ITT INC

NOTE 12

GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

The following table provides a rollforward of the carrying amount of our goodwill by segment.

(a)During the fourth quarter of 2023, we completed the sale of our Matrix business, which was previously included within our CCT segment. Goodwill of $0.3 was allocated to the divestiture. Additionally, during the second quarter of 2023, we completed the sale of a product line within our CCT segment. Goodwill of $2.4 was allocated to the divestiture. See Note 22, Acquisitions, Investments, and Divestitures, for further information.

Goodwill acquired represents the preliminary calculation of the excess purchase price over the net assets acquired. During the year ended December 31, 2023, goodwill acquired is related to our acquisition of Micro-Mode. The valuation of Micro-Mode is pending completion. Upon completion, goodwill acquired will be adjusted based on the final fair values of the net assets acquired. For the year ended December 31, 2022, goodwill acquired is related to our acquisitions of Habonim and a product line from Clippard Instrument Laboratory, Inc. (Clippard). Refer to Note 22, Acquisitions, Investments, and Divestitures, for further information.

Other Intangible Assets, Net

The following table summarizes our other intangible assets, net of accumulated amortization.

(a)During the fourth quarter of 2023, we completed the sale of our Matrix business, which was previously included within our CCT segment. Customer relationships with a net book value of $5.5 were written off as part of the divestiture. See Note 22, Acquisitions, Investments, and Divestitures, for further information.

In connection with the acquisition of Micro-Mode in May 2023, we acquired intangible assets with a preliminary fair value of $28.7. These intangible assets consist of the following:

Refer to Note 22, Acquisitions, Investments, and Divestitures, for further information.

Customer relationships, proprietary technology and trademarks and other intangible assets are amortized over weighted average lives of approximately 13.6 years,14.4 years and 7.1 years, respectively. Indefinite-lived intangibles primarily consist of brands and trademarks.

Amortization expense related to intangible assets for 2023, 2022 and 2021 was $19.1, $20.8, and $18.9, respectively. Estimated amortization expense for each of the five succeeding years and thereafter is as follows:

NOTE 13

ACCOUNTS PAYABLE, ACCRUED LIABILITIES AND OTHER NON-CURRENT LIABILITIES

The following table summarizes our accrued liabilities and other non-current liabilities.

Supply Chain Financing

The Company has supply chain financing ("SCF") programs in place under which participating suppliers may elect to obtain payment from an intermediary. The Company confirms the validity of invoices from participating suppliers and agrees to pay the intermediary an amount based on invoice totals. The majority of amounts payable under these programs are due within 90 to 180 days and are considered commercially reasonable. There are no assets pledged as security or other forms of guarantees provided for the committed payments. As of December 31,2023 and 2022, there were $19.7 and $12.9, respectively, of outstanding amounts payable to suppliers who have elected to participate in these SCF programs. These amounts were recorded within Accounts payable in our Consolidated Balance Sheets.

NOTE 14

LEASES

The Company’s lease portfolio primarily relates to real estate, which may be used for manufacturing or non-manufacturing purposes (e.g., office space), and contains lease terms generally ranging between one and 18 years. Our lease portfolio also includes vehicles and equipment. Substantially all of our leases are classified as operating leases.

Lease costs associated with fixed payments related to the Company's operating leases were $30.2, $26.6, and $25.7 for the years ended December 31, 2023, 2022 and 2021, respectively. Short-term lease costs, variable lease costs, and sublease income related to our operating leases, as well as total lease costs related to our finance leases, were not material for the years ended December 31, 2023, 2022 and 2021.

The following table displays our future lease obligations related to non-cancellable operating leases with an initial term in excess of 12 months as of December 31, 2023.

(a)Includes $19.5 of current operating lease liabilities recorded within Accrued and other current liabilities and $72.3 of non-current operating lease liabilities recorded within Other non-current liabilities in our Consolidated Balance Sheets.

The following table includes other supplemental information regarding our operating leases.

(a)Included within Other, net in our Consolidated Statements of Cash Flows.

(b)We use a discount rate for each lease based on an estimated incremental borrowing rate over a similar term as the lease, as the discount rate implicit in each lease cannot be readily determined.

In May 2022, we relocated our corporate headquarters from White Plains, New York to Stamford, Connecticut. During 2022, we terminated our former corporate headquarters lease, which resulted in an asset impairment charge of $1.7, reflected within our Consolidated Statements of Operations.