Goodwill and Other Intangible Assets, Net

6 Months Ended

Mar. 31, 2015

Goodwill and Other Intangible Assets, Net

Goodwill and Other Intangible Assets, Net

Note 8. Goodwill and Other Intangible Assets, Net

On January 7, 2015, the Company acquired the assets and operations of Leveltek Processing, LLC in LaPorte, Indiana for $14.6 million in cash (See Note 14, Acquisition). In connection with the acquisition, the Company recorded goodwill of $4,789 and customer relationships intangible assets of $2,100. As the customer relationships have a definite life, the Company amortizes them over a period of 16 years under an accelerated method.

The Company is required to assess goodwill and any indefinite-lived intangible assets for impairment annually, or more frequently if circumstances indicate impairment may have occurred. The analysis of potential impairment of goodwill requires a two-step approach. The first is the estimation of fair value of each reporting unit. If step one indicates that impairment potentially exists, the second step is performed to measure the amount of impairment, if any. Goodwill impairment occurs when the estimated fair value of goodwill is less than its carrying value.

The valuation methodology and underlying financial information included in our determination of fair value require significant management judgments. We use both market and income approaches to derive fair value. The judgments in these two approaches include, but are not limited to, comparable market multiples, long-term projections of future financial performance, and the selection of appropriate discount rates used to determine the present value of future cash flows. Changes in such estimates or the application of alternative assumptions could produce significantly different results. No impairment charges for goodwill were recorded in period ended March 31, 2015

In addition, the Company has patents, trademarks and other intangibles. As the patents have a definite life, they are amortized over lives ranging from two to fourteen years. The Company reviews patents for impairment whenever events or circumstances indicate that the carrying amount of a patent may not be recoverable. Recoverability of the patent asset is measured by a comparison of the carrying amount of the asset to the undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount exceeds the fair value of the asset.

As the trademarks have an indefinite life, the Company tests them for impairment at least annually as of August 31 (the annual impairment testing date). If the carrying value exceeds the fair value (determined by calculating a fair value based upon a discounted cash flow of an assumed royalty rate), impairment of the trademark may exist resulting in a charge to earnings to the extent of the impairment. No impairment was recognized in the years ended September 30, 2013 or 2014 because the fair value exceeded the carrying values. The Company has a non-compete agreement with a remaining life of eight months.

Amortization of the customer relationships, patents, non-competes, and other intangibles was $104 and $137 for the three-month periods ended March 31, 2014 and March 31, 2015, respectively, and $208 and $241 for the six-month periods ended March 31, 2014 and March 31, 2015, respectively.

The following represents the changes in the carrying value of goodwill for the period ended March 31, 2015:

Goodwill at September 30, 2014	$	—
Goodwill acquired — Leveltek-LaPorte Assets	4,789
Adjustments	—
Goodwill at March 31, 2015	$	4,789

The following represents a summary of intangible assets at September 30, 2014 and March 31, 2015:

September 30, 2014	Gross Amount		Accumulated Amortization			Carrying Amount
Patents	$	4,030	$	(2,813	)	$	1,217
Trademarks	3,800		—			3,800
Non-compete	500		(452		)	48
Other	330		(210		)	120
	$	8,660	$	(3,475	)	$	5,185

March 31, 2015	Gross Amount		Accumulated Amortization			Carrying Amount
Patents	$	4,030	$	(2,952	)	$	1,078
Trademarks	3,800		—			3,800
Customer relationships	2,100		(33		)	2,067
Non-compete	500		(488		)	12
Other	330		(243		)	87
	$	10,760	$	(3,716	)	$	7,044

Estimate of Aggregate Amortization Expense: Year Ended September 30,
2015 (remainder of fiscal year)		283
2016		432
2017		410
2018		410
2019		232
Thereafter		1,477

- 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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