Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Other Intangible Assets [Abstract]

9. Goodwill and Other Intangible Assets

Goodwill

We assess the impairment of long‑lived and identifiable intangibles assets and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. With respect to goodwill, we test for impairment on an annual basis or in interim periods if an event occurs or circumstances change that may indicate the fair value of a reporting unit is below its carrying amount. We completed our annual impairment test of goodwill as of December 31, 2019.

When performing our evaluation of goodwill for impairment, if we conclude qualitatively that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then the two-step impairment test is not required. If we are unable to reach this conclusion, then we would perform the two-step impairment test. In the first step, the fair value of the reporting unit is compared to its carrying amount. To the extent the carrying amount of a reporting unit exceeds the fair value of the reporting unit; we are required to perform a second step, as this is an indication that the reporting unit goodwill may be impaired. In this step, we compare the implied fair value of the reporting unit goodwill with the carrying amount of the reporting unit goodwill and recognize a charge for impairment to the extent the carrying value exceeds the implied fair value.

As of December 31, 2019, we performed a qualitative assessment of the likelihood of a goodwill impairment for both the Engine Management and Temperature Control reporting units. Based upon our qualitative assessment, we determined that it was not more likely than not that the fair value of the each of the Engine Management and Temperature Control reporting units were less than their respective carrying amounts. As such, we concluded that the two-step impairment test would not be required, and that there would be no required goodwill impairment charge as of December 31, 2019 at each of the Engine Management and Temperature Control reporting units. We did not have a goodwill impairment charge as of December 31, 2019, and we do not believe that future impairments are probable.

Changes in the carrying values of goodwill by operating segment during the years ended December 31, 2019 and 2018 are as follows (in thousands):

	Engine Management			Temperature Control		Total
Balance as of December 31, 2017:
Goodwill	$	91,631		$	14,270	$	105,901
Accumulated impairment losses		(38,488	)		—		(38,488	)
	$	53,143		$	14,270	$	67,413
Activity in 2018
Foreign currency exchange rate change		(92	)		—		(92	)
Balance as of December 31, 2018:
Goodwill		91,539			14,270		105,809
Accumulated impairment losses		(38,488	)		—		(38,488	)
	$	53,051		$	14,270	$	67,321
Activity in 2019
Acquisition of Pollak Business of Stoneridge, Inc.		10,401			—		10,401
Foreign currency exchange rate change		80			—		80
Balance as of December 31, 2019:
Goodwill		102,020			14,270		116,290
Accumulated impairment losses		(38,488	)		—		(38,488	)
	$	63,532		$	14,270	$	77,802

Acquired Intangible Assets

Acquired identifiable intangible assets as of December 31, 2019 and 2018 consist of:

	December 31,
	2019			2018
	(In thousands)
Customer relationships	$	111,692		$	87,195
Trademarks and trade names		6,980			6,800
Non-compete agreements		3,276			3,193
Patents		723			723
Supply agreements		800			800
Leaseholds		160			160
Total acquired intangible assets		123,631			98,871
Less accumulated amortization (1)		(59,431	)		(51,391	)
Net acquired intangible assets	$	64,200		$	47,480

(1)	Applies to all intangible assets, except for related trademarks and trade names totaling $5.2 million, which have indefinite useful lives and, as such, are not being amortized.

In April 2019, we acquired certain assets and liabilities of the Pollak business of Stoneridge, Inc. Intangible assets acquired of $24.7 million consist of customer relationships related to the acquired OE/OES business of $17.2 million that will be amortized on a straight-line basis over the estimated useful life of 10 years; customer relationships related to the acquired aftermarket business of $7.2 million that will be amortized on a straight-line basis over the estimated useful life of 15 years; a trademark of $0.2 million that will be amortized on a straight-line basis over the estimated useful life of 10 years; and a non-compete agreement of $0.1 million that will be amortized on a straight-line basis over the estimated useful life of 5 years.

Total amortization expense for acquired intangible assets was $8 million for the year ended December 31, 2019, $7.6 million for the year ended December 31, 2018, and $8 million for the year ended December 31, 2017. Based on the current estimated useful lives assigned to our intangible assets, amortization expense is estimated to be $8.2 million for 2020, $6.8 million in 2021, $5.2 million in 2022, $5 million in 2023 and $33.8 million in the aggregate for the years 2024 through 2034.

Other Intangible Assets

Other intangible assets include computer software. Computer software as of December 31, 2019 and 2018 totaled $16.9 million and $17.2 million, respectively. Total accumulated computer software amortization as of December 31, 2019 and 2018 was $16.2 million and $16.3 million, respectively. Computer software is amortized over its estimated useful life of 3 to 10 years. Amortization expense for computer software was $0.4 million, $0.4 million and $0.5 million for the years ended December 31, 2019, 2018 and 2017, respectively. Fully amortized computer software, no longer in use, of $0.5 million was written-off during the year ended December 31, 2019.