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Goodwill and Intangible Assets, Net | 12 Months Ended
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Dec. 31, 2016
Goodwill and Intangible Assets, Net [Abstract] |
Goodwill And Intangible Assets, Net | ﻿ NOTE 9. GOODWILL AND INTANGIBLE ASSETS, NET ﻿ A significant portion of the purchase price for acquired businesses is generally assigned to intangible assets. Intangible assets other than goodwill are initially valued at fair value. If a quoted price in an active market for the identical asset is not readily available at the measurement date, the fair value of the intangible asset is estimated based on discounted cash flows using market participant assumptions, which are assumptions that are not specific to IDEXX. The selection of appropriate valuation methodologies and the estimation of discounted cash flows require significant assumptions about the timing and amounts of future cash flows, risks, appropriate discount rates, and the useful lives of intangible assets. When material, we utilize independent valuation experts to advise and assist us in determining the fair values of the identified intangible assets acquired in connection with a business acquisition and in determining appropriate amortization methods and periods for those intangible assets. Goodwill is initially valued based on the excess of the purchase price of a business combination over the fair value of acquired net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. ﻿ Our business combinations regularly include contingent consideration arrangements that require additional consideration to be paid based on the achievement of established objectives, most commonly surrounding the retention of customers during the post-combination period. We assess contingent consideration to determine if it is part of the business combination or if it should be accounted for separately from the business combination in the post-combination period. Contingent consideration is recognized at its fair value on the acquisition date. A liability resulting from contingent consideration is remeasured to fair value at each reporting date until the contingency is resolved, with changes in fair value recognized in earnings. Changes in fair value of contingent consideration and differences arising upon settlement were not material during the years ended December 31, 201 6, 2015 and 201 4. See Note 3 for additional information regarding contingent consideration arising from recent business acquisitions. ﻿ We assess goodwill for impairment annually, at the reporting unit level, in the fourth quarter and whenever events or circumstances indicate impairment may exist. In evaluating goodwill for impairment, we have the option to first assess the qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill i mpairment test. The more likely than not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of events or circumstances, we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we would then perform step one of the two-step impairment test; otherwise, no further impairment test would be required. In contrast, we can opt to bypass the qualitative assessment for any reporting unit in any period and proceed directly to step one of the two-step impairment test. Doing so does not preclude us from performing the qualitative assessment in any subsequent period. ﻿ In the fourth quarters of 2016 and 2015, we elected to bypass the qualitative approach and instead proceeded directly to step one of the two-step impairment test to assess the fair value of all of our reporting units. As part of step one of the two-step impairment test, we estimate the fair values of applicable reporting units using an income approach based on discounted forecasted cash flows. We make significant assumptions about the extent and timing of future cash flows, growth rates and discount rates. Model assumptions are based on our projections and best estimates, using appropriate and customary market participant assumptions. In addition, we make certain assumptions in allocating shared assets and liabilities to individual reporting units in determining the carrying value of each reporting unit. Changes in forecasted cash flows or the discount rate would affect the estimated fair values of our reporting units and could result in a goodwill impairment charge in a future period. ﻿ No goodwill impairments were identified during the years ended December 31, 2016, 2015 or 2014. ﻿ We assess the realizability of intangible assets other than goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If an impairment review is triggered, we evaluate the carrying value of intangible assets based on estimated undiscounted future cash flows over the remaining useful life of the primary asset of the asset group and compare that value to the carrying value of the asset group. The cash flows that are used contain our best estimates, using appropriate and customary assumptions and projections at the time. If the net carrying value of an intangible asset exceeds the related estimated undiscounted future cash flows, an impairment to write the intangible asset to its fair value would be reported as a non-cash charge to earnings. If necessary, we would calculate the fair value of an intangible asset using the present value of the estimated future cash flows to be generated by the intangible asset, and applying a risk-adjusted discount rate. ﻿ During the first half of 2016, management reviewed the OPTI Medical product offerings. As a result of this review, we discontinued certain development activities in the human point-of-care medical diagnostics market during March 2016 that was devoted to a new platform and focused our efforts in this market on supporting our current generation OPTI CCA-TS2 Blood Gas and Electrolyte Analyzer. Non-cash intangible asset impairments of $2.2 million were recorded within our condensed consolidated statement of operations, within general and administration expenses, within our unallocated segment, during 2016. The intangibles associated with our OPTI Medical human point-of-care medical diagnostics market are fully written off. Impairments of our intangible assets during the years ended December 31, 2015 and 2014 were not material. ﻿ We provide for amortization primarily using the straight-line method by charges to income in amounts that allocate the intangible assets over their estimated useful lives as follows:
﻿ |  |  |
﻿ |  |  |
Asset Classification |  | Estimated Useful Life |
﻿ |  |  |
Patents |  | 13 years |
Product rights(1) |  | 5 to 15 years |
Customer-related intangible assets(2) |  | 5 to 1 7 years |
Noncompete agreements |  | 3 to 5 years |
﻿ ﻿
| (1) |  | Product rights comprise certain technologies, intellectual property, licenses and trade names acquired from third parties.
| (2) |  | Customer-related intangible assets comprise customer lists and customer relationships acquired from third parties.
Intangible assets other than goodwill consisted of the following (in thousands): ﻿ ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  | December 31, 2016 |  | December 31, 2015 |
﻿ |  |  | Cost |  |  | Accumulated Amortization |  |  | Cost |  |  | Accumulated Amortization |
﻿Patents |  | $ | 2,192 |  | $ | 2,075 |  | $ | 2,192 |  | $ | 1,907 |
﻿Product rights (1) |  |  | 29,748 |  |  | 20,877 |  |  | 35,318 |  |  | 22,976 |
﻿Customer-related intangible assets (2) |  |  | 74,922 |  |  | 38,190 |  |  | 86,806 |  |  | 44,232 |
﻿Noncompete agreements |  |  | 1,111 |  |  | 676 |  |  | 1,413 |  |  | 705 |
﻿ |  | $ | 107,973 |  | $ | 61,818 |  | $ | 125,729 |  | $ | 69,820 |
| (1) |  | Product rights comprise certain technologies, licenses and trade names acquired from third parties.
| (2) |  | Customer-related intangible assets are comprised of customer lists and customer relationships acquired from third parties.
﻿ Amortization expense of intangible assets other than goodwill was $9.5 mi llion for the year ended December 31, 2016, $10.4 million for the year ended December 31, 2015, and $9.8 million for the year ended December 31, 201 4. The decrease in intangible assets other than goodwill during the year ended December 31, 2016, was driven by amortization expense and the write-off of intangibles related to our OPTI Medical line of business, partly offset by intangibles recognized in connection with the acquisition of businesses. ﻿ At December 31, 2016, the aggregate amortization expense associated with intangible assets is estimated to be as follows for each of the next five years and thereafter (in thousands): ﻿
﻿ |  |  |  |
﻿ |  | Amortization Expense |
﻿ |  |  |  |
﻿2017 |  | $ | 8,467 |
﻿2018 |  |  | 7,453 |
﻿2019 |  |  | 6,561 |
﻿2020 |  |  | 5,261 |
﻿2021 |  |  | 4,457 |
﻿Thereafter |  |  | 13,956 |
﻿ |  | $ | 46,155 |
﻿ The decrease in goodwill during the twelve months ended December 31, 2016, resulted from changes in foreign currency exchange rates, partly offset by goodwill recognized in connection with the acquisition of businesses. See Note 3 for information regarding goodwill and other intangible assets recognized in connection with the acquisition of businesses and other assets during the years ended December 31, 201 6, 201 5 and 201 4. ﻿ The changes in the carrying amount of goodwill for t he years ended December 31, 2016, 2015, and 2014, were as follows (in thousands): ﻿ ﻿ ﻿
﻿ |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
﻿ |  | CAG |  |  | Water |  |  | LPD |  |  | Other |  |  | Consolidated Total |
﻿Balance as of December 31, 2013 | $ | 141,408 |  | $ | 14,515 |  | $ | 18,067 |  | $ | 6,531 |  | $ | 180,521 |
﻿Business Combinations |  | 13,077 |  |  | - |  |  | - |  |  | - |  |  | 13,077 |
﻿Impact of Changes in Foreign Currency Exchange Rates |  | (6,334) |  |  | (826) |  |  | (1,988) |  |  | - |  |  | (9,148) |
﻿Balance as of December 31, 2014 | $ | 148,151 |  | $ | 13,689 |  | $ | 16,079 |  | $ | 6,531 |  | $ | 184,450 |
﻿Business Combinations |  | 5,047 |  |  | - |  |  | - |  |  | - |  |  | 5,047 |
﻿Impact of Changes in Foreign Currency Exchange Rates |  | (8,007) |  |  | (651) |  |  | (1,905) |  |  | - |  |  | (10,563) |
﻿Balance as of December 31, 2015 | $ | 145,191 |  | $ | 13,038 |  | $ | 14,174 |  | $ | 6,531 |  | $ | 178,934 |
﻿Business Combinations |  | 1,720 |  |  | - |  |  | - |  |  | - |  |  | 1,720 |
﻿Impact of Changes in Foreign Currency Exchange Rates |  | (717) |  |  | (2,148) |  |  | 439 |  |  | - |  |  | (2,426) |
﻿Balance as of December 31, 2016 | $ | 146,194 |  | $ | 10,890 |  | $ | 14,613 |  | $ | 6,531 |  | $ | 178,228 |
﻿

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16373-109275 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16265-109275 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=66006027&loc=d3e16323-109275 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13816-109267 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13854-109267 + Details
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