Thermon Group Holdings, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

12 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Unitemp Transaction

On March 2, 2015, Thermon South Africa Pty. Ltd., a wholly owned indirect subsidiary of the Company acquired substantially all of the operating assets and assumed certain operating liabilities of Unitemp cc (Unitemp or the Unitemp Transaction). The results of Unitemp's operations have been included in the consolidated financial statements since that date. Unitemp offers heating, sensing, portable instruments, monitoring and control solutions to industrial customers throughout Sub-Saharan Africa through its headquarters in Cape Town, South Africa and a branch location in Johannesburg, South Africa. The acquisition is expected to strengthen the Company's presence in the region and leverage the pre-existing sales channels that Unitemp has in the region. The goodwill of $1,630 arising from the acquisition relates to aforementioned benefits of the acquisition. The Company paid cash consideration of $3,890.



Consideration to or on behalf of sellers at close	$	3,890
Fair value of total consideration transferred	$	3,890

The following table summarizes the preliminary fair value of the assets and liabilities assumed:



Assets acquired:
Accounts receivable	$1,346
Inventories	655
Other current assets	21
Property, plant and equipment	77
Identifiable intangible assets	1,294
Goodwill	1,630
Total assets	5,023
Liabilities assumed:
Current liabilities	415
Noncurrent deferred tax liability	718
Total liabilities	1,133
Purchase price	$3,890

The fair value of accounts receivables represents the Company's best estimate of the outstanding receivables as of the acquisition that we estimate we will collect. In total, the gross balance due is $1,346 of which we estimate all to be collectable.

In total, $34 of costs were incurred related to the Unitemp Transaction.

Our provisional estimate of other intangible assets at March 31, 2015 that were related to the Unitemp Transaction consisted of the following:



	Amortization period	Gross Carrying Amount at March 31, 2015		Accumulated Amortization		Net Carrying Amount at March 31, 2015

Trademarks	8 years	$	780	$	8	$	772
Developed Technology	3 years	107		3		104
Customer Relationships	5 years	368		6		362
Total		$	1,255	$	17	$	1,238

The weighted average useful life of acquired finite lived intangible assets related to Untiemp transaction is 6.7 years.

At March 31, 2015, approximately $351 of the purchase price was held in escrow to secure the indemnification obligations in the event of any breaches of representations and warranties contained in the definitive agreements.

The carrying amount of goodwill as of March 31, 2015, is as follows:



	Amount
Balance as of March 31, 2014	$	114,112
Goodwill acquired	1,630
Foreign currency translation impact	(10,510		)
Balance as of March 31, 2015	$	105,232

The Company does not expect goodwill recorded to be deductible for tax purposes.

Intangible assets from the CHS Transactions at March 31, 2015 and March 31, 2014 consisted of the following:



	Gross Carrying Amount at March 31, 2015		Accumulated Amortization			Net Carrying Amount at March 31, 2015		Gross Carrying Amount at March 31, 2014		Accumulated Amortization			Net Carrying Amount at March 31, 2014
Trademarks	$	43,034	$	—		$	43,034	$	47,042	$	—		$	47,042
Developed technology	9,862		(2,469		)	7,393		10,781		(2,167		)	8,614
Customer relationships	92,581		(44,195		)	48,386		99,578		(37,383		)	62,195
Backlog	9,129		(9,129		)	—		9,874		(9,874		)	—
Certification	449		—			449		498		—			498
Other	1,630		(1,317		)	313		1,630		(1,062		)	568
Total	$	156,685	$	(57,110	)	$	99,575	$	169,403	$	(50,486	)	$	118,917

Trademarks and certifications have indefinite lives. Developed technology, customer relationships, backlog and other intangible assets have estimated lives of 20 years, 10 years, 4 months and 6 years, respectively. The weighted average useful life for the group is 10 years. Portions of intangible assets are valued in foreign currencies; accordingly changes in indefinite life intangible assets at March 31, 2015 and 2014 were the result of foreign currency translation adjustments.

The Company recorded amortization expense of $10,775, $11,090, and $11,211 in fiscal 2015, fiscal 2014 and fiscal 2013, respectively for intangible assets . Annual amortization of intangible assets for the next five years and thereafter will approximate the following:



2016	$	10,422
2017	10,260
2018	10,165
2019	10,131
2020	10,126
Thereafter	6,226
Total	$	57,330

- 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.

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