Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

The changes in the carrying amount of goodwill by segment were as follows:



(amounts in millions)	Performance Solutions			Agricultural Solutions			Total
Balance, December 31, 2014	$	961.2		$	444.1		$	1,405.3
Addition from acquisitions	1,258.3			1,697.1			2,955.4
Purchase accounting adjustments	—			80.2			80.2
Foreign currency translation	(72.3		)	(346.7		)	(419.0		)
Balance, December 31, 2015	2,147.2			1,874.7			4,021.9
Addition from acquisitions	66.9			—			66.9
Purchase accounting adjustments	29.7			—			29.7
Impairment write-off	(46.6		)	—			(46.6		)
Foreign currency translation	(64.8		)	156.7			91.9
Other	—			15.1			15.1
Balance, December 31, 2016 ^(*)	$	2,132.4		$	2,046.5		$	4,178.9

^(*) Includes accumulated impairment losses totaling $46.6 million associated with the Company's Performance Solutions segment.

The Company performs its annual impairment analysis of goodwill at the reporting unit level during the fourth quarter. Platform's goodwill impairment testing analysis varies by reporting unit, using the qualitative approach for certain reporting units and an income approach derived from a discounted cash flow model to estimate the fair value of other reporting units. Except for Offshore Solutions, within the Performance Solutions segment, the Company concluded that the fair values of the remaining reporting units exceeded the carrying values of their net assets based on the assessments used in the qualitative approach and the projections and other assumptions used in the analysis. Within Offshore Solutions, the Company recorded an impairment charge totaling $46.6 million as a result of continuing weak oil prices. The Company is now experiencing the impact on its results, which slightly lag the overall industry, as this ultimately has caused the industry to depress its overall investments. The fair value was determined using a combination of an income approach derived from a discounted cash flow model as well as market multiples. There was no impairment of goodwill in 2015 and 2014.

Within the Performance Solutions segment, we used a discounted cash flow analysis and considered guideline company and guideline transaction information, where available, to aid in the valuation of the reporting units. The discount rates used ranged from 9.0% to 10.0% and the annual long term revenue growth rates assumptions are between 2.0% and 6.5%.

Additionally, as of the assessment date of October 1, 2016, the excess of the fair value of the Agro Business, a reporting unit within the Agricultural Solutions segment, over its carrying value was 21.7%. Goodwill assigned to the Agro Business reporting unit totaled $2.08 billion as of the assessment date. In 2015, the excess of the fair value of this reporting unit over its carrying value was 16.1%. Goodwill assigned to the Agro Business reporting unit totaled $1.87 billion as of the assessment date. The primary components of and assumptions used in the assessment consisted of the following:


•	Valuation Techniques - The Company uses a discounted cash flow analysis, which requires assumptions about short and long-term net cash flows, growth rates, as well as discount rates. Additionally, the Company considers guideline company and guideline transaction information, where available, to aid in the valuation of the reporting units.

•

Growth Assumptions - Multi-year financial forecasts are developed for each reporting unit by considering several key business drivers such as new business initiatives, client service and retention standards, market share changes, historical performance, and industry and economic trends, among other considerations. The annual long term growth rates used in 2016 for the initial 8 year period ranged from 0.6% to 5.7% for the Agro Business. The long-term growth rate used in 2016 in determining the terminal value of the Agro Business was estimated at 3.0%.

The annual revenue growth rates used in 2015 for the initial 8 year period ranged from 1.3% to 7.2% for the Agro Business. The long-term growth rate used in 2015 in determining the terminal value of the Agro Business was estimated at 3.0%.

•

Discount Rate Assumptions - Discount rates were estimated based on a Weighted Average Cost of Capital, or WACC. The WACC combines the required return on equity, based on a Modified Capital Asset Pricing Model, which considers the risk-free interest rate, market risk premium, small stock risk premium and a company specific risk premium, with the cost of debt, based on BBB-rated corporate bonds, adjusted using an income tax factor. The calculation resulted in a WACC rate for the Agro Business of 9.0% and 10.0% for 2016 and 2015, respectively.


•	Estimated Fair Value and Sensitivities - The estimated fair value of each reporting unit is derived from the valuation techniques described above. The estimated fair value of each reporting unit is analyzed in relation to numerous market and historical factors, including current economic and market conditions, company-specific growth opportunities, and guideline company information.

The estimated fair value of a reporting unit is highly sensitive to changes in these estimates and assumptions; therefore, in some instances, changes in these assumptions may impact whether the fair value of a reporting unit is greater than its carrying value. Platform performed sensitivity analysis around these assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values. In 2016, based on a sensitivity analysis performed for the Agro Business reporting unit, a 1% increase in the WACC, or a 1% decrease in the terminal value, does not result in the carrying value being greater than the fair value. In 2015, based on the sensitivity analysis performed for the Agro Business reporting unit, a 1% decrease in the terminal growth rate did not result in the carrying value exceeding its fair value, however, a 1% increase in the WACC rate would have resulted in the carrying value of the net assets to exceed their fair value, making it necessary to proceed to the second step of the impairment test.

Indefinite-Lived Intangible Assets

The carrying value of indefinite-lived intangible assets, other than goodwill, which consists solely of tradenames, was $377 million and $360 million at December 31, 2016 and 2015, respectively. The Company found no indications of impairment related to its indefinite-lived intangible assets as a result of its annual impairment review.

Finite-Lived Intangible Assets

Intangible assets subject to amortization were as follows:



		December 31, 2016							December 31, 2015
(amounts in millions)	Weighted average useful life (years)	Gross Carrying Amount		Accumulated Amortization and Foreign Exchange			Net Book Value		Gross Carrying Amount		Accumulated Amortization and Foreign Exchange			Net Book Value
Customer lists	18.0	$	1,245.9	$	(174.5	)	$	1,071.4	$	1,297.2	$	(184.0	)	$	1,113.2
Developed technology ⁽¹⁾	11.6	2,022.1		(254.9		)	1,767.2		2,260.9		(440.4		)	1,820.5
Tradenames	7.7	25.1		(8.2		)	16.9		24.2		(5.4		)	18.8
Non-compete agreement	5.0	1.9		(1.1		)	0.8		1.9		(0.5		)	1.4
Total	14.0	$	3,295.0	$	(438.7	)	$	2,856.3	$	3,584.2	$	(630.3	)	$	2,953.9

⁽¹⁾ Includes in-process registration rights awaiting completion before amortization commences.

For the years ended December 31, 2016, 2015 and 2014, the Company recorded amortization expense on intangible assets of $267 million, $202 million and $67.4 million, respectively.

Estimated future amortization of intangible assets for each of the next five fiscal years is as follows:



(amounts in millions)	Amortization Expense
2017	$	266.7
2018	266.5
2019	266.4
2020	261.7
2021	253.5

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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