GOODWILL AND OTHER INTANGIBLE ASSETS

8. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill Impairment Charges. We performed our annual impairment testing for goodwill and other intangible assets as of October 1, 2012. We evaluate goodwill and other intangible assets for impairment using a two-step process. The first step is to identify potential impairment by comparing the fair value of the reporting unit to the book value, including goodwill. If the fair value of the reporting unit exceeds the book value, goodwill is not considered impaired. If the book value exceeds the fair value, the second step of the process is performed to measure the amount of impairment. Our goodwill evaluations utilized discounted cash flow analyses and market multiple analyses in estimating fair value. Our weighting of the discounted cash flow and market approaches varies by each reporting unit based on factors specific to each reporting unit. Inherent in our fair value determinations are certain judgments and estimates relating to future cash flows, including interpretation of current economic indicators and market conditions, overall economic conditions and our strategic operational plans with regard to our operations. In addition, to the extent significant changes occur in market conditions, overall economic conditions or our strategic operational plan, it is possible that goodwill not currently impaired may become impaired in the future.

We have two segments that contain reporting units with goodwill and intangible assets. The chlorovinyls segment includes goodwill in our compound reporting unit and the building products segment includes goodwill primarily in our window and door profiles and our siding reporting units. The estimated fair value of the compound and siding reporting units exceeds the carrying value by more than 10 percent. Our window and door reporting unit's fair value also exceeded its carrying value by more than 10 percent. Its future earnings are significantly influenced by a recovery in the North American housing and industrial construction markets. Based on our sensitivity analysis, a 10 percent decrease in our annual earnings before interest and tax margin assumption or a greater than 10 percent decrease in our terminal multiple assumption used in our cash flow models for our window and door reporting unit could result in the carrying value exceeding the fair value. This would require us to perform step two of the impairment testing. Based on the information above, the Company determined that there were no goodwill impairments in 2012, 2011 or 2010.

In February 2011, we acquired Exterior Portfolio, which is now part of our building products segment. The purchase price was allocated to the assets acquired and liabilities assumed based upon the estimated fair value at the date of the acquisition, including the following allocations to goodwill and other intangible assets: $25.5 million to customer relationships, $5.5 million to technology, $4.5 million to trade names and the remaining $7.5 million to goodwill. In connection with the finalizing the allocation of the purchase price in February, 2012, we made certain measurement period adjustments which had the impact of increasing goodwill by $1.1 million.

Goodwill. The following table provides the detail of the changes made to goodwill by reportable segment during the years ended December 31, 2012 and 2011.

*(In thousands)*	Chlorovinyls			Building Products			Total

Gross goodwill at December 31, 2010	$	245,266		$	152,058		$	397,324
Addition from acquisition		-			6,388			6,388
Foreign currency translation adjustment		(2,411	)		-			(2,411	)

Gross goodwill at December 31, 2011		242,855			158,446			401,301
Accumulated impairment losses at December 31, 2011		(55,487	)		(132,206	)		(187,693	)

Net goodwill at December 31, 2011	$	187,368		$	26,240		$	213,608

Gross goodwill at December 31, 2011	$	242,855		$	158,446		$	401,301
Addition from acquisition		-			1,084			1,084
Foreign currency translation adjustment		2,523			-			2,523

Gross goodwill at December 31, 2012		245,378			159,530			404,908
Accumulated impairment losses at December 31, 2012		(55,487	)		(132,206	)		(187,693	)

Net goodwill at December 31, 2012	$	189,891		$	27,324		$	217,215

Indefinite-lived intangible assets. At December 31, 2012 and December 31, 2011 our indefinite-lived assets consisted only of trade names. The following table provides the detail of the changes made to indefinite-lived intangible assets by reporting segment as of December 31, 2012 and 2011:

*(In thousands)*	Chlorovinyls			Building Products			Total

Balance at December 31, 2010	$	372		$	4,247		$	4,619
Addition from acquisition		-			4,500			4,500
Foreign currency translation adjustment		(8	)		(46	)		(54	)

Balance at December 31, 2011		364			8,701			9,065
Foreign currency translation adjustment		9			47			56

Balance at December 31, 2012	$	373		$	8,748		$	9,121

Definite-lived intangible assets. At December 31, 2012 and 2011, we also had customer relationship and technology intangible assets that relate to our building products segment, which are our only definite-lived intangible assets. As noted above, an additional $25.5 million attributable to customer relationships and $5.5 million attributable to technology relating to the Exterior Portfolio acquisition are included in the December 31, 2012 and 2011 building products segment balances.

The following table provides the detail of definite-lived intangible assets at December 31, 2012 and 2011:

	Building Products

*(In thousands)*	2012			2011
Gross carrying amounts at December 31:
Customer relationships	$	35,238		$	35,238
Technology		17,367			17,367

Total		52,605			52,605
Accumulated amortization at December 31:
Customer relationships		(8,695	)		(6,860	)
Technology		(9,608	)		(8,095	)

Total		(18,303	)		(14,955	)
Net carrying amounts at December 31:
Customer relationships		26,543			28,378
Technology		7,759			9,272

Total	$	34,302		$	37,650

The weighted average estimated useful life remaining for customer relationships and technology is approximately 15 years and 5 years, respectively. Amortization expense for the definite-lived intangible assets was $3.3 million, $3.1 million and $1.0 million for the years ended December 31, 2012, 2011 and 2010, respectively. Total definite-lived intangible assets estimated annual amortization expense for the next five fiscal years is approximately $3.3 million per year.

- 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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