Goodwill

The Company has five reporting units, Energy Chemistry Technologies, Consumer and Industrial Chemistry Technologies, Downhole Tools, Teledrift, and Production Technologies, of which four had an existing goodwill balance at December 31, 2015. For segment reporting purposes, Downhole Tools and the Teledrift reporting units are included within the Drilling Technologies segment.

During May 2013, as a result of the Florida Chemical acquisition, the Company recognized $39.3 million of goodwill. During the fair value assessment process, the Company identified two separate reporting units, one of which was consolidated within the Energy Chemistry Technologies segment and the other was identified as the Consumer and Industrial Chemistry Technologies reporting unit and segment. The Company recognized $18.7 million of additional goodwill within the Energy Chemistry Technologies reporting unit and $20.6 million of goodwill within the Consumer and Industrial Chemistry Technologies reporting unit. During the year ended December 31, 2014, the Company recorded a final adjustment related to the acquisition of Florida Chemical that reduced goodwill by $1.2 million (see Note 4). The net addition to goodwill will not be deductible for income tax purposes.

Goodwill is tested for impairment annually in the fourth quarter, or more frequently if circumstances indicate a potential impairment. During the second quarter of 2015, the drilling rig count and revenue of the Drilling Technologies segment continued to decline. An impairment of inventory and rental equipment was recorded (see Note 3). The drop off in business resulting from declines in oil prices and the active drilling rig count was an event or circumstance that caused the Company to test its recorded goodwill within the Teledrift reporting unit within the Drilling Technologies segment (deterioration in the operating environment and overall financial performance of the reporting unit). No impairment of goodwill was recorded as a result of this testing.

During annual goodwill impairment testing during the year ended December 31, 2015, the Company assessed the qualitative factors and concluded it was not more likely than not that there was an impairment of goodwill for the Consumer and Industrial Chemistry Technologies reporting unit. However, the Company was not able to conclude that it was not more likely than not that fair value of the Energy Chemistry Technologies, Teledrift, and Production Technologies reporting units exceeded the carrying value of the respective reporting units. Therefore, the Company performed the Step 1 impairment test for each of these reporting units. The results of the Step 1 test indicated that the fair values of the Energy Chemistry Technologies and Production Technologies reporting units exceeded the carry amounts of their respective reporting units. Therefore, no further testing was required for these two reporting units. The Step 1 impairment test for the Teledrift reporting unit indicated that the fair value of the reporting unit was less than its carrying value; therefore, the Company performed the Step 2 impairment test. The results of the Step 2 impairment test indicated that the implied fair value of goodwill exceeded the carrying value of the goodwill for the Teledrift reporting unit. As a result of the Company’s annual testing of goodwill for all reporting units, the Company did not record any loss due to impairment of goodwill in 2015.

During annual goodwill impairment testing during the years ended December 31, 2014 and 2013, the Company first assessed qualitative factors to determine whether it was necessary to perform the two-step goodwill impairment test that the Company has historically used. The Company concluded that it was not more likely than not that goodwill was impaired as of the fourth quarter of 2014 and 2013, and therefore, further testing was not required.

Changes in the carrying value of goodwill for each reporting unit are as follows (in thousands):



	Energy Chemistry Technologies		Consumer and Industrial Chemistry Technologies			Downhole Tools			Teledrift			Production Technologies			Total
Balance at December 31, 2013:
Goodwill	$	30,296	$	20,642		$	43,009		$	46,396		$	5,861		$	146,204
Accumulated impairment losses	—		—			(43,009		)	(31,063		)	(5,861		)	(79,933		)
Goodwill balance, net	30,296		20,642			—			15,333			—			66,271
Activity during the year 2014:
Goodwill impairment recognized	—		—			—			—			—			—
Acquisition goodwill recognized	6,022		(1,162		)	—			—			—			4,860
Balance at December 31, 2014:
Goodwill	36,318		19,480			43,009			46,396			5,861			151,064
Accumulated impairment losses	—		—			(43,009		)	(31,063		)	(5,861		)	(79,933		)
Goodwill balance, net	36,318		19,480			—			15,333			—			71,131
Activity during the year 2015:
Goodwill impairment recognized	—		—			—			—			—			—
Acquisition goodwill recognized	—		—			—			—			1,689			1,689
Balance at December 31, 2015:
Goodwill	36,318		19,480			43,009			46,396			7,550			152,753
Accumulated impairment losses	—		—			(43,009		)	(31,063		)	(5,861		)	(79,933		)
Goodwill balance, net	$	36,318	$	19,480		$	—		$	15,333		$	1,689		$	72,820