Goodwill and Long-lived Assets, Net

12 Months Ended

Jan. 31, 2016

4. GOODWILL AND LONG-LIVED ASSETS, NET

The following sets forth the intangible assets by major asset class, all of which were acquired through business purchase transactions:


				January 31, 2016								January 31, 2015
	Useful Life			Original		Accumulated		Impairment		Net Book		Original		Accumulated		Net Book
	(Years)			Cost		Amortization		Charge		Value		Cost		Amortization		Value
Customer contracts and relationships	8	-	30	$	536.9	$	124.2	$	167.1	$	245.6	$	531.0	$	102.1	$	428.9
Covenants not to compete	4	-	5		18.2		7.4		10.7		0.1		17.2		6.5		10.7
Trade names	Indefinite				17.0		—		—		17.0		17.7		—		17.7
				$	572.1	$	131.6	$	177.8	$	262.7	$	565.9	$	108.6	$	457.3

Amortization expense of intangible assets was $23.7, $30.5, $19.9 and $2.8 for the years ended January 31, 2016, December 31, 2014 and 2013 and the one month ended January 31, 2015, respectively. Amortization expense is expected to be approximately $15.0 in each of the next five years.

In accordance with ASC 350, goodwill is not amortized but is subject to an annual impairment test. The continued downturn in the oil and gas industry, including the nearly 75% decrease in the number of onshore drilling rigs and the resulting significant cutbacks in the capital expenditures of our customers, represented a significant adverse change in the business climate, which indicated that the ESG reporting unit’s goodwill was impaired and ESG asset group’s long-lived assets may not be recoverable. As a result, during the third quarter ended October 31, 2015, the Company performed an interim goodwill impairment test and a long-lived asset recoverability test. The results of the goodwill impairment testing indicated that goodwill was impaired which resulted in a $310.4 goodwill impairment charge for the year ended January 31, 2016.

Long-lived assets, such as property and equipment and purchased intangibles subject to amortization, are tested for impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. An impairment loss is recognized when the undiscounted cash flows expected to be generated by an asset (or group of assets) is less than its carrying amount. Any required impairment loss is measured as the amount by which the asset’s carrying value exceeds its fair value and is recorded as a reduction in the carrying value of the related asset and a charge to operating results. Based on the impairment indicators above, we performed a long-lived asset impairment analysis and concluded the carrying amount of the long-lived assets exceeded the undiscounted cash flows of the ESG asset group. As a result, we recorded a $329.8 long-lived asset impairment charge, $177.8 related to identified intangible assets and $152.0 related to property and equipment for the year ended January 31, 2016.

The charges reflect the full value of the goodwill and identified intangible assets attributable to the ESG segment. The accumulated goodwill impairment losses (incurred in 2008 and 2015) totaled $601.1 as of January 31, 2016.

The changes in the carrying amount of goodwill for the years ended January 31, 2016 and December 31, 2014 and the one month ended January 31, 2015 are as follows:


Balance, December 31, 2013	$	1,069.8
Acquisitions		296.6
Effect of foreign currency translation		(37.7)
Balance, December 31, 2014		1,328.7
Purchase Price Adjustments		(21.7)
Effect of foreign currency translation		(20.5)
Balance, January 31, 2015		1,286.5
Acquisitions		2.5
Purchase Price Adjustments		(10.3)
Effect of foreign currency translation		(13.4)
Impairment		(310.4)
Balance, January 31, 2016	$	954.9

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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