Ameresco, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Goodwill and Intangible Assets

Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying value of goodwill attributable to each reportable segment are as follows:



	U.S. Regions			U.S. Federal			Canada			Other			Total
Balance, December 31, 2017	24,759			3,375			3,494			24,507			56,135
Goodwill acquired during the year	1,611			1,234			—			—			2,845
Currency effects	—			—			(277		)	(371		)	(648		)
Balance, December 31, 2018	26,370			4,609			3,217			24,136			58,332
Goodwill acquired during the year	337			—			—			—			337
Re-measurement adjustments	(2		)	(628		)	—			—			(630		)
Currency effects	—			—			152			223			375
Balance, December 31, 2019	26,705			3,981			3,369			24,359			58,414
Accumulated Goodwill Impairment Balance, December 31, 2018	$	—		$	—		$	(1,016	)	$	—		$	(1,016	)
Accumulated Goodwill Impairment Balance, December 31, 2019	$	—		$	—		$	(1,016	)	$	—		$	(1,016	)

In accordance with ASC 350, goodwill was tested for impairment as of December 31, 2019, 2018 and 2017 at the reporting unit level under the income approach which uses, in part, a discounted cash flow method and a peer-based guideline method, and a risk-adjusted weighted average cost of capital. No impairment was recorded in the December 31, 2019, 2018 or 2017 assessments. Based on the Company’s goodwill impairment assessment, all of its reporting units with goodwill had estimated fair values as of December 31, 2019 and 2018 that exceeded their carrying values by at least 15% and 20%, respectively. During the course of the valuation analysis it was determined that although the fair value of the Company’s Federal reporting unit exceeded the carrying amount of this reporting unit, the carrying value of the reporting unit was negative as of December 31, 2019. The Federal reporting unit had goodwill of $3,981 as of December 31, 2019.

The gross carrying amount and accumulated amortization of intangible assets are as follows:



	As of December 31,
	2019		2018
Gross Carrying Amount
Customer contracts	$	7,904	$	7,818
Customer relationships	12,749		12,082
Non-compete agreements	3,037		3,013
Technology	2,732		2,710
Trade names	544		541
	26,966		26,164
Accumulated Amortization
Customer contracts	7,844		7,668
Customer relationships	11,236		10,302
Non-compete agreements	3,037		3,013
Technology	2,704		2,651
Trade names	531		526
	25,352		24,160
Intangible assets, net	$	1,614	$	2,004

Amortization expense related to customer contracts is included in cost of revenues in the consolidated statements of income. Amortization expense related to customer relationships, non-compete agreements, technology and trade names is included in selling, general and administrative expenses in the consolidated statements of income.

Customer contracts are amortized ratably over the period of the acquired customer contracts ranging in periods from approximately one to eight years. All other intangible assets are amortized over periods ranging from approximately four to fifteen years, as defined by the nature of the respective intangible asset.

Separable intangible assets that are not deemed to have indefinite lives are amortized over their useful lives. The Company annually assesses whether a change in the life over which the Company’s assets are amortized is necessary or more frequently if events or circumstances warrant. No changes to useful lives were made during the years ended December 31, 2019, 2018 and 2017.

Amortization expense for the years ended December 31, 2019, 2018 and 2017 is as follows:



	Year Ended December 31,
	2019		2018		2017
Customer contracts	$	90	$	30	$	31
Customer relationships	806		973		1,244
Non-compete agreements	1		3		42
Technology	12		47		128
Trade names	—		4		6
Total intangible amortization expense	$	909	$	1,057	$	1,451

Amortization expense for the intangible assets related to customer contracts for the next five succeeding fiscal years is immaterial. Amortization expense for the intangible assets related to customer relationships, non-compete agreements, technology and trade names for the next five succeeding fiscal years is as follows:



	Estimated Amortization
	Included in Selling, General and Administrative Expenses
2020	628
2021	318
2022	140
2023	129
2024	127
Thereafter	212
	$	1,554