GOODWILL AND OTHER INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2015

GOODWILL AND OTHER INTANGIBLE ASSETS [Abstract]

NOTE 8 - GOODWILL AND OTHER INTANGIBLE ASSETS

The following table presents the changes in the carrying amount of goodwill and other intangible assets during the nine months ended September 30, 2015 (in thousands):

	Goodwill			Other Intangible Assets			Total

Balance as of December 31, 2014	$	253,312		$	130,333		$	383,645
Acquired during the period		11,364			7,264			18,628
Impairment		(57,816	)¹		(1,072	)²		(58,888	)
Translation adjustment		-			(3,017	)		(3,017	)
Amortization		-			(15,907	)		(15,907	)
Balance as of September 30, 2015	$	206,860		$	117,601		$	324,461

(1) Impairment of goodwill associated with acquisition of B27.

(2) Complete write-off of vendor agreement due to termination of agreement by ITT Goulds during the third quarter of 2015.

The following table presents goodwill balance by reportable segment as of September 30, 2015 and December 31, 2014 (in thousands):

	September 30, 2015		December 31, 2014
Service Centers	$	168,862	$	167,302
Innovative Pumping Solutions		20,860		68,872
Supply Chain Services		17,138		17,138
Total	$	206,860	$	253,312

We perform an analysis of goodwill on an annual basis unless an event occurs that triggers additional interim testing. The sustained decline in crude oil prices, reduced capital spending by customers and reduced revenue expectations were determined to be a triggering event during the third quarter of 2015. This triggering event required us to perform testing for possible goodwill impairment in two of our reporting units, and our step one testing indicated there may be an impairment in our B27 IPS and B27 Service Centers reporting units. No triggering event was identified in our other reporting units. Step two of the goodwill impairment testing for the reporting units was performed preliminarily during the third quarter of 2015. Our preliminary analysis concluded that $48.0 million of our B27 IPS reporting unit’s goodwill and $9.8 million of our B27 Service Centers reporting unit’s goodwill was impaired. The remaining goodwill for the B27 IPS and B27 Service Centers reporting units at September 30, 2015 were $4.9 million and $10.3 million, respectively. Step two testing will be completed in the fourth quarter of 2015 and any adjustment to the amount recorded, which could differ materially, will be recorded in the fourth quarter of 2015.

As of October 1, 2014, DXP determined it had eight reporting units. The DXP Core Supply Chain Services, DXP Core IPS, DXP Core Service Centers, Canada Service Centers and NatPro Service Centers reporting units had an aggregate goodwill value of $180.3 million at December 31, 2014. The fair value of each of these reporting units as of October 1, 2014 was substantially in excess of each reporting unit’s carrying value. The remaining reporting units, B27 Service Centers, B27 IPS and NatPro IPS, recorded impairment losses during the fourth quarter of 2014. The NatPro IPS goodwill was reduced to zero with the impairment, and the remaining aggregate goodwill for the B27 Service Centers and B27 IPS reporting units was $73 million at December 31, 2014.

The following table presents a summary of amortizable other intangible assets (in thousands):

	As of September 30, 2015							As of December 31, 2014
	Gross Carrying Amount		Accumulated Amortization			Carrying Amount, net		Gross Carrying Amount		Accumulated Amortization			Carrying Amount, net
Vendor agreements	$	2,496	$	(2,496	)¹	$	-	$	2,496	$	(1,330	)	$	1,166
Customer relationships		195,580		(78,502	)		117,078		192,512		(63,957	)		128,555
Non-compete agreements		1,815		(1,292	)		523		1,737		(1,125	)		612
Total	$	199,891	$	(82,290	)	$	117,601	$	196,745	$	(66,412	)	$	130,333

(1) Complete write-off due to termination of agreement by ITT Goulds.

Other intangible assets are amortized according to estimated economic benefits over their estimated useful lives.

- 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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