Goodwill and other intangibles

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

6. Goodwill and other intangibles

Goodwill is not amortized, but is reviewed annually or more frequently if indicators arise, for impairment. The Company’s evaluation of goodwill impairment involves first assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit, as defined below, is less than its carrying amount. The Company may bypass this qualitative assessment, or determine that based on its qualitative assessment considering the totality of events and circumstances (including macroeconomic factors, industry and market considerations, current and projected financial performance, a sustained decrease in share price, or other factors), that additional impairment analysis is necessary. This additional analysis involves comparing the Company’s market capitalization relative to the carrying value of its equity and other factors deemed appropriate by management annually, as of October 1. However, actual fair values that could be realized in a transaction may differ from those used to evaluate the potential impairment of goodwill.

Goodwill was evaluated for impairment at the reporting unit level, which was defined as the operating segment level. At December 31, 2015 and 2014, goodwill recorded on the Company’s consolidated balance sheet was $41,466,000 and $23,546,000, respectively. The Company’s fair value measurement test, performed annually as of October 1, revealed no indications of impairment as of the respective balance sheet dates.

The activity in the Company’s goodwill as of December 31 was as follows:


	2015		2014
Balance at beginning of year	$	23,546	$	—
Acquisitions		17,920		23,546

Balance at end of year	$	41,466	$	23,546

Management reviews other intangible assets, which include backlog, customer relationships, developed technology and trade names and trademarks, for impairment when events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. In the event that impairment indicators exist, a further analysis is performed and if the sum of the expected undiscounted future cash flows resulting from the use of the asset were less than the carrying amount of the asset, an impairment loss equal to the excess of the asset’s carrying value over its fair value would be recorded. Management considers historical experience and all available information at the time the estimates of future cash flows are made, however, the actual cash values that could be realized may differ from those that are estimated. For the year ended December 31, 2015 and 2014, there were no indications of impairment.

Amortization expense was classified as follows in the Company’s consolidated statements of operations for the years ended December 31:


	2015		2014		2013
Cost of sales	$	742	$	1,134	$	40
Operating expenses		4,582		1,013		—

	$	5,324	$	2,147	$	40

The tables below shows the amortization period and intangible asset cost by intangible asset as of December 31, 2015 and December 31, 2014 and the accumulated amortization and net intangible asset value in total for all those intangible assets that related to the Company’s acquisitions, for the related period. Refer to Note 3, “Acquisitions” for a further discussion of these acquisitions.


			2015
Description of intangible	Amortization period		Gross amount		Accumulated amortization			Net amount
Backlog		18 months	$	1,800	$	(1,800	)	$	—
Customer relationships		13 years		34,940		(5,129	)		29,811
Developed technology		7 years		700		(113	)		587
Trade names and trademarks		13 years		1,700		(353	)		1,347

Total			$	39,140	$	(7,395	)	$	31,745


			2014
Description of intangible	Amortization period		Gross amount		Accumulated amortization			Net amount
Backlog		18 months	$	1,200	$	(1,095	)	$	105
Customer relationships		13 years		20,600		(926	)		19,674
Trade names and trademarks		13 years		1,700		(87	)		1,613

Total			$	23,500	$	(2,108	)	$	21,392

The weighted average useful life of those intangibles acquired and included in the table above was approximately 13 years as of December 31, 2015 and 2014.

The table below shows the estimated future amortization expense for intangible assets:


Year	Estimated amortization expense
2016	$	5,714
2017		4,837
2018		4,182
2019		3,638
2020		3,053
Thereafter		10,321

Total	$	31,745

- 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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