Goodwill

As of December 31, 2015, the Company had $7.2 million of goodwill related to the March 2006 acquisition of Custom Steel; a subsidiary of Steel Technologies, Inc. The results attributable to Custom Steel are included in the manufacturing segment.

The Company performed a qualitative assessment as of March 1, 2015 and November 1, 2015 by considering the following relevant factors to determine whether it was more likely than not that the fair value of the reporting unit was greater than its carrying amount.


•	The North American railcar market has been, and ARI expects it to continue to be, highly cyclical. Based upon third party forecasts for the industry over the next several years, the Company expects demand will be near historical average levels.


•	ARI is subject to various laws and regulations. No significant assessments have been made by the various regulatory agencies against ARI.


•	The railcar manufacturing industry has historically been and continues to be extremely competitive.


•	ARI experienced three strong years of railcar order activity in 2012, 2013 and 2014. As the railcar industry was at a record backlog level at December, 31, 2014, orders slowed in 2015. However, the Company expects demand to be relatively consistent with historical average levels in line with industry forecasts, as mentioned above.


•	The primary long-lived assets at the reporting unit are machines with uses in various applications for numerous markets and industries. As such, management does not believe that there has been a significant decrease in the market value of the reporting unit’s long-lived assets.


•	The reporting unit has a history of positive operating cash flows that is expected to continue.


•	No part of the reporting unit’s net income is comprised of significant non-operating or non-recurring gains or losses, and no significant changes in balance sheet accruals were noted.


•	In addition, during 2015 there were no significant changes in the following with regard to the reporting unit that the Company expects to impact future results:


•	Key personnel;


•	Business strategy;


•	Buyer or supplier bargaining power; and


•	Legal factors.

After assessing the above factors, the Company determined that it was more likely than not that the fair value of the reporting unit was greater than its carrying amount, and therefore no further testing was necessary. Additionally, no impairment was recognized in any prior periods and there were no indicators of impairment since the annual assessment date.