Annual report pursuant to Section 13 and 15(d)

Intangible Assets

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Intangible Assets
12 Months Ended
Dec. 31, 2017
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets
INTANGIBLE ASSETS
The following table details amounts related to our intangible assets:
 
 
 
December 31, 2017
 
December 31, 2016
 
Estimated Useful Life
 
Gross Carrying Amount
 
Accumulated Amortization
 
Gross Carrying Amount
 
Accumulated Amortization
Long-lived intangible assets
 
 
 
 
 
 
 
 
Contractual arrangements
5-50 years
 
$
38.8

 
$
4.6

 
$
5.1

 
$
0.7

Intellectual property
2-15 years
 
6.5

 
1.8

 
5.8

 
1.6

Subtotal
 
 
45.3

 
$
6.4

 
10.9

 
$
2.3

Indefinite-lived intangible assets
 
 
 
 
 
 
 
 
Trademarks and brand names
Indefinite
 
21.5

 
 
 
34.0

 
 
Total
 
 
$
66.8

 
 
 
$
44.9

 
 

 
 
Year Ended December 31,
 
 
2017
 
2016
 
2015
Amortization expense
 
$
4.2

 
$
0.4

 
$
0.5


During the second quarter of 2017, we acquired vinyl composition tile ("VCT") assets for $36.1 million, consisting of equipment and trademarks of Mannington Mills, Inc. ("Mannington Mills") under an agreement that included non-compete provisions. We allocated $33.6 million of the purchase price to intangible assets and the remainder to inventories and equipment. The assigned intangible asset classes were contractual arrangements, $33.3 million, with an estimated useful life of five years, and intellectual property, $0.3 million, with an estimated useful life of two years.

In addition, Mannington Mills is eligible for contingent consideration of up to $9.0 million based on sales of our VCT flooring products for the twelve month periods ending June 30, 2019 and June 30, 2020 (“measurement periods”) compared to a base period of combined AFI and Mannington Mills sales for the 12 month period ended June 30, 2017. The contingent consideration is tiered for each of the separate twelve month measurement periods ranging from consideration of zero to a maximum of $4.5 million in each measurement period. No contingent liability has been recognized as we concluded that such liability is not probable. Any contingent liability recognized will be recorded as an adjustment to the value of the acquired assets.

We conduct our annual impairment test for indefinite-lived intangible assets during the fourth quarter. However, during the third quarter of 2017, we conducted an interim impairment test for indefinite-lived intangible assets within our Wood Flooring segment due to our decision to cease operations at two Wood Flooring manufacturing plants in response to a decline in sales. As a result of this testing, we recorded an impairment charge of $12.5 million for our Bruce trademark during the third quarter of 2017. The fourth quarter 2017, 2016 and 2015 impairment tests concluded that no impairment charges were necessary.
 
2018
 
2019
 
2020
 
2021
 
2022
Expected annual amortization expense
$
6.9

 
$
6.9

 
$
6.8

 
$
6.8

 
$
3.5