GOODWILL AND IDENTIFIABLE INTANGIBLE ASSETS

Goodwill at December 31, 2016 and 2015 was approximately $979.6 million and $843.2 million, respectively, and reflects the excess of cost over fair market value of net identifiable assets of companies acquired. Goodwill attributable to companies acquired in 2016 and 2015 has been valued at $135.9 million and $9.6 million, respectively. ASC Topic 805, “Business Combinations” (“ASC 805”) requires that all business combinations be accounted for using the acquisition method and that certain identifiable intangible assets acquired in a business combination be recognized as assets apart from goodwill. ASC Topic 350, “Intangibles-Goodwill and Other” (“ASC 350”) requires goodwill and other identifiable intangible assets with indefinite useful lives not be amortized, such as trade names, but instead tested at least annually for impairment (which we test each October 1, absent any impairment indicators) and be written down if impaired. ASC 350 requires that goodwill be allocated to its respective reporting unit and that identifiable intangible assets with finite lives be amortized over their useful lives. As of December 31, 2016, approximately 39.3% of our goodwill related to our United States industrial services segment, approximately 25.0% of our goodwill related to our United States building services segment, approximately 23.1% of our goodwill related to our United States mechanical construction and facilities services segment and approximately 12.6% of our goodwill related to our United States electrical construction and facilities services segment.

We test for impairment of goodwill at the reporting unit level. Our reporting units are consistent with the reportable segments identified in Note 17, “Segment Information”, of the notes to consolidated financial statements. In assessing whether our goodwill is impaired, we utilize the two-step process as prescribed by ASC 350. The first step of this test compares the fair value of the reporting unit, determined based upon discounted estimated future cash flows, to the carrying amount, including goodwill. If the fair value exceeds the carrying amount, no further analysis is required and no impairment loss is recognized. If the carrying amount of the reporting unit exceeds the fair value, the goodwill of the reporting unit is potentially impaired and step two of the goodwill impairment test would need to be performed to measure the amount of an impairment loss, if any. In the second step, the impairment is computed by comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of the goodwill. If the carrying amount of the reporting unit’s goodwill is greater than the implied fair value of its goodwill, an impairment loss in the amount of the excess is recognized and charged to operations. The weighted average cost of capital used in our annual testing for impairment as of October 1, 2016 was 11.4%, 11.0% and 11.5% for our domestic construction segments, our United States building services segment and our United States industrial services segment, respectively. The perpetual growth rate used for our annual testing was 2.7% for all of our domestic segments. Unfavorable changes in these key assumptions may affect future testing results and cause us to fail step one of the goodwill impairment testing process. For example, keeping all other assumptions constant, a 50 basis point increase in the weighted average costs of capital would cause the estimated fair value of our United States industrial services segment to approach its carrying value. A 50 basis point increase in the weighted average costs of capital would not significantly reduce the excess of the estimated fair value compared to the carrying value for any of our other domestic segments. In addition, keeping all other assumptions constant, a 50 basis point reduction in the perpetual growth rate would not significantly reduce the excess of the estimated fair value compared to the carrying value for any of our domestic segments. For the years ended December 31, 2016, 2015 and 2014, no impairment of our goodwill was recognized.

We also test for the impairment of trade names that are not subject to amortization by calculating the fair value of such trade names using the “relief from royalty payments” methodology. This approach involves two steps: (a) estimating reasonable royalty rates for each trade name and (b) applying these royalty rates to a net revenue stream and discounting the resulting cash flows to determine fair value. This fair value is then compared with the carrying value of each trade name. If the carrying amount of the trade name is greater than the implied fair value of the trade name, an impairment in the amount of the excess is recognized and charged to operations. The annual impairment review of our trade names for the years ended December 31, 2016 and 2014 resulted in $2.4 million and $1.5 million, respectively, of non-cash impairment charges as a result of a change in the fair value of subsidiary trade names associated with certain prior acquisitions reported within our United States mechanical construction and facilities services segment and our United States building services segment. For the year ended December 31, 2015, no impairment of our trade names was recognized.

In addition, we review for the impairment of other identifiable intangible assets that are being amortized whenever facts and circumstances indicate that their carrying values may not be fully recoverable. This test compares their carrying values to the undiscounted pre-tax cash flows expected to result from the use of the assets. If the assets are impaired, the assets are written down to their fair values, generally determined based on their future discounted cash flows. For the years ended December 31, 2016, 2015 and 2014, no impairment of our other identifiable intangible assets was recognized.

Our development of the present value of future cash flow projections used in impairment testing is based upon assumptions and estimates by management from a review of our operating results, business plans, anticipated growth rates and margins and weighted average cost of capital, among others. Those assumptions and estimates can change in future periods, and other factors used in assessing fair value are outside the control of management, such as interest rates. There can be no assurances that our estimates and assumptions made for purposes of our goodwill and identifiable intangible asset impairment testing will prove to be accurate predictions of the future. If our assumptions regarding future business performance plans or anticipated growth rates and/or margins are not achieved, or there is a rise in interest rates, we may be required to record goodwill and/or identifiable intangible asset impairment charges in future periods. It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such a charge would be material.

The changes in the carrying amount of goodwill by reportable segments during the years ended December 31, 2016 and 2015 were as follows (in thousands):



	United States electrical construction and facilities services segment		United States mechanical construction and facilities services segment		United States building services segment		United States industrial services segment		Total
Balance at December 31, 2014	$	3,823	$	217,255	$	228,385	$	384,639	$	834,102
Acquisitions, sales and purchase price adjustments	—		8,816		252		—		9,068
Balance at December 31, 2015	3,823		226,071		228,637		384,639		843,170
Acquisitions, sales and purchase price adjustments	119,777		525		16,156		—		136,458
Balance at December 31, 2016	$	123,600	$	226,596	$	244,793	$	384,639	$	979,628

The aggregate goodwill balance as of December 31, 2014 included $210.6 million of accumulated impairment charges, which were comprised of $139.5 million within the United States building services segment and $71.1 million within the United States industrial services segment.

Identifiable intangible assets as of December 31, 2016 and 2015 consist of the following (in thousands):



	December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Accumulated Impairment Charge			Total
Contract backlog	$	48,645	$	(48,412	)	$	—		$	233
Developed technology/Vendor network	95,661		(45,616		)	—			50,045
Customer relationships	466,556		(173,156		)	(4,834		)	288,566
Non-competition agreements	10,220		(10,041		)	—			179
Trade names (amortized)	32,848		(15,847		)	—			17,001
Trade names (unamortized)	183,239		—			(51,865		)	131,374
Total	$	837,169	$	(293,072	)	$	(56,699	)	$	487,398



	December 31, 2015
	Gross Carrying Amount		Accumulated Amortization			Accumulated Impairment Charge			Total
Contract backlog	$	47,745	$	(47,745	)	$	—		$	—
Developed technology/Vendor network	95,661		(40,482		)	—			55,179
Customer relationships	430,356		(141,695		)	(4,834		)	283,827
Non-competition agreements	10,220		(9,832		)	—			388
Trade names (amortized)	21,248		(12,410		)	—			8,838
Trade names (unamortized)	174,039		—			(49,437		)	124,602
Total	$	779,269	$	(252,164	)	$	(54,271	)	$	472,834

Identifiable intangible assets attributable to companies acquired in 2016 and 2015 have been valued at $57.9 million and $8.7 million, respectively. See Note 3 - Acquisitions of Businesses of the notes to consolidated financial statements for additional information. The identifiable intangible amounts are amortized on a straight-line basis, as it approximates the pattern in which the economic benefits of the identifiable intangible assets are consumed. The weighted average amortization periods for the unamortized balances remaining are, in the aggregate, approximately 10.5 years, which are comprised of the following: 10.5 years for developed technology/vendor network, 10.25 years for customer relationships, 1.25 years for non-competition agreements and 10.5 years for trade names.

Amortization expense related to identifiable intangible assets with finite lives was $40.9 million, $37.9 million and $38.0 million for the years ended December 31, 2016, 2015 and 2014, respectively. The following table presents the estimated future amortization expense of identifiable intangible assets in the following years (in thousands):



2017	$	39,210
2018	36,808
2019	34,826
2020	34,645
2021	33,851
Thereafter	176,684
	$	356,024