Note 8.Intangible Assets and Goodwill

 

Our intangible assets with definite lives consist primarily of customer relationships, technology, brand names, non-compete agreements and patents. These intangible assets are being amortized on the straight-line method over the estimated useful lives of the assets ranging from 3-20 years and have a weighted average amortization period of 12 years. Amortization expense related to intangible assets was $3,964,000 and $11,930,000 for the three and nine months ended April 30, 2017, respectively, and $3,346,000 and $9,737,000 for the three and nine months ended April 30, 2016, respectively. Our intangible assets that have indefinite useful lives, and therefore are not amortized, consist of trademarks and trade names.

 

The Company’s intangible assets consist of the following:

 

 

 

 

 

Estimated annual amortization expense of our intangible assets for the remainder for fiscal 2017 and the next five years is as follows:

 

 

Goodwill changed during fiscal 2016 and the nine months ended April 30, 2017 as follows:

 

 

On July 31, 2016, we performed impairment studies of the Company’s goodwill and indefinite lived trademarks and trade names and concluded that such assets were not impaired. While the results of these annual reviews have historically not indicated impairment, impairment reviews are highly dependent on management’s projections of our future operating results and cash flows (which management believes to be reasonable), discount rates based on the Company’s weighted average cost of capital and appropriate benchmark peer companies. Assumptions used in determining future operating results and cash flows include current and expected market conditions and future sales forecasts. Subsequent changes in these assumptions and estimates could result in future impairment. Although we consistently use the same methods in developing the assumptions and estimates underlying the fair value calculations, such estimates are uncertain by nature and can vary from actual results. At July 31, 2016, the fair value of all of our reporting units exceeded book value by substantial amounts. However, we believe the most significant assumptions impacting the impairment assessment of Dialysis relate to the assumed rate in which annual sales will decline as well as the expected future operating efficiencies included in our projections of future operating results and cash flows of this segment. If future operating results and cash flows are substantially less than our projections, future impairment charges may be recorded. On April 30, 2017, management concluded that no events or changes in circumstances have occurred during the nine months ended April 30, 2017 that would indicate that the carrying amount of our intangible assets and goodwill may not be recoverable.