Avery Dennison CorpAVY
Avery Dennison Corp Goodwill & Intangibles Disclosure
GOODWILL AND OTHER INTANGIBLES RESULTING FROM BUSINESS ACQUISITIONS
Goodwill
Results from our annual goodwill impairment test in the fourth quarter of 2025 indicated that no impairment occurred during 2025. The assumptions used in our assessment were primarily based on Level 3 inputs.
Changes in the net carrying amount of goodwill for 2025 and 2024 by reportable segment are shown below.
| (In millions) | Materials Group | Solutions Group | Total | |||||||||||||||||
Goodwill as of December 30, 2023 | $ | 630.7 | $ | 1,382.9 | $ | 2,013.6 | ||||||||||||||
Acquisition adjustments(1) | — | (2.7) | (2.7) | |||||||||||||||||
| Translation adjustments | (24.6) | (10.1) | (34.7) | |||||||||||||||||
Goodwill as of December 28, 2024 | 606.1 | 1,370.1 | 1,976.2 | |||||||||||||||||
Acquisition(2) | 237.6 | — | 237.6 | |||||||||||||||||
| Translation adjustments | 42.3 | 16.4 | 58.7 | |||||||||||||||||
Goodwill as of December 31, 2025 | $ | 886.0 | $ | 1,386.5 | $ | 2,272.5 | ||||||||||||||
(1) Measurement period adjustments related to the finalization of the purchase price allocation for our 2023 Acquisitions.
(2) Goodwill acquired related to our 2025 acquisition of Taylor Adhesives. We expect nearly all of the recognized goodwill related to this acquisition not to be deductible for income tax purposes.
The carrying amounts of goodwill at December 31, 2025 and December 28, 2024 were net of accumulated impairment losses of approximately $820 million recognized in fiscal year 2009 by our Solutions Group reportable segment.
Indefinite-Lived Intangible Assets
In connection with our acquisition of Taylor Adhesives, we acquired $18.7 million of identifiable indefinite lived intangible assets, consisting of trade names and trademarks. We utilized the income approach to estimate the fair values of intangible assets, primarily using Level 3 inputs. We applied significant judgment in determining the fair value of intangible assets, which included our estimates and assumptions with respect to the estimated future revenue and related profit margins, royalty rates, discount rates and economic lives assigned to the acquired intangible assets.
Results from our annual indefinite-lived intangible assets impairment test in the fourth quarter indicated that no impairment occurred during 2025. The carrying value of indefinite-lived intangible assets resulting from business acquisitions, consisting of trade names and trademarks, was $174.8 million and $154.5 million at December 31, 2025 and December 28, 2024, respectively.
Finite-Lived Intangible Assets
In connection with our acquisition of Taylor Adhesives, we acquired $139.6 million of identifiable finite-lived intangible assets, which consisted of customer relationships and developed technology. We utilized the income approach to estimate the fair value of acquired identifiable intangibles, primarily using Level 3 inputs. We applied significant judgment in determining the fair value of intangible assets, which included our estimates and assumptions with respect to estimated future revenue and related profit margins, customer retention rates, technology migration curves, royalty rates, discount rates and economic lives assigned to the acquired intangible assets.
The table below summarizes the amounts and useful lives of the intangible assets associated with our acquisition of Taylor Adhesives as of the acquisition date.
| Amount (in millions) | Amortization period (in years) | |||||||||||||
| Customer relationships | $ | 112.5 | 9 | |||||||||||
Developed technology | 27.1 | 8 | ||||||||||||
Refer to Note 2, “Business Acquisitions,” for more information.
The table below sets forth our finite-lived intangible assets resulting from business acquisitions at December 31, 2025 and December 28, 2024, which continue to be amortized.
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||
| (In millions) | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||||||||||||
| Customer relationships | $ | 1,040.8 | $ | 509.5 | $ | 531.3 | $ | 916.0 | $ | 438.5 | $ | 477.5 | ||||||||||||||||||||||||||
| Patented and other developed technology | 305.0 | 187.2 | 117.8 | 275.2 | 156.8 | 118.4 | ||||||||||||||||||||||||||||||||
| Trade names and trademarks | 17.5 | 14.0 | 3.5 | 17.1 | 12.8 | 4.3 | ||||||||||||||||||||||||||||||||
| Other intangibles | 3.3 | 3.2 | .1 | 3.2 | 2.6 | .6 | ||||||||||||||||||||||||||||||||
| Total | $ | 1,366.6 | $ | 713.9 | $ | 652.7 | $ | 1,211.5 | $ | 610.7 | $ | 600.8 | ||||||||||||||||||||||||||
Amortization expense for finite-lived intangible assets resulting from business acquisitions was $92.8 million for 2025, $89.4 million for 2024 and $86.3 million for 2023.
We expect estimated amortization expense for finite-lived intangible assets resulting from business acquisitions for each of the next five fiscal years and thereafter to be as follows:
| (In millions) | Estimated Amortization Expense | |||||||
| 2026 | $ | 102.0 | ||||||
| 2027 | 101.7 | |||||||
| 2028 | 93.6 | |||||||
| 2029 | 78.4 | |||||||
| 2030 | 76.5 | |||||||
| 2031 and thereafter | 200.5 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 21, 2024 | |
| 2022 | Feb 22, 2023 | |
| 2021 | Feb 25, 2021 | |
| 2019 | Feb 26, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 21, 2018 | |
| 2016 | Feb 24, 2016 | |
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.