Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

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, 2015:
Goodwill	$	1,226,245		$	366,306		1,592,551
Accumulated impairment	—			(39,893		)	(39,893		)
	1,226,245			326,413			1,552,658

Goodwill recorded related to 2016 acquisitions	24,168			21,018			45,186
Purchase price allocation adjustments	229			(214		)	15
Foreign currency translation adjustments	3,337			1,973			5,310

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

Goodwill recorded related to 2017 acquisitions	5,866			296,542			302,408
Purchase price allocation adjustments	(619		)	(659		)	(1,278		)
Goodwill impairment during 2017	—			(57,011		)	(57,011		)
Foreign currency translation adjustments	13,301			8,011			21,312

Balance at December 31, 2017:
Goodwill	1,272,527			693,905			1,966,432
Accumulated impairment	—			(97,832		)	(97,832		)
	$	1,272,527		$	596,073		$	1,868,600

Adjustments primarily represent changes in deferred tax liability estimates and would not have had a material impact on Quanta’s consolidated financial statements in prior periods had these adjustments been booked at the respective acquisition dates. The goodwill impairment in the year ended December 31, 2017 was associated with two reporting units within the Oil and Gas Infrastructure Services Division. Specifically, a reporting unit that provides material handling services experienced lower operating margins and is expected to continue to face a highly competitive environment in its select markets, and a reporting unit that provides marine and offshore services experienced prolonged periods of reduced revenues and operating margins and is expected to continue to experience lower levels of activity in the U.S. Gulf of Mexico and other offshore markets.

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, an operating unit may be reorganized between divisions if its predominant business evolves.

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
	December 31, 2017							December 31, 2016							December 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	$	327,334	$	(137,333	)	$	190,001	$	244,329	$	(110,640	)	$	133,689	7.3
Backlog	136,266		(135,847		)	419		133,592		(132,441		)	1,151		1.1
Trade names	74,797		(17,057		)	57,740		54,723		(12,855		)	41,868		16.2
Non-compete agreements	37,760		(27,659		)	10,101		29,212		(25,546		)	3,666		3.9
Patented rights and developed technology	22,529		(17,611		)	4,918		22,480		(15,831		)	6,649		3.4
Total intangible assets subject to amortization	$	598,686	$	(335,507	)	$	263,179	$	484,336	$	(297,313	)	$	187,023	9.1

Amortization expense for intangible assets was $32.2 million, $31.7 million and $34.8 million for the years ended December 31, 2017, 2016 and 2015, respectively. During the year ended December 31, 2017, Quanta recorded an impairment charge of $1.1 million related to a customer relationships intangible asset, which primarily resulted from a strategic decision to restructure a business within a reporting unit in Quanta’s Oil and Gas Infrastructure Services Division. The impairment charge recognized in 2017 is reflected in the December 31, 2017 accumulated amortization balances above. Additionally, during the year ended December 31, 2015, Quanta recorded an impairment charge of $12.1 million related to customer relationship, trade name and non-compete agreement intangible assets. These intangible asset impairments primarily resulted from lower levels of expected activity in the U.S. Gulf of Mexico and, to a lesser extent, due to the extended low commodity price environment with respect to certain directional drilling operations in Australia. The two reporting units impacted are in Quanta’s Oil and Gas Infrastructure Services Division. The impairment charges recognized in 2015 are reflected in the December 31, 2017 and 2016 accumulated amortization balances above.

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



For the Fiscal Year Ending December 31,
2018	$	39,188
2019	37,038
2020	35,639
2021	33,295
2022	29,764
Thereafter	88,255
Total	$	263,179

- 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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