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Goodwill and Other Intangible Assets (Notes)
 12 Months Ended
Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets
Goodwill and Other Intangible Assets
2019
The Company updated its financial projections in connection with its annual goodwill assessment and determined that the fair value of each of its reporting units with goodwill exceeded its carrying value and thus no impairment charge for goodwill related to the specialty products segment was recorded in the consolidated statements of operations within asset impairment. There is no reporting unit within the fuel products segment that has goodwill.
2018
The Company updated its financial projections in connection with its annual goodwill assessment and determined that the fair value of each of its reporting units with goodwill exceeded its carrying value and thus no impairment charge for goodwill related to the specialty products segment was recorded in the consolidated statements of operations within asset impairment.
2017
The Company updated its financial projections in connection with its annual goodwill assessment and determined that its Dickinson reporting unit’s fair value was below its carrying value. An impairment charge of $0.7 million for goodwill related to the specialty products segment was recorded in the consolidated statements of operations within loss on impairment and disposal of assets.
To derive the fair value of the reporting units, as required in step one of the impairment test, the Company used the income approach, specifically the discounted cash flow method, to determine the fair value of each reporting unit and the associated amount of the impairment charge. The income approach focuses on the income-producing capability of an asset, measuring the current value of the asset by calculating the present value of its future economic benefits such as cash earnings, cost savings, corporate tax structure and product offerings. Value indications are developed by discounting expected cash flows to their present value at a rate of return that incorporates the risk-free rate for the use of funds, the expected rate of inflation, and risks associated with the reporting unit.
Inputs used to estimate the fair value of the Company’s reporting units are considered Level 3 inputs of the fair value hierarchy and include the following:
•
The Company’s financial projections for its reporting units are based on its analysis of various supply and demand factors which include, among other things, industry-wide capacity, its planned utilization rate, end-user demand, crack spreads, capital expenditures and economic conditions. Such estimates are consistent with those used in the Company’s planning and capital investment reviews and include recent historical prices and published forward prices.
•
The discount rate used to measure the present value of the projected future cash flows is based on a variety of factors, including market and economic conditions, operational risk, regulatory risk and political risk. This discount rate is also compared to recent observable market transactions, if possible.
For Level 3 measurements, significant increases or decreases in long-term growth rates or discount rates in isolation or in combination could result in a significantly lower or higher fair value measurement.
Changes in goodwill balances for the periods indicated below are as follows (in millions):
 
 
Specialty
Products
 
 
Net balance as of December 31, 2017
$
171.4

 
Impairment (1)
—

 
Net balance as of December 31, 2018
$
171.4

 
Impairment (1)
—

 
Net balance as of December 31, 2019
$
171.4


 
(1) 
Total accumulated goodwill impairment as of December 31, 2019 and 2018, is $35.5 million.
Other intangible assets consist of the following (in millions):
 
Weighted Average Life (Years) 
 
December 31, 2019
 
December 31, 2018
 
 
Gross Amount
 
Accumulated Amortization
 
Gross Amount 
 
Accumulated Amortization
Customer relationships
22
 
$
181.3

 
$
(130.6
)
 
$
181.3

 
$
(120.1
)
Tradenames
11
 
26.8

 
(18.7
)
 
26.8

 
(16.4
)
Trade secrets
13
 
52.7

 
(43.4
)
 
52.7

 
(39.7
)
Patents
12
 
1.6

 
(1.6
)
 
1.6

 
(1.6
)
Royalty agreements
20
 
6.1

 
(3.0
)
 
6.1

 
(2.7
)
 
19
 
$
268.5

 
$
(197.3
)
 
$
268.5

 
$
(180.5
)

Tradenames, trade secrets, patents and royalty agreements are being amortized to properly match expenses with the undiscounted estimated future cash flows over the terms of the related agreements or the period expected to be benefited. The costs of agreements with terms allowing for the potential extension of such agreements are being amortized based on the initial term only. Customer relationships are being amortized to properly match expenses with the undiscounted estimated future cash flows based upon assumed rates of annual customer attrition. For the years ended December 31, 2019, 2018 and 2017, the Company recorded amortization expense of intangible assets of $16.8 million, $19.8 million and $24.6 million, respectively.
As of December 31, 2019, the Company estimates that amortization of intangible assets for the next five years will be as follows (in millions):
Year
Amortization Amount
2020
$
14.0

2021
$
11.5

2022
$
9.5

2023
$
7.7

2024
$
6.5