v3.24.0.1
Goodwill and Other Intangible Assets
12 Months Ended
Dec. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets

4. GOODWILL AND OTHER INTANGIBLE ASSETS

The following table presents details of the Company’s intangible assets other than goodwill:

 

December 31, 2023

 

 

December 31, 2022

 

 

Gross Carrying
Amount

 

 

Accumulated Amortization

 

 

Net Carrying Amount

 

 

Gross Carrying
Amount

 

 

Accumulated Amortization

 

 

Net Carrying Amount

 

Customer base

$

2,951.5

 

 

$

1,945.7

 

 

$

1,005.8

 

 

$

2,946.5

 

 

$

1,814.9

 

 

$

1,131.6

 

Trade names and
   trademarks

 

937.5

 

 

 

531.8

 

 

 

405.7

 

 

 

936.6

 

 

 

474.2

 

 

 

462.4

 

Patents and technologies

 

1,694.9

 

 

 

1,523.7

 

 

 

171.2

 

 

 

1,693.6

 

 

 

1,372.5

 

 

 

321.1

 

Other

 

32.3

 

 

 

32.3

 

 

 

—

 

 

 

32.3

 

 

 

32.3

 

 

 

—

 

Total intangible assets

$

5,616.2

 

 

$

4,033.5

 

 

$

1,582.7

 

 

$

5,609.0

 

 

$

3,693.9

 

 

$

1,915.1

 

There were no impairments of finite-lived intangible assets identified during the years ended December 31, 2023, 2022 or 2021.

Amortization expense for intangible assets was $327.1 million, $440.0 million and $510.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. Future amortization expense as of December 31, 2023 is as follows:

 

Estimated
Amortization
Expense

 

2024

$

273.5

 

2025

 

230.2

 

2026

 

187.9

 

2027

 

157.9

 

2028

 

119.4

 

Thereafter

 

613.8

 

The table above includes amortization expense of $19.5 million in 2024 and $4.4 million in 2025 related to retained patents in the Home business, which will be classified as discontinued operations.

The following table presents the activity in goodwill by reportable segment.

 

 

December 31, 2022

 

 

Activity

 

 

December 31, 2023

 

 

 

Goodwill

 

 

Accumulated Impairment Losses

 

 

Total

 

 

Additions (Deductions)

 

 

Impairment

 

 

Foreign Exchange and Other

 

 

Goodwill

 

 

Accumulated Impairment Losses

 

 

Total (1)

 

CCS

 

$

2,280.9

 

 

$

(51.5

)

 

$

2,229.4

 

 

$

—

 

 

$

(99.1

)

 

$

10.1

 

 

$

2,291.0

 

 

$

(150.6

)

 

$

2,140.4

 

OWN

 

 

660.3

 

 

 

(159.5

)

 

 

500.8

 

 

 

—

 

 

 

—

 

 

 

2.4

 

 

 

662.7

 

 

 

(159.5

)

 

 

503.2

 

NICS

 

 

649.4

 

 

 

(41.2

)

 

 

608.2

 

 

 

—

 

 

 

—

 

 

 

1.2

 

 

 

650.6

 

 

 

(41.2

)

 

 

609.4

 

ANS

 

 

1,995.7

 

 

 

(1,261.7

)

 

 

734.0

 

 

 

—

 

 

 

(472.3

)

 

 

(0.3

)

 

 

1,995.4

 

 

 

(1,734.0

)

 

 

261.4

 

Total

 

$

5,586.3

 

 

$

(1,513.9

)

 

$

4,072.4

 

 

$

—

 

 

$

(571.4

)

 

$

13.4

 

 

$

5,599.7

 

 

$

(2,085.3

)

 

$

3,514.4

 

(1) As of December 31, 2023, the CCS reportable segment goodwill balance of $2,140.4 million includes goodwill balances of $881.5 million and $1,258.9 million for the Building and Data Center Connectivity (BDCC) and Network Cable and Connectivity reporting units, respectively.

 

 

 

December, 31, 2021

 

 

Activity

 

 

December 31, 2022

 

 

 

Goodwill

 

 

Accumulated Impairment Losses

 

 

Total

 

 

Additions (Deductions)

 

 

Impairment

 

 

Foreign Exchange and Other

 

 

Goodwill

 

 

Accumulated Impairment Losses

 

 

Total

 

CCS

 

$

2,307.3

 

 

$

(51.5

)

 

$

2,255.8

 

 

$

—

 

 

$

—

 

 

$

(26.4

)

 

$

2,280.9

 

 

$

(51.5

)

 

$

2,229.4

 

OWN

 

 

666.6

 

 

 

(159.5

)

 

 

507.1

 

 

 

—

 

 

 

—

 

 

 

(6.3

)

 

 

660.3

 

 

 

(159.5

)

 

 

500.8

 

NICS

 

 

653.0

 

 

 

(41.2

)

 

 

611.8

 

 

 

—

 

 

 

—

 

 

 

(3.6

)

 

 

649.4

 

 

 

(41.2

)

 

 

608.2

 

ANS

 

 

1,999.1

 

 

 

(142.1

)

 

 

1,857.0

 

 

 

—

 

 

 

(1,119.6

)

 

 

(3.4

)

 

 

1,995.7

 

 

 

(1,261.7

)

 

 

734.0

 

Total

 

$

5,626.0

 

 

$

(394.3

)

 

$

5,231.7

 

 

$

—

 

 

$

(1,119.6

)

 

$

(39.7

)

 

$

5,586.3

 

 

$

(1,513.9

)

 

$

4,072.4

 

 

During the annual impairment test performed in the fourth quarter of 2023 and in conjunction with the development of the Company's 2024 and long-range plans, CommScope continued to evaluate its ANS and BDCC reporting units' expected cash flows and market valuations. The Company determined the goodwill balances in the ANS and BDCC reporting units were impaired and recorded partial impairment charges of $46.4 million and $99.1 million, respectively, in asset impairments in the Consolidated Statements of Operations. The impairment charges resulted from the Company's assessment of further lower revenue growth and EBITDA margins in the fourth quarter of 2023, due to adverse impacts of market conditions on the current year profitability and estimated future business results and cash flows. The ANS reporting unit is the same as the ANS segment, and the BDCC reporting unit is part of the CCS reportable segment. See Note 10 for further discussion of the assumptions used in the valuation.

During the third quarter of 2023, the Company concluded that a triggering event occurred, primarily due to a sustained decrease in the market value of the Company’s debt and common stock affecting the overall business and changes in expected future cash flows due to reduced earnings forecasts and current macroeconomic conditions, including a rising interest rate environment. The Company performed an interim quantitative goodwill impairment test for its ANS and BDCC reporting units, which were most sensitive to negative performance and outlook, to compare the fair values of the reporting units to their carrying amounts, including the goodwill. As a result, the Company recorded a goodwill impairment charge of $425.9 million in asset impairments in the Consolidated Statements of Operations to partially write down the carrying amount of the ANS reporting unit goodwill in the ANS segment. There was no impairment identified in the BDCC reporting unit.

During the annual impairment test performed in the fourth quarter of 2022 and in conjunction with the development of its 2023 and long-range plans, the Company identified changes in the ANS reporting unit’s expected future cash flows due to various market trends expected to affect the business, including technology shifts affecting hardware sales, trends affecting bandwidth growth and other operational challenges, as well as an increase in the cost of capital. As a result, the Company determined the goodwill balance in the ANS reporting unit was impaired and recorded a $1,119.6 million impairment charge.

Estimating the fair value of a reporting unit involves uncertainties because it requires management to develop numerous assumptions, including assumptions about the future growth and potential volatility in revenues and costs, capital expenditures, industry economic factors and future business strategy. Changes in projected revenue growth rates, projected EBITDA margin percentages or estimated discount rates due to uncertain market conditions, terminal growth rates, lower market multiples, loss of one or more key customers, changes in the Company’s strategy, changes in technology or other factors could negatively affect the fair value in one or more of the Company’s reporting units and result in a material impairment charge in the future.