Purchased Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Purchased Intangible Assets and Goodwill

Purchased Intangibles

Changes in purchased intangibles balances are as follows:



(dollars in thousands)	2015			2014
Beginning balance	$	17,771		$	19,325
Amortization	(1,039		)	(1,069		)
Foreign currency impact	(368		)	(485		)
Ending balance	$	16,364		$	17,771

Purchased intangible assets are composed of the following:



December 31, (dollars in thousands)	2015		2014
Indefinite life intangible assets	$	11,949	$	12,148
Definite life intangible assets, net of accumulated amortization of $16,758 and $15,975	4,415		5,623
Total	$	16,364	$	17,771

Amortization expense for definite life intangible assets was $1.0 million, $1.1 million and $1.1 million for years 2015, 2014 and 2013, respectively.

Indefinite life intangible assets are composed of trade names and trademarks that have an indefinite life and are therefore individually tested for impairment on an annual basis, or more frequently in certain circumstances where impairment indicators arise, in accordance with FASB ASC 350. Our measurement date for impairment testing is October 1st of each year. When performing our test for impairment of individual indefinite life intangible assets, we use a relief from royalty method to determine the fair market value that is compared to the carrying value of the indefinite life intangible asset. The inputs used for this analysis are considered as Level 3 inputs in the fair value hierarchy. See note 15 for further discussion of the fair value hierarchy. Our October 1^st review for 2015 and 2014 did not indicate impairment of our indefinite life intangible assets. There were also no indicators of impairment at December 31, 2015.

The remaining definite life intangible assets at December 31, 2015 consist of customer relationships that are amortized over a period ranging from 13 to 20 years. The weighted average remaining life on the definite life intangible assets is 4.3 years at December 31, 2015.

Future estimated amortization expense of definite life intangible assets is as follows (dollars in thousands):



2016	2017	2018	2019	2020
$1,036	$1,036	$1,036	$556	$150

Goodwill

Changes in goodwill balances are as follows:



	2015											2014
(dollars in thousands)	U.S. & Canada			Latin America		EMEA			Total			U.S. & Canada			Latin America			EMEA			Total
Beginning balance:
Goodwill	$	43,872		$	125,681	$	9,434		$	178,987		$	43,872		$	128,948		$	9,434		$	182,254
Accumulated impairment losses	(5,441		)	—		(9,434		)	(14,875		)	(5,441		)	—			(9,434		)	(14,875		)
Net beginning balance	38,431			125,681		—			164,112			38,431			128,948			—			167,379
Other	—			—		—			—			—			(3,267		)	—			(3,267		)
Ending balance:
Goodwill	43,872			125,681		9,434			178,987			43,872			125,681			9,434			178,987
Accumulated impairment losses	(5,441		)	—		(9,434		)	(14,875		)	(5,441		)	—			(9,434		)	(14,875		)
Net ending balance	$	38,431		$	125,681	$	—		$	164,112		$	38,431		$	125,681		$	—		$	164,112

In 2014, we adjusted goodwill to correct property, plant and equipment acquired in connection with the acquisition of Libbey Mexico. As a result of application of the provisions of FASB ASC Topic 805, Business Combinations, in June 2006, the adjustment should have been reflected in our purchase accounting related to this acquisition. As of December 31, 2014, we decreased goodwill by $3.3 million, increased property, plant and equipment by $4.7 million and recorded a corresponding deferred tax liability of $1.4 million to reflect this adjustment.

Goodwill impairment tests are completed for each reporting unit on an annual basis, or more frequently in certain circumstances where impairment indicators arise. The inputs used for this analysis are considered as Level 2 and Level 3 inputs in the fair value hierarchy. See note 15 for further discussion of the fair value hierarchy.

When performing our test for impairment in 2015, we measured each reporting unit's fair value using a blended analysis of the present value of future discounted cash flows and the market valuation approach. The discounted cash flow model calculates the fair value of the reporting unit based on a discounted cash flow analysis, incorporating the weighted average cost of capital of a hypothetical third party buyer. Significant estimates in the discounted cash flows model include the following: discount rate, long-term growth rate and profitability of the reporting unit's business, and working capital effects (all Level 3 inputs). The market valuation approach calculates the fair value of the reporting unit based on a comparison of the reporting unit to comparable publicly traded companies. Significant estimates in the market valuation approach model include identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on investment and assessing comparable multiples in estimating the fair value of the reporting unit (Level 2 inputs). When performing our test for impairment in 2014, we measured each reporting unit's fair value using a discounted cash flow analysis, incorporating the weighted average cost of capital of a hypothetical third party buyer.

The fair value is then compared to the carrying value. To the extent that fair value exceeds the carrying value, no impairment exists. However, to the extent the carrying value exceeds the fair value, we compare the implied fair value of goodwill to its book value to determine if an impairment should be recorded. Our annual review was performed as of October 1st for each year presented, and our review for 2015 and 2014 did not indicate an impairment of goodwill. There were also no indicators of impairment at December 31, 2015.

- 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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