NOTE 8 — PURCHASED INTANGIBLE ASSETS

At January 31, 2017, the goodwill balances related to the acquisitions of GPS, TRC and APC were $18.5 million, $14.4 million and $2.0 million, respectively.

In July 2016, construction work was suspended on APC’s largest project at that time, which reflected over 90% of its contract backlog. Additionally, APC’s primary market is the United Kingdom, which voted to leave the European Union on June 23, 2016 (“Brexit”). The resulting sterling pound drop, financial market uncertainty and recessionary pressures were considered likely to impact the availability of financing for future power plant developments in the United Kingdom for the foreseeable future. APC’s second largest market was the Middle East, which has experienced decreased project activity due to capital constraints, resulting from decreased oil revenues. APC reported losses during the first half of the fiscal year ended January 31, 2017. Given the events above, analyses were performed in order to determine whether APC’s goodwill had incurred an impairment loss. Using income and market approaches, the assessment analyses indicated that the carrying value of the business exceeded its fair value. As a result, APC recorded an estimated impairment loss at July 31, 2016 related to goodwill of approximately $2.0 million that has been reflected in the consolidated statement of earnings for the year ended January 31, 2017. No impairment loss occurred during the years ended January 31, 2016 or 2015.

The Company’s other purchased intangible assets consisted of the following elements as of January 31, 2017 and 2016.

		2017						2016
	Estimated Useful Life	Gross Amount		Accumulated Amortization		Net Amount		Net Amount
Trade names -
GPS	15 years	$	3,643	$	2,464	$	1,179	$	1,421
TRC	15 years	4,499		350		4,149		4,499
SMC	indefinite	181		—		181		181
Process certifications -
TRC	7 years	1,897		316		1,581		1,852
Customer relationships -
TRC	10 years	916		107		809		901
APC	4 years	430		167		263		371
Other intangibles	various	288		269		19		119

Totals		$	11,854	$	3,673	$	8,181	$	9,344

The Company determined the fair values of the trade names using a relief-from-royalty methodology. The Company believes that the useful lives of the trade names for GPS and TRC represent the number of years that such intangibles are expected to contribute to future cash flows. The useful life for the trade name of SMC is considered to be indefinite. In order to value the process certifications of TRC, the Company applied a new reproduction cost method that required the estimation of the costs to replace the assets with certifications that would have the same functionality or utility as the acquired assets. Other intangible assets include primarily the fair values estimated for acquired contract backlogs, other customer relationships and non-compete agreements.

The tables below present the activity for the years ended January 31, 2017 and 2016 related to intangible assets, excluding goodwill, that were acquired in connection with business combinations.

	2017		2016
Intangible assets, beginning of year	$	11,854	$	3,824
Addition - acquisition of APC	—		543
Addition - acquisition of TRC	—		7,487

Total intangible assets, end of year	11,854		11,854


Accumulated amortization, beginning of year	2,510		1,979
Amortization expense	1,163		531

Accumulated amortization, end of year	3,673		2,510

Intangible assets, net	$	8,181	$	9,344

The future amounts of amortization expense related to intangibles are presented below for the years ending January 31:

2018	$	1,032
2019	1,013
2020	954
2021	905
2022	870
Thereafter	3,226

Total	$	8,000

For income tax reporting purposes, goodwill in the approximate amount of $14.4 million is being amortized on a straight-line basis over periods of 15 years. The other amounts of the Company’s goodwill are not amortizable for income tax reporting purposes.