Goodwill and Intangible Assets

3 Months Ended

Dec. 28, 2014

4.Goodwill and Intangible Assets

Effective September 29, 2014, we reorganized our core operations to better align them with our markets, resulting in two renamed reportable segments. We now report our water resources, water and wastewater treatment, environment, and infrastructure engineering activities in the WEI reportable segment. Our RME reportable segment includes our oil and gas, energy, mining, waste management, remediation, utilities, and international development services. We report the results of the wind-down of our non-core construction activities in the RCM reportable segment. Prior year amounts for reportable segments have been revised to conform to the current-year presentation.

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

	WEI		RME		RCM		Total
	(in thousands)

Balance at September 28, 2014	$	238,086	$	476,104	$	–	$	714,190
Goodwill additions	–		–		–		–
Foreign exchange impact	(5,452)		(9,905)		–		(15,357)
Balance at December 28, 2014	$	232,634	$	466,199	$	–	$	698,833

We perform our annual goodwill impairment review at the beginning of our fiscal fourth quarter. Our most recent review at June 30, 2014 (i.e. the first day of our fourth quarter in fiscal 2014), 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.

The reorganization of our core operations, described further in Note 10, “Reportable Segments”, also impacted the definition of our reporting units used for goodwill impairment testing. As a result, as of September 29, 2014, we performed impairment testing for goodwill under our new segment structure and determined that the estimated fair value of each reporting unit exceeded its corresponding carrying amount including recorded goodwill, and, as such, no impairment existed as of September 29, 2014. However, our Global Mining Practice (“GMP”) reporting unit had an estimated fair value that exceeded its carrying value by less than 20%. As of December 28, 2014, the goodwill amount for GMP was $65.6 million. Although we believe that our estimate of fair value for GMP is reasonable, if GMP’s financial performance falls significantly below our expectations or market prices for similar businesses decline, the goodwill for GMP 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 $263.7 million and $269.2 million at December 28, 2014 and September 28, 2014, respectively, excluding $31.1 million of accumulated impairment. The gross amounts of goodwill for RME were $492.6 million and $502.5 million at December 28, 2014 and September 28, 2014, respectively, excluding $26.4 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 condensed consolidated balance sheets, were as follows:

	December 28, 2014					September 28, 2014
	Weighted- Average Remaining Life (in Years)	Gross Amount		Accumulated Amortization		Gross Amount		Accumulated Amortization
	($ in thousands)

Non-compete agreements	1.9	$	1,033	$	(562)	$	1,086	$	(524)
Client relations	3.6	119,098		(64,742)		122,198		(61,117)
Backlog	0.1	1,209		(1,174)		1,283		(1,072)
Technology and trade names	1.9	2,815		(1,788)		2,917		(1,676)
Total		$	124,155	$	(68,266)	$	127,484	$	(64,389)

Foreign currency translation adjustments reduced net identifiable intangible assets by $1.3 million in the first quarter of fiscal 2015. Amortization expense for the identifiable intangible assets for the first quarters of fiscal 2015 and 2014 was $5.9 million and $8.6 million, respectively. Estimated amortization expense for the remainder of fiscal 2015 and succeeding years is as follows:

	Amount
	(in thousands)

2015	$	14,327
2016	16,713
2017	13,987
2018	5,968
2019	2,887
Beyond	2,007
Total	$	55,889

- 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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