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Note 8 - Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

Note

8

– Goodwill and Other Intangible Assets

The major components of goodwill and other intangible assets are:

		201 7								201 6
		Historical Cost				Accumulated Amortization				Historical C ost				Accumulated Amortization
Finite-lived intangible assets:
Customer relationships		$	7,966			$	4,791			$	11,885			$	4,650
Technology and drawings			6,758				3,121				6,741				2,804
Other intangibles			1,866				1,021				1,723				942
Total finite-lived intangible ass ets			16,590				8,933				20,349				8,396
Goodwill			27,551				-				28,030				-
Trade names and trademarks			2,710				-				2,888				-
Total		$	46,851			$	8,933			$	51,267			$	8,396

Amortization of intangible assets

was

$1.6

million,

$1.7

million and

$1.5

million in

2017,

2016

and

2015,

respectively. Amortization of these intangible assets for

2018

through

2022

is expected to approximate

$1.0

million per year.

Changes in the carrying value of goodwill during the years ended

December

 

31,

2017

and

2016

are as follows:

		Goodwill
Balance at December 31, 2015		$	24,559
Acquisitions			5,187
Impairment			(1,800	)
Foreign currency			84
Balance at December 31, 201 6			28,030
Acquisitions			-
Impairment			(925	)
Foreign currency			446
Balance at December 31, 201 7		$	27,551

The decreasing

demand for barge pumps for the marine transportation market, driven by low oil prices and overcapacity of inland barges, has continued to negatively affect the Bayou City Pump Company (“Bayou”) reporting unit, leading management to reconsider its estimates for future profitability of this reporting unit prior to the

October 1

annual goodwill impairment testing date in

2017

and thereby increasing the likelihood that the associated goodwill and other intangible assets could be impaired. As such, the Company performed an interim discounted cash flow analysis to test for potential impairment of goodwill pursuant to ASC

350.

As a result of this impairment test, the Company concluded that the goodwill was impaired and recorded a non-cash impairment charge of

$0.9

million which represented the full remaining amount of Bayou’s goodwill. This impairment charge is included in Impairment of goodwill and other intangible assets on the Condensed Consolidated Statements of Income.

For

201

7,

the Company used a quantitative analysis for the annual goodwill impairment testing as of

October 1

for its National Pump Company (“National”) reporting unit. The fair value for this reporting unit was estimated using a discounted cash flow model, which considered forecasted cash flows discounted at an estimated weighted-average cost of capital. The forecasted cash flows were based on the Company’s long-term operating plan and a terminal value was used to estimate the cash flows beyond the period covered by the operating plan. The weighted-average cost of capital is an estimate of the overall after-tax rate of return required by equity and debt market holders of a business enterprise. These analyses require the exercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates and the timing of expected future cash flows. Sensitivity analyses were performed around these assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values.

The resul

t of this goodwill impairment test indicated that

no

impairment existed at National. The Company’s annual impairment analysis performed as of

October 1, 2017

concluded that National’s fair value exceeded its carrying value by approximately

7%.

A sensitivity analysis was performed for the National reporting unit, assuming a hypothetical

50

basis point decrease in the expected long-term growth rate or a hypothetical

50

basis point increase in the weighted average cost of capital, and both scenarios independently yielded an estimated fair value for the National reporting unit slightly above carrying value. If recently depressed U.S. agricultural conditions continue for an extended time, this market’s related growth and profitability assumptions

may

reduce National’s indicated fair value to require a potential future impairment charge. Goodwill relating to the National reporting unit represents

3%

of the Company’s

December 31, 2017

total assets.

For

201

7,

for all other reporting units, the Company used a qualitative analysis for goodwill impairment testing as of

October 1.

This qualitative assessment included consideration of current industry and market conditions and circumstances as well as any mitigating factors that would most affect the fair value of the Company and these reporting units. Based on the assessment and consideration of the totality of the facts and circumstances, including the business environment in the

fourth

quarter of

2017,

the Company determined that it was

not

more likely than

not

that the fair value of the Company or these reporting units is less than their respective carrying amounts. As such,

no

goodwill impairments for these reporting units were recorded for the year ended

December 31, 2017.

Other indefinite-

lived intangible assets primarily consist of trademarks and trade names. The fair value of these assets is also tested annually for impairment as of

October 

1,

or whenever events or changes in circumstances indicate there

may

be a possible permanent loss of value. The fair value of these assets is determined using a royalty relief methodology similar to that employed when the associated assets were acquired, but using updated estimates of future sales, cash flows and profitability. For

2017

and

2016

the fair value of all indefinite lived intangible assets exceeded the respective carrying values.

Finite

-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount

may

not

be recovered through future net cash flows generated by the assets. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future net undiscounted cash flows estimated to be generated by such assets. Based upon our fiscal

2017

and

2016

quantitative and qualitative impairment analyses, except for Bayou’s customer relationship intangible asset and the risk related to National’s indicated fair value, the Company was

not

aware of any events or changes in circumstances that indicate the carrying value of its finite-lived intangible assets

may

not

be recoverable. In

2017,

due primarily to the continued decreased demand for barge pumps for the marine transportation market driven by low oil prices and overcapacity of inland barges, the Company performed a recoverability test related to Bayou’s customer relationship intangible asset pursuant to ASC

360.

As a result of the recoverability test, Bayou recorded a pre-tax non-cash customer relationship impairment charge of

$3.2

million, which represented the full amount of Bayou’s customer relationships. The impairment charge is included in Impairment of goodwill and other intangible assets on the Condensed Consolidated Statements of Income.

X

- References

No definition available.

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X

- 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
-URI http://asc.fasb.org/topic&trid=2144416

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