Long-lived assets and Goodwill

The Company typically 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. During the third quarter of fiscal 2019, management reviewed qualitative factors under Accounting Standard Codification ("ASC') 350 ("Topic 350"), which triggered an interim goodwill assessment as of May 31, 2019 for its Maniago, Italy ("Maniago") reporting unit. Certain qualitative factors related to the soft energy market resulting in lower sales and continued under-performance relative to projected future operating results were factors that led the Company to perform an interim assessment of goodwill.

The Company used May 31, 2019 as the interim assessment date for its test of goodwill for Maniago. 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 comparable, 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).

Although the Company believes its assumptions are reasonable, actual results may vary significantly and may expose the Company to material impairment charges in the future. The methodology for determining fair values was consistent for the periods presented.

Upon completion of the interim impairment test for the Maniago reporting unit, it was determined that the fair value of goodwill for the Maniago reporting unit did not exceed the carrying value, which resulted in a full write-down of the reporting unit's goodwill as of June 30, 2019 in the amount of $8,294 (non-cash charge).

All of goodwill is expected to be tax deductible for tax purposes. Changes in the net carrying amount of goodwill were as follows:



Balance at September 30, 2017	$	12,170
Currency translation	(150		)
Balance at September 30, 2018	$	12,020
Impairment adjustment	(8,294		)
Currency translation	(233		)
Balance at June 30, 2019	$	3,493

Separately, the Company periodically reviews for indications of impairment loss for its long-lived assets ("asset group") to determine if the carrying value of its asset group is recoverable and exceeds its fair value. The carrying amount of long-lived assets is not recoverable if it exceeds the sum of the undiscounted cash flows expected as a result from use and eventual disposition of the asset. This evaluation is performed in accordance to ASC 360 ("Topic 360").

Due to previously triggering certain qualitative factors in the interim at its Orange, California (“Orange”) location and having an interim goodwill assessment at its Maniago reporting unit, the Company performed an interim assessment of long-lived assets for two of its asset groups. See Note 10, Commitments and Contingencies, for further discussion on the evaluation of its long-lived assets as it relates to the Orange asset group.

As for the Maniago asset group, the Company performed an interim assessment of long-lived assets of its asset group as of May 31, 2019 due to fact that an interim goodwill assessment was completed at the Maniago reporting unit. The results of management's analysis indicated that the long-lived assets were recoverable as of the assessment date and did not require further review for impairment.