Quarterly report pursuant to Section 13 or 15(d)

Intangible Assets and Goodwill

v3.19.2
Intangible Assets and Goodwill
9 Months Ended
Jun. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure [Text Block]
Intangible Assets and Goodwill

Intangible Assets

Intangible assets are stated at the lower of cost or fair value. With the exception of most trade names, intangible assets are amortized on a straight-line basis over periods ranging from three to 21 years, representing the period over which we expect to receive future economic benefits from these assets. We assess the carrying value of most trade names annually, or more often if events or changes in circumstances indicate there may be an impairment.

The following tables summarize the carrying amounts and related accumulated amortization for intangible assets as of June 30, 2019 and September 30, 2018.

 
June 30, 2019
 
September 30, 2018
 
Cost
 
Accumulated
Amortization
 
Cost
 
Accumulated
Amortization
Finite-lived assets:
 

 
 

 
 

 
 

Trade names
$
0.2

 
$
(0.2
)
 
$
0.2

 
$
(0.2
)
Customer relationships
472.1

 
(165.8
)
 
464.5

 
(148.4
)
Technology, including patents
78.8

 
(49.0
)
 
79.6

 
(45.1
)
Software
58.4

 
(51.2
)
 
58.0

 
(48.9
)
Other
2.8

 
(2.8
)
 
0.2

 
(0.2
)
 
612.3

 
(269.0
)
 
602.5

 
(242.8
)
Indefinite-lived assets:
 

 
 

 
 

 
 

Trade names
127.8

 

 
127.6

 

 
 
 
 
 
 
 
 
Total
$
740.1

 
$
(269.0
)
 
$
730.1

 
$
(242.8
)


As a result of the required annual impairment assessment performed in the third quarter of 2019, the fair value was determined to meet or exceed the carrying value for all indefinite-lived trade names, resulting in no impairment to trade names.

The net change in intangible assets during the nine months ended June 30, 2019 was driven primarily by the acquisition of BM&M in November 2018, which included intangible assets of approximately $14, normal amortization, and foreign currency adjustments. See Note 4 for further detail on the acquisition of BM&M.

Goodwill

Goodwill is not amortized, but is subject to annual impairment tests.  Goodwill has been assigned to reporting units.  We assess the carrying value of goodwill annually, or more often if events or changes in circumstances indicate there may be impairment.  Impairment testing is performed at a reporting unit level.

 
Process
Equipment
Group
 
Batesville
 
Total
Balance as of September 30, 2018
$
573.6

 
$
8.3

 
$
581.9

Acquisition
8.8

 

 
8.8

Foreign currency adjustments
(3.9
)
 

 
(3.9
)
Balance as of June 30, 2019
$
578.5

 
$
8.3

 
$
586.8



As a result of the required annual impairment assessment performed in the third quarter of 2019, the Company tested the recoverability of its goodwill, and in all reporting units, the fair value of goodwill was determined to exceed the carrying value, resulting in no impairment of goodwill.

In connection with the preparation of the quarterly financial statements for the second quarter of 2018, an interim impairment assessment was performed at a reporting unit in the Process Equipment Group segment most directly impacted by domestic coal mining and coal power. During the quarter ended March 31, 2018, published industry reports reduced their forecasts for domestic coal production and consumption. The reporting unit also experienced a larger than expected decline in orders for equipment and parts used in the domestic coal mining and coal power industries. In conjunction with these events and as part of the long-term strategic forecasting process, the Company made the decision to redirect strategic investments for growth, significantly reducing the reporting unit’s terminal growth rate. As a result of this change in expected future cash flows, along with comparable fair value information, management concluded that the reporting unit carrying value exceeded its fair value, resulting in a goodwill impairment charge of $58.8 during the quarter ended March 31, 2018. Intangible asset impairment charges for trade names associated with the same reporting unit were $4.6 pre-tax ($3.5 after tax) based on similar factors during the quarter ended March 31, 2018.