Goodwill and Identifiable Intangible Assets | 3 Months Ended |
Mar. 31, 2015 |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Identifiable Intangible Assets | 6 | Goodwill and Identifiable Intangible Assets | | | | | | | | | | | | | | | | | | | | | | | |
|
We had goodwill of $1,454.4 million and $1,467.8 million as of March 31, 2015 and December 31, 2014. The $13.4 million decrease was primarily due to acquisition-related adjustments. The change in the net carrying amount of goodwill by segment was as follows: |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
(In millions) | | | | | | | | | | | | | | Total | | | | | |
| | Cabinets | | | Plumbing | | | Doors | | | Security | | | Goodwill | | | | | |
Goodwill at December 31, 2014 (a) | | $ | 630.1 | | | $ | 595.6 | | | $ | 143 | | | $ | 99.1 | | | $ | 1,467.80 | | | | | |
Year-to-date translation adjustments | | | (2.4 | ) | | | — | | | | — | | | | (1.3 | ) | | | (3.7 | ) | | | | |
Acquisition-related adjustments | | | 5.8 | | | | (15.1 | ) | | | — | | | | (0.4 | ) | | | (9.7 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Goodwill at March 31, 2015 (a) | | $ | 633.5 | | | $ | 580.5 | | | $ | 143 | | | $ | 97.4 | | | $ | 1,454.40 | | | | | |
|
|
| (a) | Net of accumulated impairment losses of $399.5 million in the Doors segment. | | | | | | | | | | | | | | | | | | | | | | |
|
We also had identifiable intangible assets, principally tradenames, of $661.5 million and $656.5 million as of March 31, 2015 and December 31, 2014, respectively. The $6.4 million increase in gross identifiable intangible assets was due to the acquisition of Anaheim, partially offset by foreign exchange adjustments. |
|
The gross carrying value and accumulated amortization by class of identifiable intangible assets as of March 31, 2015 and December 31, 2014 were as follows: |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | |
(In millions) | | As of March 31, 2015 | | | As of December 31, 2014 | |
| | Gross | | | | | | Net | | | Gross | | | | | | Net | |
| | Carrying | | | Accumulated | | | Book | | | Carrying | | | Accumulated | | | Book | |
| | Amounts | | | Amortization | | | Value | | | Amounts | | | Amortization | | | Value | |
| | | | | | |
Indefinite-lived tradenames | | $ | 536.9 | | | $ | (42.0 | )(a) | | $ | 494.9 | | | $ | 542.7 | | | $ | (42.0 | )(a) | | $ | 500.7 | |
| | | | | | |
Amortizable intangible assets | | | | | | | | | | | | | | | | | | | | | | | | |
Tradenames | | | 29.4 | | | | (6.8 | ) | | | 22.6 | | | | 14.6 | | | | (6.4 | ) | | | 8.2 | |
Customer and contractual relationships | | | 291.5 | | | | (164.3 | ) | | | 127.2 | | | | 294.2 | | | | (164.0 | ) | | | 130.2 | |
Patents/proprietary technology | | | 57.8 | | | | (41.0 | ) | | | 16.8 | | | | 57.7 | | | | (40.3 | ) | | | 17.4 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total | | | 378.7 | | | | (212.1 | ) | | | 166.6 | | | | 366.5 | | | | (210.7 | ) | | | 155.8 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total identifiable intangibles | | $ | 915.6 | | | $ | (254.1 | ) | | $ | 661.5 | | | $ | 909.2 | | | $ | (252.7 | ) | | $ | 656.5 | |
|
|
| (a) | Accumulated amortization prior to the adoption of revised ASC requirements for Intangibles – Goodwill and Other Assets. | | | | | | | | | | | | | | | | | | | | | | |
|
Amortizable identifiable intangible assets, principally tradenames and customer relationships, are subject to amortization over their estimated useful life, 5 to 30 years, based on the assessment of a number of factors that may impact useful life. These factors include historical and tradename performance with respect to consumer name recognition, geographic market presence, market share, plans for ongoing tradename support and promotion, and other relevant factors. |
|
|
|
In the first quarter of 2015, no events or circumstances occurred that would have required us to perform interim impairment tests of goodwill or indefinite-lived intangible assets. |
|
The events and/or circumstances that could have a potential negative effect on the estimated fair value of our reporting units and indefinite-lived tradenames include: actual new construction and repair and remodel growth rates that lag our assumptions, actions of key customers, volatility of discount rates, continued economic uncertainty, higher levels of unemployment, weak consumer confidence, and lower levels of discretionary consumer spending. In addition, future decisions we could make with regard to acquisitions and divestitures could trigger a requirement to measure certain assets as held for sale with the resulting change in measurement standard potentially triggering impairments. While our cash flow projections used to assess impairment of our goodwill and other intangible assets held for use are influenced by a number of variables, they are most significantly influenced by our projection for the continued recovery of the U.S. home products markets and our ability to execute on various planned cost reduction initiatives supporting operating income. We evaluate our projection of the U.S. home products market periodically and in connection with our annual operating plans finalized in the fourth quarter of each year. The U.S. home products market is highly dependent on U.S. new home construction and the rate of spending on repair and remodel activities. Our projection for the U.S. home products markets is inherently subject to a number of uncertain factors, such as employment, home prices, credit availability, and the rate of home foreclosures. Significant changes in these and other factors could cause us to change our cash flow projections in future periods which could trigger impairment of goodwill or indefinite-lived intangible assets in the period in which such changes occur. |