Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

5. GOODWILL AND INTANGIBLE ASSETS

Goodwill represents the excess of purchase price over the assigned fair values of the assets and liabilities assumed in conjunction with an acquisition. As discussed in Note 1, goodwill is reviewed for impairment annually at December 31 or whenever events occur or circumstances change that indicates goodwill may be impaired.

In evaluating goodwill, the Company looks at the long-term prospects for the reporting unit and recognizes that current performance may not be the best indicator of future prospects or value, which requires management judgment. The income approach is based upon projected future after-tax cash flows discounted to present value using factors that consider the timing and risk associated with the future after-tax cash flows. The market approach is based upon historical and/or forward-looking measures using multiples of revenue or EBITDA. The Company utilizes a weighted average of the income and market approaches, with a heavier weighting on the income approach because of the relatively limited number of comparable entities for which relevant multiples are available. If the carrying value of the reporting unit exceeds its calculated enterprise value, then the Company continues to assess the fair value of individual assets and liabilities, other than goodwill. The difference between the reporting unit enterprise value and the fair value of its identifiable net assets is the implied fair value of the reporting unit’s goodwill. A goodwill impairment loss is recorded for the difference between the implied fair value and its carrying value.

Goodwill related to the Company’s Tubular Products Group of $16.1 million was quantitatively evaluated with consideration of the income and market approaches as applicable. Due to negative impacts on our Tubular Products business as a result of the worldwide turmoil in crude oil markets, which became significant in the fourth quarter of 2014, we concluded that there was no implied fair value of the Tubular Products Group goodwill and that it should be completely written off as of December 31, 2014.

Goodwill related to the Company’s Water Transmission Group of $5.3 million was quantitatively evaluated with consideration of the income and market approaches as applicable. We concluded that Water Transmission Group goodwill was not impaired as of December 31, 2014.

Goodwill assigned to the Company’s Water Transmission and Tubular Products Groups is as follows (in thousands):


	Water Transmission		Tubular Products			Total
Goodwill balance, December 31, 2012	$	—	$	20,478		$	20,478
Additions		5,282		—			5,282

Goodwill balance, December 31, 2013		5,282		20,478			25,760

Adjustment for the sale of OCTG business		—		(4,412	)		(4,412	)
Fourth quarter impairment		—		(16,066	)		(16,066	)

Goodwill balance, December 31, 2014	$	5,282	$	—		$	5,282

The Company had allocated $4.4 million of goodwill to the two OCTG plants disposed in March 2014, and recorded the related write-off of that goodwill as part of the loss on sale of business in the Company’s consolidated statement of operations.

Intangible Assets

Intangible assets consist of the following as of December 31, 2014 (in thousands):


	Gross Carrying Amount		Accumulated Amortization			Intangible Assets, Net		Remaining Weighted-Average Amortization Period (in years)
Customer relationships	$	1,378	$	(138	)	$	1,240		9.0
Patents		1,162		(232	)		930		4.0
Trade names and trademarks		1,132		(75	)		1,057		14.0
Other (1)		295		(77	)		218		2.9

Total	$	3,967	$	(522	)	$	3,445		8.8

(1)	Other intangibles consist of favorable lease contracts and non-compete agreements

The Company recorded $0.5 million amortization expense in 2014 and zero amortization in 2013 and 2012. The estimated amortization expense for the next five fiscal years is as follows (in thousands):


2015		523
2016		523
2017		495
2018		459
2019		213
Thereafter		1,232

	$	3,445

- 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+ Details