Goodwill and Other Intangible Assets

9 Months Ended

Oct. 01, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Note 5: Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill by segment for the nine month period ended October 1, 2016, are as follows:


(Amounts in millions)	Commercial & Industrial Group		Snap-on Tools Group		Repair Systems & Information Group		Total
Balance as of January 2, 2016	$	253.1	$	12.5	$	524.5	$	790.1
Currency translation		0.3		–		(2.1)		(1.8)

Balance as of October 1, 2016	$	253.4	$	12.5	$	522.4	$	788.3

Additional disclosures related to other intangible assets are as follows:


	October 1, 2016				January 2, 2016
(Amounts in millions)	Gross Carrying Value		Accumulated Amortization		Gross Carrying Value		Accumulated Amortization
Amortized other intangible assets:
Customer relationships	$	143.6	$	(84.5)	$	146.2	$	(79.7)
Developed technology		18.0		(18.0)		18.9		(18.9)
Internally developed software		163.5		(115.1)		156.0		(105.6)
Patents		31.6		(21.6)		30.1		(20.9)
Trademarks		2.7		(1.8)		2.6		(1.7)
Other		7.4		(2.2)		7.6		(1.9)

Total		366.8		(243.2)		361.4		(228.7)
Non-amortized trademarks		61.9		–		62.3		–

Total other intangible assets	$	428.7	$	(243.2)	$	423.7	$	(228.7)

Snap-on completed its annual impairment testing of goodwill and other indefinite-lived intangible assets in the second quarter of 2016, the results of which did not result in any impairment. Significant and unanticipated changes in circumstances, such as declines in profitability and cash flow due to significant and long-term deterioration in macroeconomic, industry and market conditions, the loss of key customers, changes in technology or markets, significant changes in key personnel or litigation, a significant and sustained decrease in share price and/or other events, including effects from the sale or disposal of a reporting unit, could require a provision for impairment of goodwill and/or other intangible assets in a future period. As of October 1, 2016, the company had no accumulated impairment losses.

The weighted-average amortization periods related to other intangible assets are as follows:


		In Years
Customer relationships		15
Internally developed software		3
Patents		9
Trademarks		6
Other		39

Snap-on is amortizing its customer relationships on both an accelerated and straight-line basis over a 15 year weighted-average life; the remaining intangibles are amortized on a straight-line basis. The weighted-average amortization period for all amortizable intangibles on a combined basis is 11 years.

The company’s customer relationships generally have contractual terms of three to five years and are typically renewed without significant cost to the company. The weighted-average 15 year life for customer relationships is based on the company’s historical renewal experience. Intangible asset renewal costs are expensed as incurred.

The aggregate amortization expense was $5.9 million and $18.2 million for the respective three and nine month periods ended October 1, 2016, and $6.0 million and $18.4 million for the respective three and nine month periods ended October 3, 2015. Based on current levels of amortizable intangible assets and estimated weighted-average useful lives, estimated annual amortization expense is expected to be $23.6 million in 2016, $22.2 million in 2017, $19.8 million in 2018, $17.2 million in 2019, $13.9 million in 2020, and $12.2 million in 2021.

- 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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