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Goodwill and Other Intangible Assets, net | 9 Months Ended
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Sep. 30, 2016
Goodwill and Other Intangible Assets, net |
Goodwill and Other Intangible Assets, net | Note 10—Goodwill and Other Intangible Assets, net During the third quarter of 2016, the Company recognized impairment charges within its CBF segment related to the Wellman® trade name of $11.5 million and goodwill of $130.0 million, and as a result, the carrying value at September 30, 2016 of the Wellman® trade name is $35.4 million and goodwill is $96.5 million. In the third quarter of 2016, the Company concluded that its expectations of recovery in the near term in CBF’s related end markets had declined to the extent that it was more likely than not that the carrying value of the Wellman® trade name and CBF reporting unit were below their carrying values. Consistent with its accounting policies, the Company performed the impairment tests for these assets through a one-step process for the Wellman® trade name and a two-step process for goodwill. Wellman® Trade name The Company based its estimate of fair value of the Wellman® trade name on the income approach utilizing the discounted future cash flow method. As part of estimating discounted future cash flows attributable to the Wellman® trade name, management estimated future revenues, royalty rates and discount rates. These represent the most significant assumptions used in the Company’s evaluation of the fair value of the Wellman® trade name (i.e., Level 3 measurements). As a result, management determined that the fair value of the Wellman® trade name was below its carrying value and recorded an impairment charge equal to the difference as noted above. Goodwill Similarly, for Step 1 of the two-step goodwill impairment test, the Company estimated the fair value of the CBF reporting unit based on the income approach utilizing the discounted cash flow method. Estimated industry weighted average cost of capital (“WACC”) and earnings before interest and taxes (“EBIT”) margins for the CBF reporting unit represent the most significant assumptions used in the Company’s evaluation of fair value (i.e., Level 3 measurements). As a result, the Company determined that the fair value of the CBF reporting unit was below its carrying value by approximately 25% and therefore Step 2 of the goodwill impairment test was required to measure the amount of the Goodwill impairment. In performing the Step 2 analysis, the Company was required to allocate the reporting units’ fair value to the estimated fair values of the CBF reporting unit’s underlying asset and liabilities, both those recognized and unrecognized, with the residual amount reflecting the implied value of goodwill at September 30, 2016. As a result, the carrying amount of goodwill approximates the implied value of goodwill at September 30, 2016. The changes in the carrying amount of goodwill for the nine months ended September 30, 2016 were as follows:
|  | Construction |  | Interconnect |  | Fluid |  | Brake and |  | FoodService |  |  |  |
(in millions) |  | Materials |  | Technologies |  | Technologies |  | Friction |  | Products |  | Total |
Balance at January 1, 2016 |  | $ | 118.7 |  | $ | 555.4 |  | $ | 173.4 |  | $ | 226.6 |  | $ | 60.3 |  | $ | 1,134.4 |
Goodwill acquired during year (1) |  |  | - |  |  | 39.7 |  |  | 2.7 |  |  | - |  |  | - |  |  | 42.4 |
Impairment charges |  |  | - |  |  | - |  |  | - |  |  | (130.0) |  |  | - |  |  | (130.0) |
Measurement period adjustments (1) |  |  | - |  |  | - |  |  | (0.3) |  |  | - |  |  | - |  |  | (0.3) |
Currency translation |  |  | 1.2 |  |  | - |  |  | (1.1) |  |  | (0.1) |  |  | - |  |  | - |
Balance at September 30, 2016 |  | $ | 119.9 |  | $ | 595.1 |  | $ | 174.7 |  | $ | 96.5 |  | $ | 60.3 |  | $ | 1,046.5 |
| (1) |  | See Note 4 for further information on goodwill resulting from recent acquisitions.
The Company’s other intangible assets, net at September 30, 2016, were as follows:
|  | Acquired |  | Accumulated |  | Net Book |
(in millions) |  | Cost (2) |  | Amortization |  | Value |
Assets subject to amortization: |  |  |  |  |  |  |  |  |  |
Intellectual property |  | $ | 199.9 |  | $ | (68.6) |  | $ | 131.3 |
Customer relationships |  |  | 688.6 |  |  | (191.9) |  |  | 496.7 |
Other |  |  | 14.2 |  |  | (11.4) |  |  | 2.8 |
Assets not subject to amortization: |  |  |  |  |  |  |  |  |  |
Trade names |  |  | 239.7 |  |  | - |  |  | 239.7 |
Other intangible assets, net |  | $ | 1,142.4 |  | $ | (271.9) |  | $ | 870.5 |
The Company’s other intangible assets, net at December 31, 2015, were as follows:
|  | Acquired |  | Accumulated |  | Net Book |
(in millions) |  | Cost (2) |  | Amortization |  | Value |
Assets subject to amortization: |  |  |  |  |  |  |  |  |  |
Intellectual property |  | $ | 180.7 |  | $ | (55.0) |  | $ | 125.7 |
Customer relationships |  |  | 673.9 |  |  | (160.5) |  |  | 513.4 |
Other |  |  | 13.5 |  |  | (10.6) |  |  | 2.9 |
Assets not subject to amortization: |  |  |  |  |  |  |  |  |  |
Trade names |  |  | 245.8 |  |  | - |  |  | 245.8 |
Other intangible assets, net |  | $ | 1,113.9 |  | $ | (226.1) |  | $ | 887.8 |
| (2) |  | Acquired cost is net of accumulated impairments.
The net book values of other intangible assets, net by reportable segment were as follows:
|  | September 30, |  | December 31, |
(in millions) |  | 2016 |  | 2015 |
Carlisle Construction Materials |  | $ | 59.2 |  | $ | 60.9 |
Carlisle Interconnect Technologies |  |  | 360.5 |  |  | 357.3 |
Carlisle Fluid Technologies |  |  | 324.5 |  |  | 325.3 |
Carlisle Brake & Friction |  |  | 100.9 |  |  | 117.2 |
Carlisle FoodService Products |  |  | 25.4 |  |  | 27.1 |
Total |  | $ | 870.5 |  | $ | 887.8 |

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16373-109275 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16265-109275 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16323-109275 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13816-109267 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13854-109267 + Details
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