Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

The changes in the carrying amount of goodwill by reportable segment for the years ended December 31, 2015, 2014 and 2013 are as follows:



(in thousands)	Grain			Plant Nutrient			Rail		Total
Balance as of January 1, 2013	$	38,165		$	16,222		$	—	$	54,387
Acquisitions	—			—			4,167		4,167
Balance as of December 31, 2013	38,165			16,222			4,167		58,554
Acquisitions	8,257			5,554					13,811
Balance as of December 31, 2014	46,422			21,776			4,167		72,365
Acquisitions	—			47,735			—		47,735
Impairments	$	(46,422	)	$	(9,744	)	$	—	$	(56,166	)
Balances of December 31, 2015	$	—		$	59,767		$	4,167	$	63,934

During the fourth quarter of 2015, the Company prospectively changed its annual goodwill impairment testing date from the last day of its fiscal year to the first day of October. The voluntary change was to better align its goodwill impairment testing procedures with its annual planning and budgeting process and to provide the Company with adequate time to evaluate goodwill for impairment. This change in accounting principle does not delay, accelerate, or avoid an impairment loss, nor does the change have a cumulative effect on pre-tax income, net income or loss, retained earnings, or net assets. This change was applied prospectively beginning on October 1, 2015. Retrospective application to prior periods did not occur, as it is impracticable to objectively determine the assumptions that would have been used in those earlier periods to estimate fair value.

In 2015, the Company performed quantitative assessments of goodwill. In 2014, the Company performed a combination of quantitative and qualitative assessments of goodwill.

The quantitative approach uses a two-step process. Step 1 compares the business enterprise value ("BEV") of each reporting unit with its carrying value. The BEV was computed based on both an income approach (discounted cash flows) and a market approach. The income approach uses a reporting unit's estimated future cash flows, discounted at the weighted average cost of capital of a hypothetical third-party buyer. The market approach estimates fair value by applying cash flow multiples to the reporting unit's operating performance. The multiples are derived from comparable publicly traded companies with similar operating and investment characteristics to the reporting unit. If the BEV is less than the carrying value for any reporting unit, then Step 2 must be performed. Step 2 compares the implied fair value of goodwill with the carrying amount of goodwill. Any excess of the carrying value of the goodwill over the implied fair value will be recorded as an impairment loss. The calculations of the BEV in Step 1 and the implied fair value of goodwill in Step 2 are based on significant unobservable inputs, such as price trends, customer demand, material costs, discount rates and asset replacement costs, and are classified as Level 3 in the fair value hierarchy.

In performing the qualitative assessment of goodwill, management considered the following relevant events and circumstances to determine if any reporting units were deemed to be at risk:


•	Macroeconomic conditions including, but not limited to deterioration in general economic conditions, limitation on accessing capital, or other developments in equity and credit markets;


•	Industry and market considerations such as a deterioration in the environment in which an entity operates, an increased competitive environment, a change in the market for an entity's products or services, or a regulatory or political development;


•	Adverse fluctuations in commodity prices


•	Cost factors such as increases in raw materials, labor, or other costs that have a negative effect on earnings and cash flows;


•	Overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods;


•	Other relevant entity-specific events such as changes in management, key personnel, strategy, or customers and;

•

Events affecting a reporting unit such as a change in the composition or carrying amount of its net assets, a more-likely-than-not expectation of selling or disposing all, or a portion, of a reporting unit, the testing for recoverability of a significant asset group within a reporting unit, or recognition of a goodwill impairment loss in the financial statements of a subsidiary that is a component of a reporting unit.

There is a certain degree of uncertainty associated with the key assumptions used. Potential events or changes in circumstances that could reasonably be expected to negatively affect the key assumptions include significant volatility in commodity prices or raw material prices and unanticipated changes in the economy or industries within which the businesses operate.

While performing the annual assessment of goodwill impairment in 2015, the Company recorded impairment losses related to our Grain and Farm Center reporting units of $54.2 million due to compressed margins over the past several years and anticipated unfavorable operating conditions in domestic and global commodity markets, including oil and ethanol, as well as foreign exchange impacts. This is in addition to the $2.0 million of impairment related to our Cob business which was recognized in the third quarter.

The Company's other intangible assets are as follows:



(in thousands)	Original Cost		Accumulated Amortization		Net Book Value
December 31, 2015
Intangible asset class
Customer list	$	42,561	$	12,130	$	30,431
Non-compete agreement	4,594		2,517		2,077
Supply agreement	9,806		3,955		5,851
Technology	15,500		2,483		13,017
Trademarks and patents	18,717		2,273		16,444
Lease intangible	5,479		4,586		893
Software	70,846		19,508		51,338
Other	1,953		1,764		189
	$	169,456	$	49,216	$	120,240
December 31, 2014
Intangible asset class
Customer list	$	21,757	$	10,374	$	11,383
Non-compete agreement	3,502		2,187		1,315
Supply agreement	9,806		3,082		6,724
Technology	2,100		1,225		875
Trademarks and patents	3,218		876		2,342
Lease intangible	5,985		4,422		1,563
Software	55,436		13,305		42,131
Other	1,904		1,695		209
	$	103,708	$	37,166	$	66,542

Amortization expense for intangible assets was $14.5 million, $8.8 million and $6.4 million for 2015, 2014 and 2013, respectively. Expected future annual amortization expense is as follows: 2016 -- $16.5 million; 2017 -- $15.8 million; 2018 -- $15.2 million; 2019 -- $14.3 million; and 2020 -- $13.2 million. In December 2014, the Company recorded an impairment of $1.5 million related to a customer list in the Grain Group.

- 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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