Goodwill and Intangible Assets

12 Months Ended

Oct. 02, 2016

6. Goodwill and Intangible Assets

The following table summarizes the changes in the carrying value of goodwill:

	WEI			RME			Total
	(in thousands)
Balance at September 28, 2014	$	281,930		$	432,260		$	714,190
Goodwill additions		–			6,272			6,272
Foreign exchange translation		(27,479	)		(33,486	)		(60,965	)
Goodwill impairment		(43,703	)		(14,415	)		(58,118	)

Balance at September 27, 2015		210,748			390,631			601,379
Goodwill additions		9,080			98,538			107,618
Goodwill adjustment		–			1,687			1,687
Foreign exchange translation		2,125			5,179			7,304

Balance at October 2, 2016	$	221,953		$	496,035		$	717,988

We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter. Our last review at June 27, 2016 (i.e. the first day of our fourth quarter in fiscal 2016), indicated that we had no impairment of goodwill, and all of our reporting units had estimated fair values that were in excess of their carrying values, including goodwill. We had no reporting units that had estimated fair values that exceeded their carrying values by less than 20%, excluding the impact of acquisitions completed within the last two fiscal years. In addition, we regularly evaluate whether events and circumstances have occurred that may indicate a potential change in the recoverability of goodwill. We perform interim goodwill impairment reviews between our annual reviews if certain events and circumstances have occurred, such as a deterioration in general economic conditions; an increase in the competitive environment; a change in management, key personnel, strategy or customers; negative or declining cash flows; or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods.

In the fourth quarter of fiscal 2015, the mining sector continued to contract in response to lower global growth expectations driven in large part by China's actual and projected slower economic growth. Consistent with this trend, our mining customers continued their curtailment of capital spending for new mining projects. As a result, our Global Mining Practice ("GMP") reporting unit experienced a 25% decline in revenue in the fourth quarter of fiscal 2015 compared to the same period of fiscal 2014. This negative trend was compared to the expected revenue growth of approximately 3% in the previous goodwill impairment test, performed as of June 30, 2014. In response to these results, we performed a strategic review of GMP in the fourth quarter of fiscal 2015, and determined that our mining activities would likely decline further in fiscal 2016, and that revenue and profits would not return to acceptable levels of performance in the foreseeable future. We also decided to redeploy a significant portion of our mining resources into other operational areas that have better growth and profitability prospects. Consequently, as of the first day of fiscal 2016, GMP was no longer a reporting unit. We considered GMP's financial performance and prospects in our goodwill impairment analysis in the fourth quarter of fiscal 2015 and determined that GMP's fair value had fallen significantly below its carrying value, including goodwill. As required, we performed further analysis to measure the amount of the impairment loss and, as a result, we wrote-off all of GMP's goodwill and identifiable intangible assets and recorded a related impairment charge of $60.8 million ($57.3 million after-tax) in the fourth quarter of fiscal 2015. The related goodwill and identifiable intangible assets that were determined not to be recoverable totaled $58.1 million and $2.7 million, respectively.

Our fourth quarter 2016 and 2015 goodwill impairment reviews indicated that we had no other impairment of goodwill, and all of our other reporting units had estimated fair values that were in excess of their carrying values, including goodwill. Although we believe that our estimates of fair value for these reporting units are reasonable, if financial performance for these reporting units falls significantly below our expectations or market prices for similar business decline, the goodwill for these reporting units could become impaired.

Foreign exchange impact relates to our foreign subsidiaries with functional currencies that are different than our reporting currency. The gross amounts of goodwill for WEI were $304.4 million and $293.1 million at October 2, 2016 and September 27, 2015, respectively, excluding $82.4 million of accumulated impairment. The gross amounts of goodwill for RME were $529.2 million and $423.8 million at October 2, 2016 and September 27, 2015, respectively, excluding $33.2 million of accumulated impairment.

The gross amount and accumulated amortization of our acquired identifiable intangible assets with finite useful lives included in "Intangible assets – net" on the consolidated balance sheets, were as follows:

	Fiscal Year Ended
	October 2, 2016							September 27, 2015
	Weighted- Average Remaining Life (in years)		Gross Amount		Accumulated Amortization			Gross Amount		Accumulated Amortization
	($ in thousands)
Non-compete agreements		0.6	$	881	$	(840	)	$	819	$	(587	)
Client relations		3.0		112,367		(83,514	)		106,676		(67,726	)
Backlog		2.2		23,018		(7,536	)		2,115		(1,444	)
Technology and trade names		4.0		7,778		(3,192	)		2,506		(2,027	)

Total			$	144,044	$	(95,082	)	$	112,116	$	(71,784	)

Foreign currency translation adjustments reduced net identifiable intangible assets by $1.1 million in fiscal 2016. Amortization expense for the identifiable intangible assets for fiscal 2016, 2015 and 2014 was $22.1 million, $20.2 million and $27.3 million, respectively.

Estimated amortization expense for the succeeding five years and beyond is as follows:

	Amount
	(in thousands)
2017	$	22,617
2018		14,295
2019		6,989
2020		3,755
2021		666
Beyond		640

Total	$	48,962

- 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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