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GOODWILL, OTHER INTANGIBLE ASSETS AND RESTRUCTURING | 6 Months Ended
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Jun. 30, 2014
GOODWILL, OTHER INTANGIBLE ASSETS AND RESTRUCTURING |
GOODWILL, OTHER INTANGIBLE ASSETS AND RESTRUCTURING | 6. GOODWILL, OTHER INTANGIBLE ASSETS AND RESTRUCTURING Our intangible assets consist of goodwill, customer relationships, supply contracts, trade names, and technology. Goodwill is the excess of the cost of an acquired entity over the fair value of tangible and intangible assets (including customer lists, trade names and technology) acquired and liabilities assumed under purchase accounting for business combinations. Goodwill. We have two segments that contain reporting units with goodwill and intangible assets: our chlorovinyls segment includes goodwill in its chlor-alkali and derivatives and compound reporting units and our building products segment includes goodwill primarily in its siding reporting unit. During the quarter ended June 30, 2014, the Company recorded an immaterial correction of an error related to the overstatement of certain assets and deferred tax liabilities recorded in connection with the acquisition accounting for the Merged Business that were outside of the measurement period. The Company recognized a $0.7 million decrease in the fair value of acquired net assets and a $0.7 million increase to goodwill on the consolidated balance sheet as of June 30, 2014. Management performed an evaluation under Staff Accounting Bulletin No. 108 and concluded the effect of the adjustment is immaterial to the current and prior periods' financial statements. The following table provides the detail of the changes made to goodwill during the six months ended June 30, 2014.
(In millions) |  | Chlorovinyls |  | Building Products |  | Total |
--- | --- | --- | --- | --- | --- | --- | ---
Gross goodwill at December 31, 2013 |  | $ | 1,808.8 |  | $ | 160.3 |  | $ | 1,969.1 |
Accumulated impairment losses |  |  | (55.5 | ) |  | (150.4 | ) |  | (205.9 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net goodwill at December 31, 2013 |  | $ | 1,753.3 |  | $ | 9.9 |  | $ | 1,763.2 |
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Gross goodwill at December 31, 2013 |  | $ | 1,808.8 |  | $ | 160.3 |  | $ | 1,969.1 |
Adjustments |  |  | 0.7 |  |  | - |  |  | 0.7 |
Foreign currency translation adjustment |  | ​ | (0.5 | ) | ​ | - |  | ​ | (0.5 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Gross goodwill at June 30, 2014 |  |  | 1,809.0 |  |  | 160.3 |  |  | 1,969.3 |
Accumulated impairment losses |  | ​ | (55.5 | ) | ​ | (150.4 | ) | ​ | (205.9 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net goodwill at June 30, 2014 |  | $ | 1,753.5 |  | $ | 9.9 |  | $ | 1,763.4 |
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Indefinite-lived intangible assets. Our indefinite-lived intangible assets consisted of certain trade names with a carrying value of $6.0 million at June 30, 2014 and December 31, 2013 in our building products segment. Definite-lived intangible assets. At June 30, 2014 and December 31, 2013, we had definite-lived intangible assets in our building products segment that related to customer relationships and technology. In the acquisition of the Merged Business, we acquired definite-lived intangible assets in our chlorovinyls segment. The values of these assets acquired are $1.1 billion for customer relationships, $42.6 million for supply contracts, $14.9 million for technology and $6.0 million for trade names. At June 30, 2014 and December 31, 2013, there were no definite-lived intangible assets in our aromatics segment. The following table provides the definite-lived intangible assets, by reportable segment, as of June 30, 2014 and December 31, 2013.
|  | Chlorovinyls |  | Building Products |  | Total |
--- | --- | --- | --- | --- | --- | --- | ---
(In millions) |  | June 30, 2014 |  | December 31, 2013 |  | June 30, 2014 |  | December 31, 2013 |  | June 30, 2014 |  | December 31, 2013 |
Gross carrying amounts |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |
Customer relationships |  | $ | 1,142.3 |  | $ | 1,142.3 |  | $ | 32.2 |  | $ | 32.2 |  | $ | 1,174.5 |  | $ | 1,174.5 |
Supply contracts |  | ​ | 42.6 |  | ​ | 42.6 |  | ​ | - |  | ​ | - |  | ​ | 42.6 |  | ​ | 42.6 |
Trade names |  |  | 6.0 |  |  | 6.0 |  |  | - |  |  | - |  |  | 6.0 |  |  | 6.0 |
Technology |  | ​ | 14.9 |  | ​ | 14.9 |  | ​ | 17.4 |  | ​ | 17.4 |  | ​ | 32.3 |  | ​ | 32.3 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total |  |  | 1,205.8 |  |  | 1,205.8 |  |  | 49.6 |  |  | 49.6 |  |  | 1,255.4 |  |  | 1,255.4 |
Accumulated amortization: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Customer relationships |  |  | (89.6 | ) |  | (58.2 | ) |  | (11.2 | ) |  | (10.5 | ) |  | (100.8 | ) |  | (68.7 | )
Supply contracts |  | ​ | (3.0 | ) | ​ | (2.0 | ) | ​ | - |  | ​ | - |  | ​ | (3.0 | ) | ​ | (2.0 | )
Trade names |  |  | (0.5 | ) |  | (0.3 | ) |  | - |  |  | - |  |  | (0.5 | ) |  | (0.3 | )
Technology |  | ​ | (1.0 | ) | ​ | (0.6 | ) | ​ | (11.9 | ) | ​ | (11.1 | ) | ​ | (12.9 | ) | ​ | (11.7 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total |  |  | (94.1 | ) |  | (61.1 | ) |  | (23.1 | ) |  | (21.6 | ) |  | (117.2 | ) |  | (82.7 | )
Foreign currency translation adjustment: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |  |
Customer relationships |  |  | (4.4 | ) |  | (4.0 | ) |  | - |  |  | - |  |  | (4.4 | ) |  | (4.0 | )
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total |  | ​ | (4.4 | ) | ​ | (4.0 | ) | ​ | - |  | ​ | - |  | ​ | (4.4 | ) | ​ | (4.0 | )
Net carrying amounts |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Customer relationships |  | ​ | 1,048.3 |  | ​ | 1,080.1 |  | ​ | 21.0 |  | ​ | 21.7 |  | ​ | 1,069.3 |  | ​ | 1,101.8 |
Supply contracts |  |  | 39.6 |  |  | 40.6 |  |  | - |  |  | - |  |  | 39.6 |  |  | 40.6 |
Trade names |  | ​ | 5.5 |  | ​ | 5.7 |  | ​ | - |  | ​ | - |  | ​ | 5.5 |  | ​ | 5.7 |
Technology |  |  | 13.9 |  |  | 14.3 |  |  | 5.5 |  |  | 6.3 |  |  | 19.4 |  |  | 20.6 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Total |  | $ | 1,107.3 |  | $ | 1,140.7 |  | $ | 26.5 |  | $ | 28.0 |  | $ | 1,133.8 |  | $ | 1,168.7 |
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
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The weighted average estimated useful life remaining for customer relationships, supply contracts, definite-lived trade names and technology is approximately 17 years, 19 years, 16 years, and 16 years, respectively. Amortization expense for the definite-lived intangible assets was $16.8 million and $18.2 million for the three months ended June 30, 2014 and 2013, respectively and $33.6 million and $29.8 million for the six months ended June 30, 2014 and 2013, respectively. The estimated annual amortization expense for definite-lived intangible assets the next five fiscal years is approximately $67.1 million per year. Restructuring: In September 2013, we initiated a restructuring plan in our building products segment consisting of various cost saving initiatives, including the reduction of overhead and plant labor, and the consolidation of various plants, primarily in the window and door profiles reporting unit, to improve utilization and efficiencies. During the three and six month periods ended June 30, 2014, we recorded $1.8 million and $2.9 million, respectively, in restructuring charges in our building products segment that are included in Transaction-related costs and other, net in the unaudited condensed consolidated statements of operations. We expect to complete these restructuring initiatives in 2015 with additional expected restructuring charges in 2014 and 2015 totaling a combined $3.3 million.

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- 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 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16323-109275 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=14024403&loc=d3e13816-109267 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16373-109275 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16265-109275 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=14024403&loc=d3e13854-109267 + Details
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