intangibles | $ | 1,248.3 |  |  | $ | (346.1) |  |  | $ | 902.2 |  |  | $ | 1,284.4 |  |  | $ | (307.4) |  |  | $ | 977.0 |
(1)Accumulated amortization prior to the adoption of authoritative guidance on goodwill and other intangible assets, at which time further amortization ceased. The Company’s intangible amortization expense was $46.3 million, $32.8 million and $35.4 million for the years ended December 31, 2021, 2020 and 2019, respectively. Estimated amortization expense for amortizable intangible assets for the next five years is as follows:
(in millions) | 2022 |  | 2023 |  | 2024 |  | 2025 |  | 2026
Estimated amortization expense(2) | $ | 42.8 |  |  | $ | 40.5 |  |  | $ | 38.8 |  |  | $ | 37.2 |  |  | $ | 35.1 |
(2)Actual amounts of amortization expense may differ from estimated amounts due to changes in foreign currency exchange rates, additional intangible asset acquisitions, impairment of intangible assets, accelerated amortization of intangible assets and other events. We test indefinite-lived intangibles for impairment at least annually and on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. We performed this annual assessment, on a quantitative basis, for our indefinite-lived trade names and concluded that no impairment existed as of our measurement date of May 31, 2021. The result of our impairment testing of our indefinite-lived intangible assets determined the fair value of our five indefinite-lived trade names ACCO Brands®, Five Star®, Swingline®, Leitz® and Tilibra® exceeded their carrying values. The fair value of these trade names are considered Level 3 measurements which utilize a relief-from-royalty discounted cash flows approach. Key inputs and assumptions involved include the estimated near-term revenue growth, long-term growth rate, royalty rate, and discount rate. As of May 31, 2021, we changed the indefinite-lived Tilibra® trade name to an amortizable intangible asset. The change was made as a result of decisions regarding the Company's future use of the trade name. The Company began amortizing the Tilibra® trade name on a straight-line basis over a life of 30 years effective June 1, 2021. COVID-19 Impact We continue to monitor the significant global impact and uncertainty as a result of COVID-19 to assess the outlook for demand for our products and the effect on our business and our overall financial performance. This includes our risk of impairment of our goodwill and indefinite-lived intangible assets. Although the full impact of COVID-19 on demand remains uncertain, with impact varying significantly by geographic region, we remain committed to taking the actions necessary to protect our long-term financial performance expectations and position the Company for long-term growth. We expect the macroeconomic environment will recover in the medium to long-term. As a result of our analysis, and consideration of events and circumstances, we concluded based on the previously conducted annual assessment, on a qualitative basis, no impairment existed as of our measurement date of May 31, 2021. The implied fair values of all three of our reporting units, more likely than not, exceed their carrying values at December 31, 2021. In addition, we have not identified a triggering event that would cause us to perform a quantitative goodwill impairment analysis. In management’s opinion, the goodwill balance for our ACCO Brands International reporting unit could be at risk for impairment if operating performance does not recover as expected from the current impacts of COVID-19, if we experience negative changes to the long-term outlook for the business, or if changes in factors and assumptions occur which impact the fair value such as low or declining revenue growth rates, depressed operating margins or adverse changes to the discount rates impacting this reporting unit.

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