Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets, Other Assets and Goodwill

INTANGIBLE ASSETS AND GOODWILL:

Intangible Assets

Intangible assets as of December 31, 2016 and 2015 were as follows (dollars in thousands):



	2016							Weighted Average Amortization Period (in Years)
	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net		Weighted Average Amortization Period (in Years)
Intangible assets:
Amortizable intangible assets:
Operational network rights	$	399,751	$	(7,050	)	$	392,701	100
Track access agreements	416,878		(72,442		)	344,436		43
Customer contracts and relationships	750,057		(63,520		)	686,537		24
Trade names/trademarks	11,888		(524		)	11,364		40
Favorable operating leases	2,210		(869		)	1,341		5
Total amortizable intangible assets	$	1,580,784	$	(144,405	)	$	1,436,379	48
Non-amortizable intangible assets:
Perpetual track access agreements						35,891
Operating license						106
Total intangible assets, net						$	1,472,376



	2015							Weighted Average Amortization Period (in Years)
	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net		Weighted Average Amortization Period (in Years)
Intangible assets:
Amortizable intangible assets:
Operational network rights	$	477,706	$	(3,693	)	$	474,013	100
Track access agreements	415,348		(57,751		)	357,597		43
Customer contracts and relationships	297,519		(51,618		)	245,901		30
Trade names/trademarks	13,327		(268		)	13,059		40
Favorable operating leases	2,972		(590		)	2,382		5
Total amortizable intangible assets	$	1,206,872	$	(113,920	)	$	1,092,952	62
Non-amortizable intangible assets:
Perpetual track access agreements						35,891
Operating license						109
Total intangible assets, net						$	1,128,952

The Company expenses costs incurred to renew or extend the term of its track access agreements.

During the year ended December 31, 2016, the Company recorded an impairment charge of $4.1 million related to a customer relationship intangible asset at ERS. See Note 3, Changes in Operations, for additional information regarding ERS. In the purchase price allocation of GRail, the Company assigned a preliminary fair value of $470.6 million to customer contracts and relationships. See Note 3, Changes in Operations, for additional information on the GRail acquisition.

The perpetual track access agreements on one of the Company's railroads have been determined to have an indefinite useful life and, therefore, are not subject to amortization.

For the years ended December 31, 2016, 2015 and 2014, the aggregate amortization expense associated with intangible assets was $32.9 million, $29.4 million and $22.0 million, respectively. The Company estimates the future aggregate amortization expense related to its intangible assets as of December 31, 2016 will be as follows for the periods presented (dollars in thousands):



	Amount
2017	$	52,392
2018	50,963
2019	46,463
2020	46,263
2021	46,184
Thereafter	1,194,114
Total	$	1,436,379

Goodwill

The changes in the carrying amount of goodwill for the years ended December 31, 2016 and 2015 were as follows (dollars in thousands):



	December 31, 2016
	North American Operations		Australian Operations			U.K./European Operations			Total Operations
Balance at beginning of period	$	605,234	$	39,312		$	182,029		$	826,575
Goodwill acquired	26,969		308,267			—			335,236
Acquisition accounting adjustments	176		168			9,736			10,080
Goodwill impairment	—		—			(14,482		)	(14,482		)
Currency translation adjustment	558		(7,882		)	(24,489		)	(31,813		)
Balance at end of period	$	632,937	$	339,865		$	152,794		$	1,125,596



	December 31, 2015
	North American Operations			Australian Operations			U.K./European Operations			Total Operations
Balance at beginning of period	$	615,403		$	—		$	13,412		$	628,815
Goodwill acquired	920			42,312			172,821			216,053
Acquisition accounting adjustments	(6,895		)	—			—			(6,895		)
Currency translation adjustment	(4,194		)	(3,000		)	(4,204		)	(11,398		)
Balance at end of period	$	605,234		$	39,312		$	182,029		$	826,575

The acquired goodwill for the year ended December 31, 2016 was related to the acquisitions of P&W in our North American Operations and GRail in our Australian Operations. The acquired goodwill for the year ended December 31, 2015 was related to the acquisitions of Pinsly in our North American Operations and Freightliner in our Australian and U.K./European Operations. See Note 3, Changes in Operations, for additional information regarding the P&W and GRail acquisitions.

The goodwill impairment recorded in 2016 resulted from the write-off of goodwill ascribed to the Company's ERS business within its U.K./European Operations segment. See Note 3, Changes in Operations, for additional information regarding ERS.

- 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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