Goodwill and Other Intangibles

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

NOTE 4 – GOODWILL AND OTHER INTANGIBLES

Goodwill:

Goodwill is reviewed for impairment annually during the fourth quarter, or more frequently if events or changes in business conditions indicate that impairment may exist. Goodwill is not amortizable for financial statement purposes. The Company did not record any goodwill impairment during the years ended December 31, 2016 or 2015.

The carrying amount of the Company’s goodwill was included in “Goodwill” on the accompanying Consolidate Balance Sheets as of December 31, 2016 and 2015. During the year ended December 31, 2016 and 2015, the Company recorded an increase in goodwill of $28.3 million and $0.8 million, respectively, resulting from small acquisitions.

The following table identifies the changes in goodwill for the years ended December 31, 2016 and 2015 (in thousands):



	2016		2015
Goodwill, balance at January 1,	$	757,142	$	756,384
Change in goodwill	28,257		758
Goodwill, balance at December 31,	$	785,399	$	757,142

As of December 31, 2016 and 2015, other than goodwill, the Company did not have any other indefinite-lived intangible assets.

Intangibles other than goodwill:

The following table identifies the components of the Company’s amortizable intangibles as of December 31, 2016 and 2015 (in thousands):



	Cost of Amortizable Intangibles				Accumulated Amortization (Expense) Benefit						Net Amortizable Intangibles
	December 31, 2016		December 31, 2015		December 31, 2016			December 31, 2015			December 31, 2016		December 31, 2015
Amortizable intangible assets:
Favorable leases	$	27,960	$	32,070	$	(18,104	)	$	(19,991	)	$	9,856	$	12,079
Non-compete agreements	1,887		732		(414		)	(409		)	1,473		323
Total amortizable intangible assets	$	29,847	$	32,802	$	(18,518	)	$	(20,400	)	$	11,329	$	12,402

Unfavorable leases	$	19,950	$	28,580	$	15,840		$	22,415		$	4,110	$	6,165

During the years ended December 31, 2016 and 2015, the Company recorded non-compete agreement assets in conjunction with small acquisitions in the amounts of $1.1 million and $0.2 million, respectively.

The Company recorded favorable lease assets in conjunction with the acquisition of CSK Auto Corporation (“CSK”); these favorable lease assets represent the values of operating leases acquired with favorable terms. These favorable leases had an estimated weighted-average remaining useful life of approximately 9.0 years as of December 31, 2016. For the years ended December 31, 2016, 2015 and 2014, the Company recorded amortization expense of $2.1 million, $2.7 million and $3.9 million, respectively, related to its amortizable intangible assets, which were included as a component of “Other assets, net” on the accompanying Consolidated Balance Sheets as of December 31, 2016 and 2015.

The Company recorded unfavorable lease liabilities in conjunction with the acquisition of CSK; these unfavorable lease liabilities represent the values of operating leases acquired with unfavorable terms. These unfavorable leases had an estimated weighted-average remaining useful life of approximately 3.7 years as of December 31, 2016. For the years ended December 31, 2016, 2015 and 2014, the Company recognized an amortized benefit of $2.1 million, $2.8 million and $3.7 million, respectively, related to these unfavorable operating leases, which were included as a component of “Other liabilities” on the accompanying Consolidated Balance Sheets as of December 31, 2016 and 2015.

The following table identifies the estimated amortization expense and benefit of the Company’s intangibles for each of the next five years as of December 31, 2016 (in thousands):



	December 31, 2016
	Amortization Expense			Amortization Benefit		Total Amortization Expense
2017	$	(2,072	)	$	1,493	$	(579	)
2018	(1,599		)	923		(676		)
2019	(1,377		)	712		(665		)
2020	(1,197		)	541		(656		)
2021	(969		)	389		(580		)
Total	$	(7,214	)	$	4,058	$	(3,156	)

- 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