Goodwill and Intangible Assets

12 Months Ended

Sep. 30, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

The Company’s intangible assets by major asset class subject to amortization as of:



September 30, 2016	Weighted Average Life at September 30,	Original Cost		Accumulated Amortization		Currency Translation		Net Book Value
Intangible assets:
Trade name	8 years	$	2,776	$	1,240	$	9	$	1,545
Non-compete agreement	5 years	1,600		1,547		—		53
Below market lease	5 years	900		900		—		—
Technology asset	5 years	1,869		389		37		1,517
Customer relationships	10 years	15,568		7,571		26		8,023
Total intangible assets		$	22,713	$	11,647	$	72	$	11,138

September 30, 2015
Intangible assets:
Trade name	8 years	$	2,776	$	886	$	6	$	1,896
Non-compete agreement	5 years	1,600		1,308		—		292
Below market lease	5 years	900		865		—		35
Technology asset	5 years	1,663		84		12		1,591
Customer relationships	10 years	15,352		5,912		11		9,451
Total intangible assets		$	22,291	$	9,055	$	29	$	13,265

Included in the intangible assets at September 30, 2015 are assets acquired in connection with the purchase of substantially all the outstanding equity from Maniago on July 1, 2015, as discussed more fully in Note 11. During fiscal 2016, final purchase price adjustments for Maniago were made and reflected as shown in the table below, which are included as September 30, 2016. These acquired intangible assets consist of:



	Estimated Useful Life	Initial Value		Purchase Price Adjustment		Final Value
Intangible assets:
Trade name	5 years	$	776	$	—	$	776
Technology asset	5 years	1,663		317		1,980
Customer relationships	10 years	1,552		105		1,657
Total intangible assets		$	3,991	$	422	$	4,413

The amortization expense on identifiable intangible assets for fiscal 2016 and 2015 was $2,593 and $2,245, respectively. Amortization expense associated with the identified intangible assets is expected to be as follows:



	Amortization Expense
Fiscal year 2017	$	2,345
Fiscal year 2018	2,324
Fiscal year 2019	2,309
Fiscal year 2020	2,168
Fiscal year 2021	1,127

Goodwill is not amortized, but is subject to an annual impairment test. The Company tests its goodwill for impairment in the fourth fiscal quarter, and in interim periods if certain events occur indicating that the carrying amount of goodwill may be impaired. At the end of the second quarter of fiscal 2016, there was a triggering event, which resulted in the Company performing an interim impairment test at its Orange, California reporting unit and its Maniago reporting unit. It was determined at the time that the fair value exceeded its carrying value; therefore, step 2 of the two-step goodwill impairment test was unnecessary. The Company completed its annual impairment review of goodwill as of July 31, 2016, using judgment to determine whether to use a qualitative analysis or a quantitative fair value measurement for its goodwill impairment testing. The Company's fair value measurement approach combines the income (discounted cash flow method) and market valuation (market comparable method) techniques for each of the Company’s reporting units that carry goodwill. These valuation techniques use estimates and assumptions including, but not limited to, the determination of appropriate market comparables, projected future cash flows (including timing and profitability), discount rate reflecting the risk inherent in future cash flows, perpetual growth rate, and projected future economic and market conditions (level 3 inputs).

Upon completion of the annual testing, goodwill for the Orange, California ("Orange") reporting unit was determined to be impaired based on a quantitative analysis, as the carrying value exceeded the fair value. During 2016, the Orange reporting unit did not meet revenue expectations due, in part, to a product mix resulting in lower margins and related business practices have not come to fruition for cost savings measures undertaken to address increased costs. Based on the results of the annual testing, the Company recorded goodwill impairment charges for the entire goodwill balance of the Orange reporting unit in the amount of $4,164 as the carrying value of the operating unit exceeded its fair value.

As of September 30, 2016, the remaining value of goodwill associated with our reporting units totaled $11,748.

No other impairment charges were identified in connection with the annual goodwill impairment test with respect to any of the other identified reporting units. The fair values for our Alliance and Maniago reporting units were in excess of their carrying values. All of the goodwill is expected to be deductible for tax purposes. Changes in the net carrying amount of goodwill were as follows:



Balance at September 30, 2014	$	7,658
Goodwill acquired during the year	8,760
Currency translation	62
Balance at September 30, 2015	$	16,480
Goodwill adjustment	(589		)
Currency translation	21
Impairment adjustment	(4,164		)
Balance at September 30, 2016	$	11,748

- 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 + Details