GOODWILL, INTANGIBLE AND LONG-LIVED ASSETS
During 2013, the Company recognized $1,885 of goodwill and $466 of indefinite-lived trademarks in the acquisition of the U.S./Canada business of Comex. Acquired customer relationships valued at $4,230 are being amortized over 7 years from the date of acquisition.
During 2012 and 2013, the Company recognized $60,027 of goodwill and $968 of indefinite-lived trademarks related to the 2012 acquisitions of Geocel and Pulanna. Acquired customer relationships, finite-lived trademarks, intellectual property and covenants not to compete recognized in these acquisitions valued at $25,120, $13,000, $4,955 and $1,335, respectively, are being amortized over periods ranging from 3 to 15 years from the date of acquisition.
During 2011, the Company recognized $5,039 of goodwill in the acquisition of Leighs Paints. Acquired technology, trademarks and customer relationships recognized in this acquisition valued at $4,794, $2,125 and $1,918, respectively, are being amortized over periods ranging from 5 to 10 years from the date of acquisition.
In accordance with the Property, Plant and Equipment Topic of the ASC, whenever events or changes in circumstances indicate that the carrying value of long-lived assets may not be recoverable or the useful life may have changed, impairment tests are to be performed. Undiscounted cash flows are to be used to calculate the recoverable value of long-lived assets to determine if such assets are impaired. Where impairment is identified, a discounted cash flow valuation model, incorporating discount rates commensurate with the risks involved for each group of assets, is to be used to determine the fair value for the assets to measure any potential impairment.
In 2011, a reduction in the carrying value of property, plant and equipment associated with a facility closed during 2008 was recorded (see Note 5).
In accordance with the Goodwill and Other Intangibles Topic of the ASC, goodwill and indefinite-lived intangible assets are tested for impairment annually, and interim impairment tests are performed whenever an event occurs or circumstances change that indicate an impairment has more likely than not occurred. October 1 has been established for the annual impairment review. At the time of impairment testing, values are estimated separately for goodwill and trademarks with indefinite lives using a discounted cash flow valuation model, incorporating discount rates commensurate with the risks involved for each group of assets. An optional qualitative assessment may alleviate the need to perform the quantitative goodwill impairment test when impairment is unlikely. The Company used the qualitative assessment for each of its reporting units in 2013 and 2012. Impairments of trademarks with indefinite lives have been reported as a separate line in the Statements of Consolidated Income.
The annual impairment review performed as of October 1, 2013 did not result in any goodwill or trademark impairment.
The annual impairment review performed as of October 1, 2012 resulted in trademark impairments in the Paint Stores Group and Global Finishes Group of $3,400 and $686, respectively, and no goodwill impairment. The trademark impairments related primarily to the planned conversion of various acquired brands.
The annual impairment review performed as of October 1, 2011 resulted in trademark impairments in the Paint Stores Group and Global Finishes Group of $4,669 and $823, respectively, and no goodwill impairment. The trademark impairments related primarily to lower-than-anticipated sales of acquired brands.
Amortization of finite-lived intangible assets is as follows for the next five years: $28,172 in 2014, $25,362 in 2015, $20,750 in 2016 and $15,097 in 2017 and $13,324 in 2018.
A summary of changes in the Company’s carrying value of goodwill by reportable segment is as follows:
|
| | | | | | | | | | | | | | | | | | | |
Goodwill | Paint Stores Group | | Consumer Group | | Global Finishes Group | | Latin America Coatings Group | | Consolidated Totals |
Balance at January 1, 2011 (a) | $ | 286,744 |
| | $ | 689,388 |
| | $ | 115,719 |
| | $ | 10,607 |
| | $ | 1,102,458 |
|
Acquisitions | | | | | 5,039 |
| | | | 5,039 |
|
Currency and other adjustments | 254 |
| | (109 | ) | | (408 | ) | | 774 |
| | 511 |
|
Balance at December 31, 2011 (a) | 286,998 |
| | 689,279 |
| | 120,350 |
| | 11,381 |
| | 1,108,008 |
|
Acquisitions | | | 17,357 |
| | 24,707 |
| | | | 42,064 |
|
Currency and other adjustments | (214 | ) | | (344 | ) | | 7,230 |
| | (739 | ) | | 5,933 |
|
Balance at December 31, 2012 (a) | 286,784 |
| | 706,292 |
| | 152,287 |
| | 10,642 |
| | 1,156,005 |
|
Acquisitions | 1,885 |
| | | | 17,963 |
| | | | 19,848 |
|
Currency and other adjustments | (1,369 | ) | | (2,941 | ) | | 8,048 |
| | (904 | ) | | 2,834 |
|
Balance at December 31, 2013 (a) | $ | 287,300 |
| | $ | 703,351 |
| | $ | 178,298 |
| | $ | 9,738 |
| | $ | 1,178,687 |
|
| |
(a) | Net of accumulated impairment losses of $8,904 ($8,113 in the Consumer Group and $791 in the Global Finishes Group). |
A summary of the Company’s carrying value of intangible assets is as follows:
|
| | | | | | | | | | | | | | | | | | | |
| Finite-lived intangible assets | | Trademarks with indefinite lives | | Total intangible assets |
| Software | | All other | | Subtotal | |
December 31, 2013 | | | | | | | | | |
Weighted-average amortization period | 8 years |
| | 10 years |
| | 9 years |
| | | | |
Gross | $ | 114,404 |
| | $ | 327,962 |
| | $ | 442,366 |
| | | | |
Accumulated amortization | (77,018 | ) | | (202,084 | ) | | (279,102 | ) | | | | |
Net value | $ | 37,386 |
| | $ | 125,878 |
| | $ | 163,264 |
| | $ | 150,035 |
| | $ | 313,299 |
|
December 31, 2012 | | | | | | | | | |
Weighted-average amortization period | 8 years |
| | 12 years |
| | 11 years |
| | | | |
Gross | $ | 107,779 |
| | $ | 337,089 |
| | $ | 444,868 |
| | | | |
Accumulated amortization | (66,106 | ) | | (193,959 | ) | | (260,065 | ) | | | | |
Net value | $ | 41,673 |
| | $ | 143,130 |
| | $ | 184,803 |
| | $ | 162,750 |
| | $ | 347,553 |
|
December 31, 2011 | | | | | | | | | |
Weighted-average amortization period | 7 years |
| | 13 years |
| | 11 years |
| | | | |
Gross | $ | 109,401 |
| | $ | 274,086 |
| | $ | 383,487 |
| | | | |
Accumulated amortization | (60,030 | ) | | (177,706 | ) | | (237,736 | ) | | | | |
Net value | $ | 49,371 |
| | $ | 96,380 |
| | $ | 145,751 |
| | $ | 160,122 |
| | $ | 305,873 |
|
