Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

7. Goodwill and Other Intangible Assets

Goodwill

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



	Engineered Systems			Fluids			Refrigeration & Food Equipment			Energy			Total
Goodwill	$	1,484,455		$	715,715		$	560,600		$	1,047,180		$	3,807,950
Accumulated impairment loss	(10,591		)	(59,970		)	—			—			(70,561		)
Balance at January 1, 2016	$	1,473,864		$	655,745		$	560,600		$	1,047,180		$	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	(23,536		)	(29,270		)	63			(1,406		)	(54,149		)
Balance at December 31, 2016	1,567,216			1,413,508			536,179			1,045,774			4,562,677
Acquisitions	30,180			—			—			5,053			35,233
Purchase price adjustments	6,826			(35,939		)	—			—			(29,113		)
Disposition of business	(79,113		)	—			(296		)	—			(79,409		)
Foreign currency translation	60,288			36,890			816			4,530			102,524
Balance at December 31, 2017	$	1,585,397		$	1,414,459		$	536,699		$	1,055,357		$	4,591,912

During 2017 and 2016, the Company recognized additions of $35,233 and $908,313, respectively, to goodwill as a result of acquisitions as discussed in Note 3 — 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 2017 and 2016, the Company recorded adjustments totaling $(29,113) and $5,991, respectively, as a result of the finalization of purchase price allocation to assets acquired and liabilities assumed related to acquisitions completed in 2016 and 2015.

During 2017 and 2016, the Company derecognized $79,409 and $34,867, respectively, of goodwill as a result of the disposition of businesses as discussed in Note 4 — 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 tests goodwill for impairment annually in the fourth quarter of each year and whenever events or circumstances indicate an impairment may have occurred. In the first quarter of 2017, the Company re-aligned its reporting units after acquiring four companies in the retail fueling market in 2016, increasing its reporting units from nine to ten. The Company performed the goodwill impairment test for the three reporting units within the Fluids segment before and after the realignment, concluding that the fair values of the reporting units were in excess of their carrying values.

The Company performed its annual goodwill impairment test during the fourth quarter of 2017 using a discounted cash flow analysis as discussed in Note 1 — Description of Business and Summary of Significant Accounting Policies. The Company performed a quantitative goodwill impairment test for each of its ten reporting units, concluding that the fair values of all of its reporting units were substantially in excess of their carrying values. 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. The Company used discount rates commensurate with the risks and uncertainties inherent to each reporting unit and in our internally developed forecasts. Discount rates used in the 2017 reporting unit valuations ranged from 8.5% to 10.0%.

While the Company believes the assumptions used in the 2017 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.

Intangible Assets

The Company's definite-lived and indefinite-lived intangible assets by major asset class were as follows and reflect the divestiture

of Warn and acquired intangibles in 2017:



	December 31, 2017						December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortized intangible assets:
Customer intangibles	$	1,977,776	$	836,102	$	1,141,674	$	1,942,974	$	718,135	$	1,224,839
Trademarks	253,934		76,344		177,590		246,619		56,455		190,164
Patents	160,237		130,771		29,466		157,491		119,828		37,663
Unpatented technologies	162,613		80,984		81,629		155,752		64,648		91,104
Distributor relationships	85,794		32,092		53,702		113,463		44,914		68,549
Drawings & manuals	35,806		22,876		12,930		37,744		23,114		14,630
Other	34,106		21,570		12,536		31,632		21,184		10,448
Total	2,710,266		1,200,739		1,509,527		2,685,675		1,048,278		1,637,397
Unamortized intangible assets:
Trademarks	100,400		—		100,400		165,526		—		165,526
Total intangible assets, net	$	2,810,666	$	1,200,739	$	1,609,927	$	2,851,201	$	1,048,278	$	1,802,923

The Company recorded $12,707 of acquired intangible assets in 2017. See Note 3 — Acquisitions.

Amortization expense was $202,955, $185,244 and $159,573, including acquisition-related intangible amortization of $201,695, $183,835 and $157,849, for the years ended December 31, 2017, 2016 and 2015, respectively.

Estimated future amortization expense related to intangible assets held at December 31, 2017 is as follows:



	Estimated Amortization
2018	$	193,566
2019	186,346
2020	175,119
2021	167,253
2022	152,105

- 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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