Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets at December 31, 2019 and 2018 consist of the following ($ in millions):



	As of December 31,
	2019			2018
Contractual arrangements	$	921		$	921
Non-compete agreements	14			14
Customer relationships	352			353
Trade names	16			16
Technology	9			9
	1,312			1,313
Less: accumulated amortization	(583		)	(524		)
Intangible assets, net	$	729		$	789

At December 31, 2019, the Company had $12 million in trade names net of accumulated amortization, of which $7 million relates to Atlantic Aviation and are considered to be indefinite-lived. The remaining balance of $5 million relates to “The Gas Company” trade name and is being amortized over its estimated useful life.

Amortization expense of intangible assets in 2019, 2018 and 2017 totaled $59 million, $68 million and $64 million, respectively. The estimated future amortization expense for amortizable intangible assets to be recognized are ($ in millions):



2020	$	50
2021	45
2022	43
2023	42
2024	37
Thereafter	505
Total	$	722

The goodwill balance by reportable segments as of December 31, 2019 are comprised of the following ($ in millions):



	IMTT			Atlantic Aviation			MIC Hawaii			Total
Goodwill acquired in business combinations, net of disposals, at December 31, 2018	$	1,430		$	619		$	123		$	2,172
Accumulated impairment charges	—			(123		)	(3		)	(126		)
Other	(3		)	—			—			(3		)
Balance at December 31, 2018	1,427			496			120			2,043
Other	1			(1		)	—			—
Balance at December 31, 2019	$	1,428		$	495		$	120		$	2,043

The Company tests for goodwill impairment at the reporting unit level on an annual basis on October 1^st of each year and between annual tests if a triggering event indicates the possibility of an impairment. The Company monitors changing business conditions as well as industry and economic factors, among others, for events which could trigger the need for an interim impairment analysis. The Company has experienced a sustained decline in its market capitalization over the 18-months ended September 30, 2019. The decline reflects, in part, the sales of smaller and non-core businesses during that period. However, the Company concluded that the decline in its market capitalization also reflected a reduced contribution from its IMTT segment as a result of lower bulk liquid storage utilization levels and storage rates and determined that these constituted a triggering event.

The Company performed an interim impairment analysis based on financial results through September 30, 2019. For IMTT, the Company used both the market and income approaches and weighting them based on their applicability to the segment. The income approach used forecasted cash flows developed as part of the Company’s annual update of its 5-year business plan. For Atlantic Aviation and Hawaii Gas, the Company used only the market approach given that the fair value of these businesses substantially exceeded the book value noted in 2018. The analysis concluded that fair value of each of the Company’s reporting units exceeded their carrying value and no impairment was recorded.

At September 30, 2019, the fair value of the Company's reporting units exceeded their aggregate book value by $2.2 billion, or 33%. Approximately $1.9 billion of the excess was attributed to Atlantic Aviation, approximately $280 million to Hawaii Gas and approximately $20 million to IMTT.

Unfavorable fluctuations in the discount rate or declines in forecasted storage revenues and margins could result in an impairment to IMTT in the future. For example, a 0.25% increase to the discount rate would decrease the value of IMTT by approximately $70 million. Any increase in the discount rate, in conjunction with any decrease in the projected cash flows for IMTT, would negatively affect the current valuations. Due to the inherent uncertainties in the estimates and assumptions used in the fair value analysis, the Company's actual results may differ. These differences could alter the fair value of the Company's reporting units and may result in impairment charges in future periods. At December 31, 2019, there were no new triggering events that indicated impairment.