Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

6. Goodwill and Other Intangible Assets

Goodwill

The changes in the carrying value of goodwill by reportable operating segments were as follows:



	Energy			Engineered Systems			Fluids			Refrigeration & Food Equipment			Total
Goodwill	$	1,048,735		$	1,280,769		$	669,633		$	562,981		$	3,562,118
Accumulated impairment loss	—			(10,591		)	(59,970		)	—			(70,561		)
Balance at January 1, 2015	$	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		)	—			(3,749		)	(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
Acquisitions	—			126,140			782,173			—			908,313
Purchase price adjustments	—			363			4,860			768			5,991
Disposition of business	—			(9,615		)	—			(25,252		)	(34,867		)
Foreign currency translation and other	(1,406		)	(23,536		)	(29,270		)	63			(54,149		)
Balance at December 31, 2016	$	1,045,774		$	1,567,216		$	1,413,508		$	536,179		$	4,562,677

During 2016 and 2015, the Company recognized additions of $908,313 and $315,701, respectively, to goodwill as a result of acquisitions as discussed 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; any such revisions are not expected to be significant. During 2016 and 2015, the Company recorded adjustments totaling $5,991 and $8,604, respectively, as a result of the finalization of purchase price allocation to assets acquired and liabilities assumed related to acquisitions completed in 2015 and 2014.

During 2016 and 2015, the Company derecognized $34,867 and $22,877, respectively, of goodwill as a result of disposition of businesses as discussed in Note 3 — Disposed and Discontinued Operations. The Company allocated goodwill upon disposal based upon the fair value of the disposed business relative to the remaining entities in its reporting unit.

Annual impairment testing

The Company performed its annual goodwill impairment test during the fourth quarter of 2016 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 2016 reporting unit valuations ranged from 9.0% to 10.5%.

Although all nine reporting units passed step one of the impairment test, two of the Company's reporting units within the Energy segment had the lowest headroom compared to the other reporting units. The aggregate goodwill balance for these two reporting units were $959.0 million. The Company experienced an overall decline within the Energy segment resulting in lower estimated cash flows, impacted by lower oil prices and the resulting economic pressures within the oil and gas industry. These two reporting units had fair values in excess of their carrying values of 49% and 33%.

While the Company believes the assumptions used in the 2016 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 2017.

Intangible Assets

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



	December 31, 2016						December 31, 2015
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Amortized intangible assets:
Customer intangibles	$	1,942,974	$	718,135	$	1,224,839	$	1,567,048	$	595,635	$	971,413
Trademarks	246,619		56,455		190,164		150,926		45,536		105,390
Patents	157,491		119,828		37,663		150,570		112,399		38,171
Unpatented Technologies	155,752		64,648		91,104		137,919		56,495		81,424
Distributor Relationships	113,463		44,914		68,549		64,614		37,610		27,004
Drawings & Manuals	37,744		23,114		14,630		34,232		15,760		18,472
Other	31,632		21,184		10,448		23,923		18,168		5,755
Total amortized intangibles	2,685,675		1,048,278		1,637,397		2,129,232		881,603		1,247,629
Unamortized intangible assets:
Trademarks	165,526		—		165,526		165,594		—		165,594
Total intangible assets	$	2,851,201	$	1,048,278	$	1,802,923	$	2,294,826	$	881,603	$	1,413,223

The Company recorded $621,651 from acquired intangible assets during 2016. See Note 2 — Acquisitions.

Total amortization related to the Company's intangible assets was $185,244, $159,573 and $155,109, for the years ended December 31, 2016, 2015 and 2014, respectively. Estimated future amortization expense related to intangible assets held at December 31, 2016 is as follows:



	Estimated Amortization
2017	$	188,903
2018	187,235
2019	177,942
2020	170,607
2021	166,350

- 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.

+ References + Details