GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in goodwill for the years ended December 31, 2016 and 2015 were as follows (in thousands):



	Technical Services			Industrial and Field Services			Safety-Kleen			Oil, Gas and Lodging Services			Totals
Balance at January 1, 2015	$	50,092		$	109,214		$	224,756		$	68,607		$	452,669
Increase from current period acquisitions	—			—			46,539			—			46,539
Measurement period adjustments from prior period acquisitions	—			—			—			3,574			3,574
Goodwill impairment charge	—			—			—			(31,992		)	(31,992		)
Foreign currency translation and other	(825		)	(3,928		)	(4,951		)	(7,981		)	(17,685		)
Balance at December 31, 2015	$	49,267		$	105,286		$	266,344		$	32,208		$	453,105
Increase from current period acquisitions	12,572			6,953			26,266			—			45,791
Measurement period adjustments 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	(723		)	723			1,365			1,805			3,170
Balance at December 31, 2016	$	61,116		$	107,968		$	296,070		$	—		$	465,154

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 its annual impairment test of goodwill for all of the Company's reporting units with remaining goodwill as of December 31, 2016 and determined that no adjustment to the carrying value of goodwill for any reporting unit was then necessary because the fair values of the reporting units exceeded their respective carrying values. The fair value of all reporting units was determined using an income approach based upon estimates of future discounted cash flows. The resulting estimates of fair value were validated through the consideration of other factors such as the fair value of comparable companies to the reporting units and a reconciliation of the sum of all estimated fair values of the reporting units to the Company’s overall market capitalization. In all cases, except for the Company's Industrial Services and Kleen Performance Products reporting units, the estimated fair values of the reporting units significantly exceeded their carrying values.

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 impacts of any adverse business and market conditions which impact the overall performance of the Company's reporting units will continue to be monitored. If the Company's reporting units do not achieve the financial performance that the Company expects, it is possible that additional goodwill impairment charges may result. There can therefore be no assurance that future events will not result in an impairment of goodwill.

At December 31, 2016, the total accumulated goodwill impairment charges was $189.4 million, of which $34.0 million was recorded during the year ended December 31, 2016 within the Lodging Services reporting unit, $32.0 million was recorded during the year ended December 31, 2015 within the Oil and Gas Field Services reporting unit, and $123.4 million was recorded within the Kleen Performance Products reporting unit during the year ended December 31, 2014.

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 Services reporting unit was more likely than not less than its carrying value, and

(7) GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

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 Services' 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 Services' future growth in terms of the demand for temporary accommodations provided by the Lodging Services 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 Services' 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 Services reporting unit.


•	During the 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 Services operations.


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

In performing Step I of the interim goodwill impairment test, the estimated fair value of the Lodging Services 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 Services' 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 Services 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 Services 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 quarter ended September 30, 2016 due to market conditions as management updated the Company's long-term projections for the business which, 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 depressed pricing and activity levels, 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.

During the second quarter of 2015, certain events and changes in circumstances arose which led management of the Company to conclude that the fair value of the Oil and Gas Field Services reporting unit may be less than its carrying value and

therefore an interim impairment test was conducted relative to goodwill recorded by the Oil and Gas Field Services reporting unit. The primary events and changes in circumstances which led to this conclusion were:

(7) GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

•

The second quarter is the period of time where greater levels of communication with customers and the receipt of bids and proposals for project work take place and provide management with more clarity into levels of activity and other economic and business indicators for the latter half of the fiscal year and into the first quarter of the following year. During the quarter ended June 30, 2015, it became apparent that oil and gas exploration and production activity would continue to be lower than for prior periods and than previously anticipated by the Company. This was evidenced by reduced volume in bid and proposal requests from customers and communications indicating the reduction in customer budgets in these areas as well as lower than anticipated pricing for the Company's services.

•

Market and industry reports to which management looks in projecting business conditions and establishing forecast information evidenced more pessimistic views in the near term. The continued depressed price of oil without any upward momentum since December 2014, as well as declining and expected continued decline in rig count for the remainder of 2015, resulted in lower estimates of industry activity in the second half of 2015 and early 2016.


•	In recognition of lower than anticipated business results and less optimistic market indicators, management significantly lowered its 2015 forecasts relative to the Oil and Gas Field Services reporting unit.

In performing Step I of this interim goodwill impairment test, the estimated fair value of the Oil and Gas Field Services reporting unit was determined using an income approach based upon discounted cash flows and was compared to the reporting unit's carrying value as of June 30, 2015. Based on the results of that valuation, the carrying amount of the reporting unit, including $32.0 million of goodwill, exceeded its estimated fair value and as a result the Company performed Step II of the

goodwill impairment test to determine the amount of goodwill impairment charge to be recorded.

Step II of the goodwill impairment test required the Company to perform a theoretical purchase price allocation for the reporting unit to determine the implied fair value of goodwill and to compare the implied fair value of goodwill to the recorded

amount. The estimates of the fair values of intangible assets identified in performing this theoretical purchase price allocation and resulting implied fair value of goodwill required significant judgment. Based on the results of this goodwill impairment test, the implied value of goodwill was $0 and the Company therefore recognized a goodwill impairment charge equal to the recorded amount of goodwill of $32.0 million as of June 30, 2015.

The factors contributing to the $32.0 million goodwill impairment charge principally related to events and changes in circumstances discussed above which had negative impacts on the Company’s prospective financial information utilized in its discounted cash flow model prepared in connection with the interim impairment test. The projected lower levels of activity and pricing in the latter half of the year which became evident during the second quarter decreased the reporting unit’s anticipated future cash flows for 2015 as compared to those estimated previously. These factors also provided evidence of a longer than expected overall recovery from current industry decreased pricing and activity levels which negatively impacted the estimated levels of cash flows in future periods that were assumed in the cash flow models utilized in the interim impairment test. These factors adversely affected the estimated fair value of the reporting unit as of June 30, 2015 and ultimately led to the recognition of the goodwill impairment charge.

During the third quarter of 2014, the Company obtained evidence that indicated the carrying value of the Kleen Performance Products reporting unit may have exceeded its estimated fair value and therefore an interim goodwill impairment test was performed. As a result of that test the Company recorded a $123.4 million impairment charge. The factors contributing to this goodwill impairment charge principally related to decreases in market prices of oil products sold by the Kleen Performance Products business which took place during the third quarter of 2014. These decreasing market prices negatively impacted the profitability of the Kleen Performance operating segment and further resulted in lower assumptions for future revenues and profits of the business. These factors adversely affected the estimated fair value of the reporting unit as of September 30, 2014 and ultimately led to the recognition of the goodwill impairment charge.

(7) GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

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



	December 31, 2016							December 31, 2015
	Cost		Accumulated Amortization		Net		Weighted Average Amortization Period (in years)	Cost		Accumulated Amortization		Net		Weighted Average Amortization Period (in years)
Permits	$	171,637	$	67,301	$	104,336	18.9	$	161,396	$	61,142	$	100,254	19.0
Customer and supplier relationships	393,426		127,462		265,964		12.2	374,866		99,463		275,403		10.1
Other intangible assets	34,254		28,456		5,798		7.1	31,416		22,581		8,835		1.5
Total amortizable permits and other intangible assets	599,317		223,219		376,098		13.9	567,678		183,186		384,492		10.0
Trademarks and trade names	122,623		—		122,623		Indefinite	122,326		—		122,326		Indefinite
Total permits and other intangible assets	$	721,940	$	223,219	$	498,721		$	690,004	$	183,186	$	506,818

The Company also performed an analysis to determine whether the carrying values of the Oil and Gas Field Services and Lodging Services operating segments' finite-lived intangibles and other long lived assets as of December 31, 2016 may not be entirely recoverable. As of December 31, 2016, the Oil and Gas Field Services and Lodging Services operating segments had property, plant and equipment, net of $88.2 million and $93.8 million, respectively, and intangible assets of $5.5 million and $5.4 million, respectively. 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. If expectations of future cash flows were to decrease in the future as a result of worse than expected or prolonged periods of depressed activity, future impairments may become evident.

Amortization expense of permits and other intangible assets for the years ended December 31, 2016, 2015 and 2014 were $40.0 million, $40.2 million and $36.7 million, respectively.

The expected amortization of the net carrying amount of finite-lived intangible assets at December 31, 2016 is as follows (in thousands):



Years Ending December 31,	Expected Amortization
2017	$	36,904
2018	33,981
2019	31,272
2020	29,087
2021	26,515
Thereafter	218,339
	$	376,098