Goodwill and Intangible Assets

12 Months Ended

Apr. 30, 2018

4. Goodwill and Intangible Assets

Goodwill

The following table presents changes in the carrying amount of goodwill during the years ended April 30, 2018 and 2017:


	Carrying
	Amount
	(in thousands)
Balance as of April 30, 2016	$	386,306
Goodwill acquired		37,728
Purchase price adjustments		(390)
Balance as of April 30, 2017		423,644
Goodwill acquired		4,145
Purchase price adjustments		(144)
Balance as of April 30, 2018	$	427,645

All goodwill relates to our geographic divisions reportable segment.

The annual impairment tests during the fourth quarters of fiscal 2018, 2017 and 2016 indicated that the fair value of the Company’s reporting units exceeded their carrying values. The Company identified six reporting units for evaluating goodwill for the fiscal 2018 annual impairment test, which were Central, Midwest, Northeast, Southern, Southeast and Western. Each of these reporting units constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results. The Company evaluates its reporting units on an annual basis.

The Company estimated the fair values of its reporting units based on weighting of a discounted cash flow analysis, a market comparable method and a market transaction approach. These models use significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. The significant assumptions used in the discounted cash flow method included internal forecasts and projections developed by management for planning purposes, available industry/market data, discount rates and the growth rate to calculate the terminal value. Under the market approach and market transaction approach, the fair value was estimated using the guideline company method. The Company selected guideline companies in the industry in which each reporting unit operates.

Intangible Assets

The following tables present the components of the Company’s definite-lived intangible assets as of April 30, 2018 and 2017:


	Estimated	Weighted	April 30, 2018
	Useful	Average	Gross				Net
	Lives	Amortization	Carrying		Accumulated		Carrying
	(years)	Period	Amount		Amortization		Value
	(dollars in thousands)
Customer relationships	5 - 13	10.9	$	282,547	$	150,081	$	132,466
Definite-lived tradenames	5 - 20	18.0		26,250		3,578		22,672
Vendor agreements	8 - 10	8.3		6,644		2,956		3,688
Leasehold interests	7 - 15	9.0		2,866		832		2,034
Other	5	5.0		521		66		455
Totals			$	318,828	$	157,513	$	161,315


	Estimated	Weighted	April 30, 2017
	Useful	Average	Gross				Net
	Lives	Amortization	Carrying		Accumulated		Carrying
	(years)	Period	Amount		Amortization		Value
	(dollars in thousands)
Customer relationships	5 - 13	10.9	$	273,196	$	111,291	$	161,905
Definite-lived tradenames	5 - 20	18.3		25,250		1,718		23,532
Vendor agreement	8	8.0		5,644		2,176		3,468
Leasehold interests	7 - 13	8.2		2,516		496		2,020
Totals			$	306,606	$	115,681	$	190,925

Definite-lived intangible assets are amortized over their estimated useful lives. The Company amortizes its customer relationships using an accelerated method to match the estimated cash flow generated by such assets, and amortizes its other definite-lived intangibles using the straight-line method because a pattern to which the expected benefits will be consumed or otherwise used up could not be reliably determined. Amortization expense related to definite-lived intangible assets was $41.5 million, $43.7 million and $37.5 million during the years ended April 30, 2018, 2017 and 2016, respectively, and is recorded in depreciation and amortization expense in the Consolidated Statements of Operations and Comprehensive Income.

Based on the current amount of definite-lived intangible assets, the Company expects to record amortization expense of $34.8 million, $28.0 million, $22.6 million, $18.4 million, $14.2 million and $43.3 million during the years ending April 30, 2019, 2020, 2021, 2022, 2023 and thereafter, respectively. Actual amortization expense to be reported in future periods could differ materially from these estimates as a result of acquisitions, changes in useful lives and other relevant factors.

The Company’s indefinite-lived intangible assets, other than goodwill, consist of tradenames that had a carrying amount of $61.4 million as of April 30, 2018 and 2017.

- 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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