Goodwill and Intangible Assets

12 Months Ended

Oct. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Note 5 — Goodwill and intangible assets

We account for goodwill and other intangible assets in accordance with the provisions of ASC 350 and account for business combinations using the acquisition method of accounting and accordingly, the assets and liabilities of the entities acquired are recorded at their estimated fair values at the acquisition date. Goodwill is the excess of purchase price over the fair value of tangible and identifiable intangible net assets acquired in various business combinations. Goodwill is not amortized but is tested for impairment annually at the reporting unit level, or more often if indications of impairment exist. We assess the fair value of reporting units on a non-recurring basis using a combination of two valuation methods, a market approach and an income approach, to estimate the fair value of our reporting units. The implied fair value of our reporting units is determined based on significant unobservable inputs; accordingly, these inputs fall within Level 3 of the fair value hierarchy.

Our reporting units are the Adhesive Dispensing Systems segment, the Industrial Coating Systems segment and one level below the Advanced Technology Systems segment.

The goodwill impairment test is a two-step process. In the first step, performed in the fourth quarter of each year, we estimate a reporting unit’s fair value using a combination of the discounted cash flow method of the Income Approach and the guideline public company method of the Market Approach and compare the result against the reporting unit’s carrying value of net assets. If the carrying value of a reporting unit exceeds its fair value, then a second step is performed to determine if goodwill is impaired. In the second step, a hypothetical purchase price allocation of the reporting unit’s assets and liabilities is performed using the fair value calculated in step one. The difference between the fair value of the reporting unit and the hypothetical fair value of assets and liabilities is the implied goodwill amount. Impairment is recorded if the carrying value of the reporting unit’s goodwill is higher than its implied goodwill. Based upon results of step one in 2014, 2013 and 2012, the second step of the goodwill impairment test was not necessary.

We acquired Avalon on August 8, 2014 and Dima on August 29, 2014. Determination of the preliminary goodwill associated with these acquisitions was completed with the assistance of an independent valuation specialist in October 2014. Since the dates of the valuations, no events or changes in circumstances have occurred that would more likely than not reduce the fair value of these acquisitions below their carrying values.

Changes in the carrying amount of goodwill during 2014 by operating segment follow:


	Adhesive Dispensing Systems			Advanced Technology Systems			Industrial Coating Systems		Total
Balance at October 31, 2013	$	407,269		$	507,884		$	24,058	$	939,211
Acquisitions		—			124,391			—		124,391
Currency effect		(10,223	)		(842	)		—		(11,065	)

Balance at October 31, 2014	$	397,046		$	631,433		$	24,058	$	1,052,537

Accumulated impairment losses, which were recorded in 2009, were $232,789 at October 31, 2014 and October 31, 2013. Of these losses, $229,173 related to the Advanced Technology Systems segment and $3,616 related to the Industrial Coating Systems segment.

Information regarding intangible assets subject to amortization follows:

October 31, 2014

Carrying
Amount

Accumulated
Amortization

Net Book Value

Customer relationships

200,028

41,910

158,118

Patent/technology costs

93,799

27,030

66,769

Trade name

77,846

12,173

65,673

Noncompete agreements

8,220

7,600

620

Other

1,369

1,239

130

Total

381,262

89,952

291,310


	October 31, 2013
	Carrying Amount		Accumulated Amortization		Net Book Value
Customer relationships	$	171,489	$	28,872	$	142,617
Patent/technology costs		85,414		21,145		64,269
Trade name		67,865		7,856		60,009
Noncompete agreements		9,965		8,091		1,874
Other		1,400		1,096		304

Total	$	336,133	$	67,060	$	269,073

Amortization expense for 2014 and 2013 was $25,308 and $22,672, respectively.

Estimated amortization expense for each of the five succeeding years follows:


Year	Amounts
2015	$	27,754
2016	$	27,075
2017	$	26,653
2018	$	26,366
2019	$	26,359

- 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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