Note 8. Other Intangible Assets

Other intangible assets comprise the following:


(in millions)	2017		2016
Gross cost:
– Product rights	$	34.0	$	34.0
– Brand names		8.9		8.9
– Technology		55.1		55.1
– Customer and distributor relationships		127.5		85.1
– Patents		2.9		2.9
– Non-compete agreements		4.1		4.1
– Marketing related		22.1		22.1
– Internally developed software		41.2		36.4

		295.8		248.6


Accumulated amortization:
– Product rights		(16.4	)		(12.6	)
– Brand names		(4.4	)		(3.2	)
– Technology		(15.7	)		(12.3	)
– Customer and distributor relationships		(43.2	)		(32.5	)
– Patents		(2.9	)		(2.9	)
– Non-compete agreements		(4.1	)		(3.4	)
– Marketing related		(22.1	)		(21.2	)
– Internally developed software		(23.7	)		(16.1	)

		(132.5	)		(104.2	)

	$	163.3		$	144.4

Product rights

Following the acquisition of Chemsil on August 30, 2013, the Company recognized an intangible asset of $34.0 million in respect of Chemsil’s product rights portfolio. This asset has an expected life of 9 years and is being amortized on a straight-line basis over this period. No residual value is anticipated.

An amortization expense of $3.8 million was recognized in 2017 (2016 – $3.8 million) in selling, general and administrative expenses.

Brand names

Following the acquisition of Independence on October 27, 2014, the Company recognized an intangible asset of $6.0 million in respect of Independence’s brand name. This asset has an expected life of 10 years and is being amortized on a straight-line basis over this period. No residual value is anticipated.

Following the acquisition of Bachman on November 4, 2013, the Company recognized an intangible asset of $2.9 million in respect of Bachman’s brand names. This asset has an expected life of 5 years and is being amortized on a straight-line basis over this period. No residual value is anticipated.

An amortization expense of $1.2 million was recognized in 2017 (2016 – $1.2 million) in selling, general and administrative expenses.

Technology

Following the acquisition of Independence on October 27, 2014, the Company recognized an intangible asset of $26.0 million in respect of Independence’s product formulations. This asset has an expected life of 15 years and is being amortized on a straight-line basis over this period. No residual value is anticipated.

Following the acquisition of Bachman on November 4, 2013, the Company recognized an intangible asset of $8.5 million in respect of Bachman’s core chemistry know-how of oilfield chemicals. This asset has an expected life of 15 years and is being amortized on a straight-line basis over this period. No residual value is anticipated.

Following the acquisition of Strata on December 24, 2012, the Company recognized an intangible asset of $18.3 million in respect of technological know-how of the mixing and manufacturing process, patents which protect the technology and the associated product branding. This asset has an expected life of 16.5 years and is being amortized on a straight-line basis over this period. No residual value is anticipated.

An amortization expense of $3.4 million was recognized in 2017 (2016 – $3.4 million) in cost of goods sold.

Customer and distributor relationships

On August 9, 2017, the Company acquired an intangible asset from Huntsman Holland B.V. for $4.2 million in respect of long-term customer and distributor relationships in ASPAC and America. This asset has a weighted average expected life of 10 years and is being amortized on a straight-line basis over this period. No residual value is anticipated.

On March 31, 2017 the Company recognized an intangible asset of $33.5 million in respect of long-term customer relationships relating to the Huntsman acquisition on December 30, 2016. This asset has a weighted average expected life of 10 years and is being amortized on a straight-line basis over this period. No residual value is anticipated.

Following the acquisition of Independence on October 27, 2014, the Company recognized an intangible asset of $29.2 million in respect of Independence’s long-term customer relationships. This asset has a weighted average expected life of 10 years and is being amortized on a straight-line basis over this period. No residual value is anticipated.

Following the acquisition of Bachman on November 4, 2013, the Company recognized an intangible asset of $14.5 million in respect of Bachman’s long-term customer relationships. This asset has a weighted average expected life of 14.5 years and is being amortized on a straight-line basis over this period. No residual value is anticipated.

Following the acquisition of Strata on December 24, 2012, the Company recognized an intangible asset of $28.2 million in respect of long-term customer relationships. This asset has an expected life of 11.5 years and is being amortized on a straight-line basis over this period. No residual value is anticipated.

Following the acquisition of Finetex (now merged into Innospec Active Chemicals LLC) in January 2005, the Company recognized an intangible asset of $4.2 million in relation to customer lists acquired. This asset has an expected life of 13 years and is being amortized on a straight-line basis over this period. No residual value is anticipated.

An amortization expense of $10.7 million was recognized in 2017 (2016 – $6.8 million) in selling, general and administrative expenses.

Non-compete agreements

Following the acquisition of Independence on October 27, 2014, the Company recognized an intangible asset of $2.6 million in respect of a non-compete agreement. This asset has an expected life of 3 years and is being amortized on a straight-line basis over this period. No residual value is anticipated.

Following the acquisition of Strata on December 24, 2012, the Company recognized an intangible asset of $1.5 million in respect of a non-compete agreement. This asset had an expected life of 2 years and is now fully amortized.

An amortization expense of $0.7 million was recognized in 2017 (2016 – $0.9 million) in selling, general and administrative expenses.

Marketing related

An intangible asset of $28.4 million was recognized in the second quarter of 2007 in respect of Ethyl Corporation foregoing their entitlement effective April 1, 2007 to a share of the future income stream under the sales and marketing agreements to market and sell TEL. In 2008, contract provisions no longer deemed necessary of $6.3 million were offset against the intangible asset. The amount attributed to the Octane Additives reporting segment was amortized straight-line to December 31, 2013 and the amount attributed to the Fuel Specialties reporting segment was amortized straight-line to December 31, 2017.

An amortization expense of $0.9 million was recognized in 2017 (2016 – $0.9 million) in cost of goods sold.

Internally developed software

In September 2017 we completed the implementation of our new information system platform for our acquired Huntsman businesses. At December 31, 2017 we had capitalized $4.4 million (2016 – $0.0 million) in relation to this internally developed software. This asset has an expected life of 5 years and is being amortized on a straight-line basis over this period. No residual value is anticipated.

In August 2017 we completed the implementation of our existing information system platform at two of our reporting entities in the United States for a cost of $0.3 million. At December 31, 2017 we had capitalized $36.7 million (2016 – $36.4 million) in relation to the phased deployment of this internally developed software to the majority of entities in the group which began in 2013. This asset has an expected life of 5 years from the point in time each deployment is completed and is being amortized on a straight-line basis over these periods. No residual value is anticipated.

An amortization expense of $7.6 million was recognized in 2017 (2016 – $7.3 million) in selling, general and administrative expenses.

Amortization expense

The aggregate of other intangible asset amortization expense was $28.3 million, $24.2 million and $21.0 million in 2017, 2016 and 2015, respectively, of which $4.3 million, $4.3 million and $4.4 million, respectively, was recognized in cost of goods sold, and the remainder was recognized in selling, general and administrative expenses.

Future amortization expense is estimated to be as follows for the next five years:


(in millions)
2018	$	25.8
2019	$	22.5
2020	$	22.2
2021	$	19.0
2022	$	17.4