Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

The table below presents changes in the carrying amount of goodwill and our accumulated impairment losses (in thousands):



Goodwill (gross) at December 31, 2015	$	182,027
Acquired goodwill	12,696
Foreign currency translation adjustments	(49		)
Goodwill (gross) at December 31, 2016	194,674

Accumulated impairment losses at December 31, 2015	(9,266		)
Goodwill impairment	(613		)
Accumulated impairment losses at December 31, 2016	(9,879		)

Goodwill (net) at December 31, 2016	$	184,795

Goodwill (gross) at December 31, 2016	$	194,674
Acquired goodwill	3,068
Foreign currency translation adjustments	1,572
Goodwill (gross) at December 31, 2017	199,314

Accumulated impairment losses at December 31, 2016	(9,879		)
Goodwill impairment	—
Accumulated impairment losses at December 31, 2017	(9,879		)

Goodwill (net) at December 31, 2017	$	189,435

In October 2017 and October 2016, we performed our annual goodwill impairment test and did not identify any goodwill impairment at the reporting unit level. As of October 1, 2017, we had 221 reporting units with allocated goodwill balances. The most significant goodwill balance for a reporting unit was $5.7 million and the average goodwill balance was $0.8 million.

In the third quarter of 2016, we performed an interim goodwill impairment analysis for an at-risk reporting unit in Quebec, Canada. We had been monitoring this location’s results, which came in below expectations at the end of the 2016 pool season. Due to this impairment indicator, we performed an interim goodwill impairment analysis. We estimated the fair value of this reporting unit based on an income approach that incorporates our assumptions for determining the present value of future cash flows. We projected future cash flows using management’s assumptions for sales growth rates, operating margins, discount rates and multiples. Because the carrying value of this reporting unit’s goodwill exceeded its estimated fair value, we recorded a non-cash goodwill impairment charge in Selling and administrative expenses on the Consolidated Statements of Income in 2016.

Other intangible assets consisted of the following (in thousands):



	December 31,
	2017			2016
Horizon tradename (indefinite life)	$	8,400		$	8,400
Pool Systems tradename and trademarks (indefinite lives)	1,109			1,023
National Pool Tile (NPT) tradename (20 year life)	1,500			1,500
Non-compete agreements (5 year weighted average useful life)	5,078			4,396
Patents (5 year weighted average useful life)	523			483
Other intangible assets	16,610			15,802
Less: Accumulated amortization	(3,387		)	(2,476		)
Other intangible assets, net	$	13,223		$	13,326

The Horizon and Pool Systems tradenames and trademarks have indefinite useful lives and are not subject to amortization. However, we evaluate the useful lives of these intangible assets and test for impairment annually. The NPT tradename, our non-compete agreements and our patents have finite useful lives, and we amortize the estimated fair value of these agreements using the straight-line method over their respective useful lives. We have not identified any indicators of impairment related to these assets. The useful lives for our non-compete agreements are based on their contractual terms, and the useful lives for our patents are based on expected future cash flows. We recognize expenses related to patent renewal costs as incurred.

Other intangible amortization expense was $1.0 million in 2017, $1.0 million in 2016 and $0.4 million in 2015.

The table below presents estimated amortization expense for other intangible assets for the next five years (in thousands):



2018	$	1,080
2019	905
2020	833
2021	353
2022	163

- 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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