Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

6. Goodwill and Other Intangible Assets

Goodwill

The changes in the carrying value of goodwill by segment for the years ended December 31, 2015 and 2014 are as follows:



	Energy			Engineered Systems				Fluids			Refrigeration & Food Equipment				Total
Goodwill	$	727,972		$	1,221,210			$	664,128		$	565,831			$	3,179,141
Accumulated impairment loss	—			(10,591		)		(59,970		)	—				(70,561		)
Balance at January 1, 2014	727,972			1,210,619				604,158			565,831				3,108,580
Acquisitions	325,438			80,581				25,097			1,022				432,138
Purchase price adjustments	(395		)	—				11,350			—				10,955
Foreign currency translation	(4,280		)	(21,022		)		(30,942		)	(3,872		)		(60,116		)
Balance at December 31, 2014	1,048,735			1,270,178				609,663			562,981				3,491,557
Acquisitions	—			238,618				73,251			3,832				315,701
Purchase price adjustments	8,604			—				—			—				8,604
Disposition of business	—			(19,128		)	⁽¹⁾	—			(3,749		)	⁽²⁾	(22,877		)
Foreign currency translation and other	(10,159		)	(15,804		)		(27,169		)	(2,464		)		(55,596		)
Balance at December 31, 2015	$	1,047,180		$	1,473,864			$	655,745		$	560,600			$	3,737,389


(1)	Amount reflects additional goodwill allocated to Sargent Aerospace upon its disposition, based on the fair value of the business relative to the remaining entities in its reporting unit.


(2)	Amount reflects goodwill disposed of in connection with the divestiture of a product line within the Refrigeration and Food Equipment segment.

During 2015, the Company recognized additions of $315,701 to goodwill as a result of recent acquisitions as outlined in Note 2 Acquisitions. Due to the inherent difficulty of estimating the initial purchase price allocation of recent acquisitions and the time needed to finalize the balance sheets of acquired companies, the Company will continue to refine its estimates of fair value to more accurately allocate purchase price; however, any such revisions are not expected to be significant. During 2015, the Company recorded adjustments totaling $8,604 as a result of the finalization of purchase price allocation to assets acquired and liabilities assumed related to acquisitions completed in 2014.

During the fourth quarter of 2015, the Company sold a product line within the Refrigeration and Food Equipment segment. In conjunction with this disposal, the company allocated goodwill upon disposal of $3,749, determined using the relative fair value approach.

Due to the separation of Knowles in the first quarter of 2014, the Company was required to allocate a portion of its goodwill from continuing operations to a reporting unit included in the distribution of Knowles. Accordingly, the assets distributed on February 28, 2014 included an additional $19,749 of allocated goodwill, determined using the relative fair value approach.

In addition, during 2014, the Company announced its intent to sell two businesses within the Engineered Systems segment. As a result, the Company allocated goodwill totaling $152,663 to these companies from their respective reporting units using a relative fair value approach.

The adjustments made to goodwill due to the distribution of Knowles, the reclassification of businesses held for sale, and the restatement of segment results due to the realignment of Dover's businesses has been applied to all periods presented on the Consolidated Balance Sheet for goodwill and assets of discontinued operations.

During the year ended December 31, 2014, the Company recorded adjustments totaling $10,955 to goodwill related primarily to finalization of the purchase price allocation to assets acquired and liabilities assumed for the 2013 acquisitions.

Annual impairment testing

The Company performed its annual goodwill impairment test during the fourth quarter of 2015 using a discounted cash flow analysis as discussed in Note 1 Description of Business and Summary of Significant Accounting Policies. The Company performed step one of the annual goodwill impairment test for each of its nine reporting units, concluding that the fair values of all of its reporting units were in excess of their carrying values. As such, step two of the impairment test was not required. As previously noted, the fair values of each of the Company’s reporting units was determined using a discounted cash flow analysis which includes management’s current assumptions as to future cash flows and long-term growth rates. The discount rates used in these analyses varied by reporting unit and were based on a capital asset pricing model and published relevant industry rates. We used discount rates commensurate with the risks and uncertainties inherent to each reporting unit and in our internally developed forecasts. Discount rates used in our 2015 reporting unit valuations ranged from 9.5% to 11.0%.

Although all nine reporting units passed the step 1 impairment test, the Company noted a decrease in the fair value in excess of carrying value for two of its reporting units within the Energy segment, which together have an aggregate goodwill balance of $957.0 million. These businesses and their estimated cash flows have been impacted by declining oil prices and the resulting economic pressures within the oil and gas industry. In spite of these declines these two reporting units had fair values in excess of their carrying values of 26% and 19%.

While the Company believes the assumptions used in the 2015 impairment analysis are reasonable and representative of expected results, if market conditions worsen or persist for an extended period of time, an impairment of goodwill or assets may occur. The Company will continue to monitor the long-term outlook and forecasts, including estimated future cash flows, for these businesses and the impact on the carrying value of goodwill and assets in 2016.

Intangible Assets

The following table provides the gross carrying value and accumulated amortization for each major class of intangible asset:



	December 31, 2015				December 31, 2014
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortized intangible assets:
Trademarks	$	150,926	$	45,536	$	138,650	$	34,097
Patents	150,570		112,399		150,404		108,484
Customer Intangibles	1,567,048		595,635		1,429,906		484,449
Unpatented Technologies	137,919		56,495		92,480		45,812
Drawings & Manuals	34,232		15,760		36,377		13,087
Distributor Relationships	64,614		37,610		64,614		34,377
Other	23,923		18,168		24,214		12,737
Total	$	2,129,232	$	881,603	$	1,936,645	$	733,043
Unamortized intangible assets:
Trademarks	165,594				165,918
Total intangible assets, net	$	1,413,223			$	1,369,520

Total amortization expense for the years ended December 31, 2015, 2014, and 2013 was $159,573, $155,109, and $133,946, respectively. Amortization expense for the next five years, based on current intangible balances, is estimated to be as follows:



2016	$	165,903
2017	162,338
2018	161,416
2019	160,058
2020	154,519

- 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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