Goodwill and Intangible Assets

The Company is required to test for impairment of goodwill and intangible assets on at least an annual basis. The Company conducted its annual impairment assessment as of October 1 for its five reporting units, noting no impairment in 2014, 2013 or 2012. Based on procedures conducted to test impairment of goodwill of the Company’s reporting units, Plasticos Novel do Nordeste S. A. (“Novel”) and Jamco Products, Inc. (“Jamco”) did not substantially exceed their carrying value as of our assessment date in 2014. The estimated fair value of Novel and Jamco exceeded their carrying values by approximately 10% and 20%, respectively. Although no goodwill impairment charge is required for 2014, it does present a risk of future impairment for the goodwill assigned to those reporting units. The decline in the fair values of these businesses was driven primarily by reduced profitability as a result of lower margins due to higher costs, primarily in raw materials and a prolonged economic downturn in the Brazilian economy impacting Novel. As a result, management decreased future projections of the operating results and cash flows in assessing goodwill at these reporting units. The Company tests for impairment whenever events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is below its carrying amount. Such events may include, but are not limited to, significant changes in economic and competitive conditions, the impact of the economic environment on the Company’s customer base or its businesses, or a material negative change in its relationships with significant customers.

In accordance with ASU No. 2011-08, Intangibles—Goodwill and Other (Topic 350), the Company first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the Company concludes that this is the case, it must perform the two-step test. Otherwise the Company does not perform the two-step test. During the 2014 annual review of goodwill, management proceeded directly to the two-step test for Novel and Jamco. In evaluating goodwill for impairment using the two-step test, the Company uses a combination of valuation techniques primarily using discounted cash flows to determine the fair values of its business reporting units and market based multiples as supporting evidence. The variables and assumptions used, all of which are level 3 fair value inputs, include the projections of future revenues and expenses, working capital, terminal values, discount rates and long term growth rates. The market multiples observed in sale transactions are determined separately for each reporting unit, and are based on the weighted average cost of capital for each of the Company’s reporting units, which ranged from 10.0% to 13.0% in 2014. In addition we make certain judgments about the selection of comparable companies used in determining market multiples in valuing our business units, as well as certain assumptions to allocate shared assets and liabilities to calculate values for each of our business units. The underlying assumptions used are based on historical actual experience and future expectations that are consistent with those used in the Company’s strategic plan. The Company compares the fair value of each of its reporting units to their respective carrying values, including related goodwill. We also compare our book value and the estimates of fair value of the reporting units to our market capitalization as of and at dates near the annual testing date. Management uses this comparison as additional evidence of the fair value of the Company, as our market capitalization may be suppressed by other factors such as the control premium associated with a controlling shareholder, our leverage or general expectations regarding future operating results and cash flows. In situations where the implied value of the Company under the Income or Market Approach are significantly different than our market capitalization we re-evaluate and adjust, if necessary, the assumptions underlying our Income and Market Approach models. Our estimate of the fair values of these business units, and the related goodwill, could change over time based on a variety of factors, including the aggregate market value of the Company’s common stock, actual operating performance of the underlying businesses or the impact of future events on the cost of capital and the related discount rates used.

The change in the carrying amount of goodwill for the years ended December 31, 2014 and 2013 is as follows:



	Distribution		Material Handling			Total
January 1, 2013	$	505	$	50,741		$	51,246
Reclassification of prepaid asset from Novel acquisition	—		1,028			1,028
Foreign currency translation	—		(1,199		)	(1,199		)
December 31, 2013	505		50,570			51,075
Acquisitions	—		19,812			19,812
Foreign currency translation	—		(4,248		)	(4,248		)
December 31, 2014	$	505	$	66,134		$	66,639

Intangible assets other than goodwill primarily consist of trade names, customer relationships, patents, and technology assets established in connection with acquisitions. These intangible assets, other than certain trade names, are amortized over their estimated useful lives. The Company performs an annual impairment assessment for the indefinite lived trade names which had a carrying value of $11,256 and $2,509 at December 31, 2014 and 2013, respectively. In performing this assessment the Company uses an income approach, based primarily on level 3 inputs, to estimate the fair value of the trade name. The Company records an impairment charge if the carrying value of the trade name exceeds the estimated fair value at the date of assessment.

Intangible assets at December 31, 2014 and 2013 consisted of the following:



		2014							2013
	Weighted Average Useful Life (years)	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Trade Names - Indefinite Lived		$	11,256	$	—		$	11,256	$	2,509	$	—		$	2,509
Trade Names	5.3	280		(110		)	170		280		(78		)	202
Customer Relationships	5.1	41,332		(7,964		)	33,368		7,968		(4,515		)	3,453
Technology	9.0	27,642		(2,552		)	25,090		5,502		(918		)	4,584
Patents	2.2	10,888		(8,538		)	2,350		10,899		(7,448		)	3,451
Non-Compete	0.0	150		(149		)	1		150		(94		)	56
		$	91,548	$	(19,313	)	$	72,235	$	27,308	$	(13,053	)	$	14,255

Intangible amortization expense was $6,466, $2,769 and $2,188 in 2014, 2013 and 2012, respectively. Estimated annual amortization expense for intangible assets with finite lives for the next five years is: $10,449 in 2015; $10,447 in 2016; $9,539 in 2017, $9,086 in 2018 and $8,521 in 2019.