Quarterly report pursuant to Section 13 or 15(d)

Goodwill and Other Intangible Assets

v2.4.1.9
Goodwill and Other Intangible Assets
 3 Months Ended
Dec. 31, 2014
Goodwill and Other Intangible Assets [Abstract]  
Goodwill and Other Intangible Assets
Note 13.   Goodwill and Other Intangible Assets

Goodwill is not amortized, but is subject to periodic review for impairment.  In general, when the carrying value of a reporting unit exceeds its implied fair value, an impairment loss must be recognized.  For purposes of testing for impairment, the Company uses a combination of valuation techniques, including discounted cash flows.  Intangible assets are amortized over their estimated useful lives, unless such lives are considered to be indefinite.  The Company performs its annual impairment review of goodwill and indefinite lived trade names in the second fiscal quarter.  A significant decline in cash flows generated from these assets may result in a write-down of the carrying values of the related assets.  The Company performed its annual impairment reviews in the second quarters of fiscal 2014 and 2013 and determined that no adjustments to the carrying values of goodwill were necessary.  Recent economic conditions in Europe have unfavorably impacted the operating results of the graphics imaging business within the SGK Brand Solutions segment.  For the graphics imaging reporting unit in 2014, the estimated fair value exceeded its carrying value by less than 10%, resulting in no goodwill impairment for the unit.  While the graphics imaging reporting unit passed the first step of the impairment test, if its operating profits or another significant assumption were to deteriorate in the future, it could adversely affect the estimated fair value of the reporting unit.  Factors that could have a negative impact on the estimated fair value of the graphics imaging reporting unit include a further delay in the recovery of the European market, continued pricing pressure, declines in expected volumes, and an increase in discount rates.  If the Company is unsuccessful in its plans to recover the profitability of this business, the estimated fair value could decline and lead to a potential goodwill impairment in the future.  The graphics imaging reporting unit did not include Schawk at the time of the fiscal 2014 impairment review.  Schawk will be included in the graphics imaging reporting unit for the fiscal 2015 impairment review.

A summary of the carrying amount of goodwill attributable to each segment as well as the changes in such amounts are as follows:

                 
   
SGK Brand Solutions
    
Memorialization
    
Industrial
    
Consolidated
  
                 
Goodwill
  
$
501,050
    
$
278,282
    
$
50,887
    
$
830,219
  
Accumulated impairment losses
    
(5,752
)
    
(5,000
)
    
-
      
(10,752
)
Balance at September 30, 2014
    
495,298
      
273,282
      
50,887
      
819,467
  
                                 
Additions during period
    
-
      
-
      
-
      
-
  
Translation and other  adjustments
    
(12,829
)
    
(1,439
)
    
(69
)
    
(14,335
)
Goodwill
    
488,223
      
276,843
      
50,818
      
815,884
  
Accumulated impairment losses
    
(5,752
)
    
(5,000
)
    
-
      
(10,752
)
Balance at December 31, 2014
  
$
482,471
    
$
271,843
    
$
50,818
    
$
805,132
  
 
The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of December 31, 2014 and September 30, 2014, respectively.

   
Carrying
    
Accumulated
    
Dispositions
      
   
Amount
    
Amortization
        
Net
  
December 31, 2014:
                
Trade names
  
$
142,356
    
$
-
*
  
$
-
    
$
142,356
  
Trade names
    
2,765
      
(2,107
)
    
-
      
658
  
Customer relationships
    
254,743
      
(28,926
)
    
(7,715
)
    
218,102
  
Copyrights/patents/other
    
14,441
      
(9,752
)
    
(2,890
)
    
1,799
  
   
$
414,305
    
$
(40,785
)
  
$
(10,605
)
  
$
362,915
  
                                 
September 30, 2014:
                                
Trade names
  
$
142,529
    
$
-
*
  
$
-
    
$
142,529
  
Trade names
    
2,854
      
(2,121
)
    
-
      
733
  
Customer relationships
    
258,441
      
(24,785
)
    
-
      
233,656
  
Copyrights/patents/other
    
14,528
      
(9,584
)
    
-
      
4,944
  
   
$
418,352
    
$
(36,490
)
  
$
-
    
$
381,862
  
* Not subject to amortization
                          

The net change in intangible assets during the three months ended December 31, 2014 included the impact of foreign currency fluctuations during the period and additional amortization.  In addition, the Company completed the sale of a majority ownership in its Schawk Digital Solutions business, which was acquired in 2014 as part of the Schawk acquisition.  Net proceeds from this transaction totaled approximately $10,400, and the sale primarily resulted in the disposal of working capital and intangible assets, and the recognition of a cost-basis investment in this business.  No gain or loss was recognized on the sale.

Amortization expense on intangible assets was $4,650 and $1,174 for the three-month periods ended December 31, 2014 and 2013, respectively.  The remaining amortization expense is estimated to be $14,552 in 2015, $18,308 in 2016, $17,295 in 2017, $16,170 in 2018 and $15,298 in 2019.