CJ 2017 Annual Report

recoverability test on all of its definite-lived intangible assets and PP&E by comparing the estimated future net undiscounted cash flows expected to be generated from the use of these assets to the carrying amounts of the assets for recoverability. If the estimated undiscounted cash flows exceed the carrying amount of the assets, an impairment does not exist, and a loss will not be recognized. If the undiscounted cash flows are less than the carrying amount of the assets, the assets are not recoverable, and the amount of impairment must be determined by fair valuing the assets. Recoverability testing through June 30, 2016 resulted in the determination that certain intangible assets associated with the Company’s wireline and artificial lift lines of business were not recoverable. The fair value of the wireline and artificial lift assets was determined to be approximately $38.2 million and zero, respectively, resulting in impairment expense of $50.4 million and $4.6 million, respectively. For the year ended December 31, 2016, the Company recorded $55.0 million of impairment expense, as the intangible assets assessed were determined not to be recoverable. For the year ended December 31, 2015, recoverability testing resulted in $11.2 million of impairment expense as the intangible assets assessed were determined not to be recoverable. The changes in the carrying amounts of other intangible assets for the year ended December 31, 2017 are as follows (in thousands): Predecessor Successor Amortization Period December 31, 2016 Fresh Start Adjustments On January 1, 2017 Acquisition / (Divestiture) Amortization Expense December 31, 2017 Customer relationships 8-15 years $ 80,826 $ (80,826) $ — $ 58,100 $ — $ 58,100 Trade name 10-15 years 29,994 26,506 56,500 11,800 — 68,300 Developed technology 5-15 years 21,516 (17,616) 3,900 (3,900) — — Non-compete 4-5 years 2,600 (2,600) — 1,600 — 1,600 Patents 10 years 35 (35) — — — — 134,971 (74,571) 60,400 67,600 — 128,000 Less: accumulated amortization (58,914) 58,914 — — (4,163) (4,163) Intangible assets, net $ 76,057 $ (15,657) $ 60,400 $ 67,600 $ (4,163) $ 123,837 Amortization expense for the years ended December 31, 2017, 2016 and 2015 totaled $4.2 million, $10.8 million and $14.5 million, respectively. Estimated amortization expense for each of the next five years and thereafter is as follows (in thousands): Years Ending December 31, 2018 $ 8,747 2019 8,747 2020 8,747 2021 8,747 2022 8,720 Thereafter 80,129 $ 123,837 C&J ENERGY SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 97 Note 6 - Income Taxes On December 22, 2017, the Tax Cuts and Jobs Act ("U.S. Tax Reform") was enacted by the U.S. federal government. The legislation significantly changed U.S. income tax law, by among other things, lowering the federal corporate income tax rate from 35% to 21%, effective January 1, 2018, implementing a territorial tax system and imposing a one-time toll charge on deemed repatriated earnings of foreign subsidiaries. In addition, there are many new provisions, including changes to expensing of qualified tangible property, the deductions for executive compensation and interest expense, a global intangible low-tax income provision, the base erosion anti-abuse tax, and a deduction for foreign-derived intangible income. The Company's consolidated financial statements for the year ended December 31, 2017 were impacted by the corporate income tax