Goodwill and Identifiable Intangible Assets

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Identifiable Intangible Assets

8. Goodwill and Identifiable Intangible Assets

Goodwill

We test goodwill for impairment at least annually as of our measurement date of May 31st 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.

During the second quarter ended June 30, 2023, we performed a qualitative assessment of impairment for goodwill for each of our three reporting units. We considered events and circumstances that may affect the fair value of each reporting unit to determine whether it is necessary to perform the quantitative impairment test. We focused on events or circumstances that could affect the significant inputs, including, but not limited to, financial performance, such as negative or declining cash flows, a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods, competitive, economic, industry and market considerations, and other factors that have or could impact each of our reporting units.

The result of our qualitative assessment performed during the second quarter ended June 30, 2023, as of our measurement date of May 31, 2023, was that there were no triggering events that would make it more likely than not that an impairment loss to our goodwill has been incurred for any our three reporting units.

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, 2022	$		348.0	$		145.6		$		177.9	$		671.5
Foreign currency translation			—			(7.5	)			0.8			(6.7	)
Balance at September 30, 2023	$		348.0	$		138.1		$		178.7	$		664.8

Identifiable Intangible Assets

The gross carrying value and accumulated amortization by class of identifiable intangible assets as of September 30, 2023 and December 31, 2022, were as follows:


		September 30, 2023										December 31, 2022
(in millions)		Gross Carrying Amounts			Accumulated Amortization				Net Book Value			Gross Carrying Amounts			Accumulated Amortization				Net Book Value
Indefinite-lived intangible assets:
Trade names(1)	$		295.1	$		(44.5	)	$		250.6	$		410.6	$		(44.5	)	$		366.1
Amortizable intangible assets:
Trade names			485.5			(135.8	)			349.7			369.7			(123.0	)			246.7
Customer and contractual relationships			354.9			(211.2	)			143.7			356.9			(198.2	)			158.7
Vendor relationships			82.4			(15.3	)			67.1			82.4			(11.2	)			71.2
Patents			7.9			(4.6	)			3.3			8.1			(3.8	)			4.3
Subtotal			930.7			(366.9	)			563.8			817.1			(336.2	)			480.9
Total identifiable intangibles	$		1,225.8	$		(411.4	)	$		814.4	$		1,227.7	$		(380.7	)	$		847.0

(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 for the three and nine months ended September 30, 2023 was $10.8 million and $32.7 million, respectively, and $9.9 million and $31.5 million for the three and nine months ended September 30, 2022, respectively.

Estimated amortization expense for amortizable intangible assets, as of September 30, 2023, for the current year and the next five years is as follows:


(in millions)		2023			2024			2025			2026			2027			2028
Estimated amortization expense(2)	$		43.7	$		42.1	$		40.5	$		38.4	$		35.9	$		33.7

(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 as of our measurement date of May 31st 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 qualitative basis, for our indefinite-lived trade names in the second quarter of 2023 and concluded that no impairment loss had been incurred.

As of January 1, 2023, we changed the indefinite-lived Leitz® 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 Leitz® trade name on a straight-line basis over a life of 30 years effective January 1, 2023.