Purchased Intangible Assets and Goodwill

Purchased Intangibles

Changes in purchased intangibles balances are as follows:



(dollars in thousands)	2018			2017
Beginning balance	$	14,565		$	15,225
Amortization	(1,049		)	(1,073		)
Foreign currency impact	(131		)	413
Ending balance	$	13,385		$	14,565

Purchased intangible assets are composed of the following:



December 31, (dollars in thousands)	2018		2017
Indefinite life intangible assets	$	12,035	$	12,120
Definite life intangible assets, net of accumulated amortization of $20,006 and $19,093	1,350		2,445
Total	$	13,385	$	14,565

Amortization expense for definite life intangible assets was $1.0 million and $1.1 million for years 2018 and 2017, 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 1^st 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 Level 3 inputs in the fair value hierarchy. See note 14 for further discussion of the fair value hierarchy. Our October 1^st review for 2018 and 2017 did not indicate impairment of our indefinite life intangible assets.

The remaining definite life intangible assets at December 31, 2018 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, 2018.

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



2019	2020	2021	2022	2023
$564	$157	$157	$157	$157

Goodwill

Changes in goodwill balances are as follows:



	2018									2017
(dollars in thousands)	U.S. & Canada			Latin America			Total			U.S. & Canada			Latin America			Total
Beginning balance:
Goodwill	$	43,872		$	125,681		$	169,553		$	43,872		$	125,681		$	169,553
Accumulated impairment losses	(5,441		)	(79,700		)	(85,141		)	(5,441		)	—			(5,441		)
Net beginning balance	38,431			45,981			84,412			38,431			125,681			164,112
Impairment	—			—			—			—			(79,700		)	(79,700		)
Ending balance:
Goodwill	43,872			125,681			169,553			43,872			125,681			169,553
Accumulated impairment losses	(5,441		)	(79,700		)	(85,141		)	(5,441		)	(79,700		)	(85,141		)
Net ending balance	$	38,431		$	45,981		$	84,412		$	38,431		$	45,981		$	84,412

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 Level 2 and Level 3 inputs in the fair value hierarchy. See note 14 for further discussion of the fair value hierarchy.

When performing our test for impairment, we measure each reporting unit's fair value using a combination of "income" and "market" approaches on a shipping point basis. The income approach 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 income approach include the following: discount rate; expected financial outlook and profitability of the reporting unit's business; and foreign currency impacts (Level 3 inputs). Discount rates use the weighted average cost of capital for companies within our peer group, adjusted for specific company risk premium factors. The market approach uses the "Guideline Company" method, which 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 approach model include identifying similar companies with comparable business factors such as size, growth, profitability, risk and return on investment, assessing comparable multiples, as well as consideration of control premiums (Level 2 inputs). The blended approach assigns a 70 percent weighting to the income approach and 30 percent to the market approach (Level 3 input). The higher weighting is given to the income approach due to some limitations of publicly available peer information used in the market approach. The blended fair value of both approaches is then compared to the carrying value, and to the extent that fair value exceeds the carrying value, no impairment exists. However, to the extent the carrying value exceeds the fair value, an impairment is recorded.

The results of our October 1, 2018 annual impairment test indicated the estimated fair values of all reporting units that have goodwill were in excess of their carrying values, with the Mexico reporting unit's excess fair value exceeding carrying value by approximately 15 percent. The reporting unit within the U.S. and Canada reporting segment, which consists of two aggregated components, had an estimated fair value over carrying value of greater than 50 percent.

As part of our on-going assessment of goodwill at September 30, 2017, we noted that third quarter 2017 sales, profitability and cash flow of our Mexico reporting unit (within the Latin America reporting segment) significantly underperformed in comparison to the forecast, and expectations for the fourth quarter of 2017 were lowered as well. These factors, as well as continuing competitive pressures, long-term weakness of the Mexican peso relative to the U.S. dollar, and an increase in the discount rate of 70 basis points from December 31, 2016 to September 30, 2017, contributed to increased pressure on the outlook of the reporting unit. As a result, we determined a triggering event had occurred for our Mexico reporting unit. Accordingly, an interim impairment test was performed, indicating that the carrying value exceeded its fair value, and in accordance with the early adoption of ASU 2017-04, we recorded a non-cash impairment charge of $79.7 million during the third quarter of 2017.

As the impairment assessment performed at September 30, 2017 resulted in the fair value of the Mexico reporting unit equaling its carrying value, there was no further impairment as of October 1, 2017. The results of our review performed as of October 1, 2017 also did not indicate an impairment for our other reporting unit with goodwill.