GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in goodwill for the nine months ended September 30, 2016 were as follows (in thousands):



	Technical Services			Industrial & Field Services			Kleen Performance Products		SK Environmental Services		Lodging Services			Oil and Gas Field Services		Totals
Balance at January 1, 2016	$	49,267		$	105,286		$	49,755	$	216,589	$	32,208		$	—	$	453,105
Acquired from current period acquisitions	8,989			4,925			18,629		17,524		—			—		50,067
Measurement period adjustment from prior period acquisitions	—			—			—		2,095		—			—		2,095
Decrease from disposition of business	—			(4,994		)	—									(4,994		)
Goodwill impairment charge											(34,013		)			(34,013		)
Foreign currency translation and other	(619		)	1,132			98		1,957		1,805			—		4,373
Balance at September 30, 2016	$	57,637		$	106,349		$	68,482	$	238,165	$	—		$	—	$	470,633

The Company assesses goodwill for impairment on an annual basis as of December 31, or at an interim date when events or changes in the business environment would more likely than not reduce the fair value of a reporting unit below its carrying value. The Company conducted the annual impairment test of goodwill for all reporting units as of December 31, 2015 and determined that no adjustment to the carrying value of goodwill for any reporting units was necessary because the fair value of each of the reporting units exceeded that reporting unit's respective carrying value.

As disclosed in the Company’s quarterly report on Form 10-Q for the period ended June 30, 2016, the Company noted that its Lodging reporting unit has been negatively impacted by persistently weak oil and gas prices that have negatively impacted the Western Canadian energy market and that if these economic difficulties persisted, future impairments might be required. During the first and second quarters of 2016, the Company evaluated the reporting unit’s performance along with other business specific and macroeconomic factors and concluded that no interim impairment test was necessary.

During the quarter ended September 30, 2016 certain events and changes in circumstances arose which led management to conclude that the fair value of the Lodging reporting unit was more likely than not less than its carrying value, and therefore an interim goodwill impairment test was performed. The primary events and changes in circumstances which led to this conclusion were:


•	Macroeconomic conditions for service companies operating in western Canada’s oil sands region deteriorated in 2016 primarily due to persistently low oil and gas prices. Persistently low prices have caused Lodging’s primary customers to significantly reduce, defer, or cancel oil and gas projects that are in, or had been planned for, this region during periods of more robust commodity pricing.

•

Government regulatory delays related to oil and gas pipeline projects have reduced management’s confidence that these projects will move forward in a timely manner or in the form that had been originally contemplated by their planners. These projects represented a significant portion of Lodging’s future growth in terms of the demand for temporary accommodations provided by the Lodging reporting unit. While some of these projects have made recent advancements towards successful government approval, the lack of meaningful progress to date does not provide enough positive evidence that a recovery will be significant enough to improve Lodging’s current forecasted outlook.


•	There have been consecutive historical quarters where business results were significantly less than internal forecasts, and previous actual results, for the Lodging reporting unit.


•	During the third quarter ended September 30, 2016, management’s near term outlook was clarified in regards to the business’ projections and the impacts of large scale forest fires which took place in the Fort McMurray area of Alberta, Canada where the Company has significant Lodging operations.


•	Due to the factors listed above, management significantly lowered its 2016 forecasts and long-range performance relative to the Lodging reporting unit.

In performing Step I of the interim goodwill impairment test, the estimated fair value of the Lodging reporting unit was determined using an income approach with discounted cash flows which were compared to the reporting unit’s carrying value as of September 30, 2016. Based on the results of that evaluation, the carrying amount of the reporting unit, including $34.0 million of goodwill, exceeded Lodging’s estimated fair value and as a result the Company performed Step II of the goodwill impairment test to determine the amount of goodwill impairment that would need to be recognized.

Step II of the goodwill impairment test required the Company to perform a theoretical purchase price allocation for Lodging to determine the implied fair value of its goodwill and then compare that implied fair value to its recorded amount. Estimates and assumptions were used to determine the fair values for Lodging’s long-lived assets in Step II and these involved the use of significant professional judgment on the part of management. The classes of assets that were affected by these estimates and assumptions related most significantly to property, plant, and equipment, goodwill, and intangible assets. Based on the results of this test the implied fair value of goodwill was determined to be $0. Accordingly, the Company recognized a goodwill impairment charge equal to its recorded amount, or $34.0 million, as of September 30, 2016.

The factors contributing to the $34.0 million goodwill impairment charge principally related to events and changes in circumstances discussed above which negatively impacted the Company’s prospective financial information in its discounted cash flow model and the reporting unit's estimated fair value. Lower levels of pricing and an unfavorable change in product mix that reduced expected profit became evident during the third quarter ended September 30, 2016 as management updated the Company's long term projections for the business and as a result decreased the reporting unit’s anticipated future cash flows as compared to those estimated previously. These factors also provided evidence of a longer than expected recovery from current industry lows, which negatively impacted the estimated levels of cash flows in future periods that are assumed in the cash flow model. These factors adversely affected the estimated fair value of the reporting unit and ultimately led to the recognition of the goodwill impairment charge.

As a result of the sale of the Catalyst Services business discussed in Note 4, "Disposition of Business" to the accompanying financial statements, a step 1 goodwill impairment test was also performed relative to the remaining goodwill of $25.1 million in the Industrial Services reporting unit. The results of this test indicated that no impairment of the goodwill exists as of September 30, 2016.

Significant judgments and unobservable inputs categorized as Level III in the fair value hierarchy are inherent in the impairment tests performed and include assumptions about the amount and timing of expected future cash flows, growth rates, and the determination of appropriate discount rates. The Company believes that the assumptions used in its annual and any interim date impairment tests are reasonable, but variations in any of the assumptions may result in different calculations of fair values and impairment charges.

The Company also performed an analysis to determine whether the carrying values of the Lodging segment's finite-lived intangible and other long lived assets may not be entirely recoverable. As of September 30, 2016, the Lodging reporting unit had property, plant and equipment of $99.8 million and other intangible assets of $6.0 million. Based on the analysis performed, sufficient future cash flows are anticipated over those assets' remaining lives to demonstrate recoverability. Thus no impairment charge was recorded related to those other long lived assets.

As of September 30, 2016 and December 31, 2015, the Company's total finite-lived and indefinite-lived intangible assets consisted of the following (in thousands):



	September 30, 2016							December 31, 2015
	Cost		Accumulated Amortization		Net		Weighted Average Remaining Amortization Period (in years)	Cost		Accumulated Amortization		Net		Weighted Average Remaining Amortization Period (in years)
Permits	$	170,194	$	66,510	$	103,684	20.3	$	161,396	$	61,142	$	100,254	19.0
Customer and supplier relationships	389,002		120,922		268,080		12.5	374,866		99,463		275,403		10.1
Other intangible assets	40,266		27,548		12,718		7.8	31,416		22,581		8,835		1.5
Total amortizable permits and other intangible assets	599,462		214,980		384,482		14.4	567,678		183,186		384,492		10.0
Trademarks and trade names	122,855		—		122,855		Indefinite	122,326		—		122,326		Indefinite
Total permits and other intangible assets	$	722,317	$	214,980	$	507,337		$	690,004	$	183,186	$	506,818

Amortization expense of permits and other intangible assets was $10.8 million and $30.3 million for the three and nine months ended September 30, 2016, respectively. Amortization expense of permits and other intangible assets was $9.9 million and $29.7 million for the three and nine months ended September 30, 2015, respectively.

The expected amortization of the net carrying amount of finite-lived intangible assets at September 30, 2016 was as follows (in thousands):



Years Ending December 31,	Expected Amortization
2016 (three months)	$	9,533
2017	35,325
2018	32,345
2019	29,612
2020	27,316
Thereafter	250,351
	$	384,482