Goodwill And Intangible Assets

12 Months Ended

Jan. 02, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill

As described in Note 3 of Notes to the Consolidated Financial Statements, the Company evaluates the carrying amount of goodwill annually or more frequently if events or circumstances indicate that the goodwill might be impaired. As a result of the annual review, there were certain reporting units where the carrying value, exceeded fair value. See Note 3 of Notes to the Consolidated Financial Statements, "Goodwill" and "Long-Lived Assets" for additional details of the impairments.

The Commercial and Industrial Systems segment includes reporting units that have significant exposure to the volatility in the oil and gas industry. Crude oil prices remained depressed throughout 2015 with pronounced declines in the fourth quarter of 2015 and into 2016. Expected cash flows were also negatively impacted by lower gas and oil prices as lower prices decreased the capital spending of customers these reporting units serve. Weak economic conditions in China have contributed to the reduced expected cash flows for one of our reporting units in this region.

The Commercial and Industrial Systems segment and the Power Transmission Solutions segment include reporting units that have significant exposure to the volatility in the oil and gas industry. These markets saw a sharp decline in the latter part of 2014, leading to declines in sales and profitability and thereby reducing expected cash flows. Expected cash flows were also negatively impacted by lower gas and oil prices as lower prices decreased the capital spending of customers these reporting units serve. Weak economic conditions in regions such as Australia and New Zealand as well as currency devaluations in Venezuela have contributed to the reduced expected cash flows for the Company's reporting units in these regions. In the Climate Solutions segment, unfavorable customer dynamics impacted one reporting unit's expected cash flows. Additionally, the Company's reporting unit related to technology that had been deemed substantially impaired during the fourth quarter of 2013 was deemed fully impaired during 2014 as a result of the closing of the facility.

The following table presents changes to goodwill during the periods indicated (in millions):




	Total			Commercial and Industrial Systems			Climate Solutions			Power Transmission Solutions
Balance as of December 28, 2013	$	1,081.9		$	703.2		$	353.6		$	25.1
Acquisitions and valuation adjustments	54.5			54.5			—			—
Less: Impairment charges	119.5			100.7			7.7			11.1
Translation adjustments	(12.9		)	(11.6		)	(1.3		)	—
Balance as of January 3, 2015	$	1,004.0		$	645.4		$	344.6		$	14.0

Acquisitions and valuation adjustments	559.4			(5.2		)	—			564.6
Less: Impairment charges	79.9			79.9			—			—
Translation adjustments	(17.9		)	(12.6		)	(1.8		)	(3.5		)
Balance as of January 2, 2016	$	1,465.6		$	547.7		$	342.8		$	575.1

Cumulative goodwill impairment charges	$	275.7		$	244.8		$	7.7		$	23.2

Intangible Assets

Gross intangible assets consist of the following (in millions):



	Weighted Average Amortization Period (Years)	January 3, 2015		Acquisitions		Translation Adjustments			January 2, 2016
Customer Relationships	15	$	256.8	$	462.8	$	(10.6	)	$	709.0
Technology	11	129.4		63.5		(1.8		)	191.1
Trademarks	12	33.1		—		(1.0		)	32.1
Patent and Engineering Drawings	5	16.6		—		—			16.6
Non-compete Agreements	5	8.6		—		(0.1		)	8.5
		444.5		526.3		(13.5		)	957.3
Non-amortizable Trade Names		—		121.9		(0.6		)	121.3
Total Gross Intangibles		$	444.5	$	648.2	$	(14.1	)	$	1,078.6

Accumulated amortization on intangible assets consists of the following:



	January 3, 2015		Amortization		Translation Adjustments			January 2, 2016
Customer Relationships	$	122.6	$	42.2	$	(3.4	)	$	161.4
Technology	74.9		19.0		(1.0		)	92.9
Trademarks	20.1		2.4		(0.7		)	21.8
Patent and Engineering Drawings	16.6		—		—			16.6
Non-compete Agreements	8.0		0.3		(0.2		)	8.1
Total Accumulated Amortization	$	242.2	$	63.9	$	(5.3	)	$	300.8
Intangible Assets, Net of Amortization	$	202.3						$	777.8

The Company's contractual customer relationships are generally short-term in nature. Useful lives are established at acquisition based on historical attrition rates.

Amortization expense was $63.9 million in fiscal 2015, $46.7 million in fiscal 2014 and $44.1 million in fiscal 2013.

The following table presents estimated future amortization expense (in millions):



	Estimated Amortization
Year	Estimated Amortization
2016	$	61.1
2017	54.7
2018	52.9
2019	52.4
2020	49.8

- 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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