Note 8 - Goodwill:

Substantially all of our goodwill is related to our component products operations and was generated from CompX’s acquisitions of certain business units. Prior to December 31, 2012, we also had approximately $6.4 million of goodwill which resulted from our acquisition of our subsidiary, EWI Re, Inc., (EWI), an insurance brokerage and risk management services company. EWI brokers certain insurance policies for Contran and certain of its affiliates, including us and Kronos, as well as certain third parties. See Note 16.

We have assigned goodwill related to the component products operations to three reporting units (as that term is defined in ASC Topic 350-20-20 Goodwill): one consisting of CompX’s security products operations, one consisting of CompX’s furniture components operations and one consisting of CompX’s marine component operations. Prior to 2012, all of the goodwill related to CompX’s marine components operations (which aggregated $10.1 million) was impaired. Our gross goodwill at December 31, 2014 was $43.7 million.

We test for Goodwill impairment at the reporting unit level. In accordance with ASC 350-20-35, we test for goodwill impairment during the third quarter of each year or when circumstances arise that indicate impairment might be present. Prior to 2013, we used a quantitative assessment in determining the estimated fair value of the reporting units, using appropriate valuation techniques such as discounted cash flows. Such discounted cash flows are a Level 3 input as defined by ASC 820-10-35. If the carrying amount of goodwill exceeds its implied fair value, an impairment charge is recorded. In 2013 we adopted the guidance in ASU No. 2011-08 for testing goodwill for impairment by assessing qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Based on our qualitative assessment, a quantitative assessment was not required for 2013 or 2014.

In 2012, 2013 and 2014, goodwill for all applicable reporting units was tested for impairment in the third quarter of each year in connection with our annual testing. No impairment was indicated as part of such annual review of goodwill. However, as a result of the December 2012 disposition of CompX’s furniture components business and the December 2012 sale of all common stock of TIMET owned by Contran Corporation and its affiliates (including us), a significant portion of EWI’s insurance brokerage business was lost. Consequently, we reevaluated goodwill associated with EWI due to the triggering event caused by the significant impact these dispositions had on EWI’s business and concluded that all of our goodwill related to EWI was impaired. Accordingly, we recognized a $6.4 million goodwill impairment in December 2012. In addition, we had goodwill of approximately $14.3 million attributable to the disposed CompX furniture components operations. In December 2012 we sold CompX’s furniture components operations. See Note 2.

Changes in the carrying amount of our goodwill related to CompX’s two reporting units as well as the goodwill related to EWI during the past three years are presented in the table below.

	Security Products			Furniture Components		EWI Re, Inc.
	(In thousands)
Balance at December 31, 2011	$	13,991		$	27,156	$	6,406
Sale of disposed operations		(14,286	)		-		-
Goodwill impairment		-			-		(6,406	)
Changes in currency exchange rates		295			-		-

Balance at December 31, 2012, 2013 and 2014	$	-		$	27,156	$	-