Quanta Services, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

3 Months Ended

Mar. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

5.	GOODWILL AND OTHER INTANGIBLE ASSETS:

A summary of changes in Quanta’s goodwill is as follows (in thousands):


	Electric Power Infrastructure Services Division		Oil and Gas Infrastructure Services Division			Total
Balance at December 31, 2016:
Goodwill	$	1,253,979	$	388,923		$	1,642,902
Accumulated impairment		—		(39,733	)		(39,733	)

		1,253,979		349,190			1,603,169
Purchase price allocation adjustments		—		(659	)		(659	)
Foreign currency translation adjustments		3,354		2,520			5,874

Balance at March 31, 2017:
Goodwill		1,257,333		391,551			1,648,884
Accumulated impairment		—		(40,500	)		(40,500	)

	$	1,257,333	$	351,051		$	1,608,384

Adjustments primarily represent changes in deferred tax liability estimates and would not have had a material impact on the consolidated financial statements in prior periods had these adjustments been booked at the respective acquisition dates.

Also, as described in Note 2, Quanta’s operating units are organized into one of Quanta’s two internal divisions and, accordingly, the goodwill associated with the operating units has been aggregated on a divisional basis in the table above. These divisions are closely aligned with Quanta’s reportable segments and operating units are assigned to a division based on the predominant type of work performed. From time to time, operating units may be reorganized between divisions as business environments evolve.

Quanta’s intangible assets subject to amortization and the remaining weighted average amortization periods related to such assets were as follows (in thousands except for weighted average amortization periods, which are in years):


	As of							As of							As of
	March 31, 2017							December 31, 2016							March 31, 2017
	Intangible Assets		Accumulated Amortization			Intangible Assets, Net		Intangible Assets		Accumulated Amortization			Intangible Assets, Net		Remaining Weighted Average Amortization Period in Years
Customer relationships	$	246,049	$	(115,894	)	$	130,155	$	244,329	$	(110,640	)	$	133,689		8.5
Backlog		134,152		(133,227	)		925		133,592		(132,441	)		1,151		0.7
Trade names		55,063		(13,773	)		41,290		54,723		(12,855	)		41,868		17.5
Non-compete agreements		29,325		(25,974	)		3,351		29,212		(25,546	)		3,666		2.8
Patented rights and developed technology		22,485		(16,272	)		6,213		22,480		(15,831	)		6,649		3.9

Total intangible assets subject to amortization	$	487,074	$	(305,140	)	$	181,934	$	484,336	$	(297,313	)	$	187,023		10.3

Amortization expense for intangible assets was $6.6 million and $7.5 million for the three months ended March 31, 2017 and 2016.

The estimated future aggregate amortization expense of intangible assets subject to amortization as of March 31, 2017 is set forth below (in thousands):


For the Fiscal Year Ending December 31,
Remainder of 2017	$	19,196
2018		24,414
2019		22,373
2020		21,081
2021		18,750
Thereafter		76,120

Total	$	181,934

- 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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