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

Annual report pursuant to Section 13 and 15(d)

Acquisition, Goodwill and Other Intangible Assets (Tables)

Acquisition, Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Mar. 31, 2017

Acquired Finite-Lived Intangible Assets [Line Items]

Schedule of Business Acquisitions, by Acquisition



Consideration to or on behalf of sellers at close	$	10,956
Fair value of total consideration transferred	$	10,956

The Company paid cash consideration of $3,890.

During the fourth quarter of fiscal 2016, the Company received notice that a significant distribution partner for Unitemp intended to end its relationship with the Company. Previously, Unitemp had performed distribution services for its manufacturing partner in addition to product services directly to the end customer. The Company also concluded that the overall financial performance of Unitemp was below the forecast used at acquisition. As part of its annual assessment of goodwill and intangible assets, the carrying values of Unitemp's goodwill and other intangible assets were tested for potential impairment. The results of our step-one goodwill analysis concluded that the carrying value of Unitemp's goodwill was less than its fair value. As a result, the Company initiated the second step of the goodwill impairment test, which involved calculating the implied fair value of goodwill by allocating the fair value of the reporting unit to all assets and liabilities of the reporting unit other than goodwill, and comparing it to the carrying amount of goodwill. Utilizing the income approach, the Company determined that the implied fair value of goodwill related to the Unitemp reporting unit was less than the carrying value and impaired 100% of the Unitemp reporting unit's goodwill balance during the fourth quarter of fiscal 2016. A goodwill impairment charge of $1,240 was recorded within our consolidated statements of operations during the year ended March 31, 2016. The undiscounted cash flows of the amortizing customer relationship intangible asset were determined to be less than its carrying value; therefore, all of the remaining customer relationship assets was impaired. In addition, a portion of the trademark asset was also impaired based on the present value of relief from royalty estimations. The combined impairment charge for intangible assets for the Unitemp reporting unit was $1,713 for the year ended March 31, 2016. In fiscal 2017, there were no impairments to Unitemp intangible assets.



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

Schedule of Acquired Finite-Lived Intangible Assets by Major Class

ntangible assets at March 31, 2017, and 2016 consisted of the following (including IPI, Sumac, and Unitemp):



	Gross Carrying Amount at March 31, 2017		Accumulated Amortization		Net Carrying Amount at March 31, 2017		Gross Carrying Amount at March 31, 2016		Accumulated Amortization		Net Carrying Amount at March 31, 2016
Trademarks	$	44,563	$	521	$	44,042	$	45,234	$	237	$	44,997
Developed technology	9,796		3,454		6,342		9,950		2,988		6,962
Customer relationships	99,676		64,682		34,994		105,720		54,913		50,807
Certifications	442		—		442		449		—		449
Other	2,626		2,268		358		2,631		1,848		783
Total	$	157,103	$	70,925	$	86,178	$	163,984	$	59,986	$	103,998

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table summarizes the fair value of the assets and liabilities assumed as originally allocated at the March 2, 2015 acquisition date:



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
Deferred tax liability	718
Total liabilities	1,133
Purchase price	$	3,890

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



Assets acquired:
Accounts receivable	$	1,693
Inventories	1,299
Other current assets	33
Property, plant and equipment	1,316
Identifiable intangible assets	3,085
Goodwill	7,992
Deferred tax asset	111
Total assets	15,529
Liabilities assumed:
Current liabilities	935
Total liabilities	935
Non-controlling interests	3,638
Total consideration	$	10,956

Schedule of carrying amount of goodwill

The carrying amount of goodwill for all reporting segments as of March 31, 2017, is as follows:



	United States		Canada			Europe			Asia		Total
Balance as of March 31, 2015	$	38,767	$	37,623		$	20,218		$	8,624	$	105,232
Goodwill acquired	10,204		7,992			—			—		18,196
Goodwill impairment	—		—			(1,240		)	—		(1,240		)
Foreign currency translation impact	—		(1,127		)	449			—		(678		)
Balance as of March 31, 2016	$	48,971	$	44,488		$	19,427		$	8,624	121,510
Goodwill acquired	—		—			—			—		—
Goodwill impaired	—		—			—			—		—
Purchase price adjustment	3,045		—			—			—		3,045
Foreign currency translation impact	—		(1,044		)	(990		)	—		(2,034		)
Balance as of March 31, 2017	$	52,016	$	43,444		$	18,437		$	8,624	$	122,521

Schedule of Future Amortization Expense

Annual amortization of intangible assets for the next five years and thereafter will approximate the following:



2018	$	11,765
2019	11,556
2020	10,829
2021	2,507
2022	1,499
Thereafter	5,254
Total	$	43,410

Industrial Process Insulators, Inc.

Acquired Finite-Lived Intangible Assets [Line Items]

Schedule of Business Acquisitions, by Acquisition



Consideration to or on behalf of sellers at close	$	21,750
Fair value of total consideration transferred	$	21,750

Schedule of Acquired Finite-Lived Intangible Assets by Major Class

Our identifiable intangible assets at March 31, 2017, and March 31, 2016 that were related to the IPI transaction consisted of the following:



	Amortization period	Gross Carrying Amount at March 31, 2017		Accumulated Amortization		Net Carrying Amount at March 31, 2017		Gross Carrying Amount at March 31, 2016		Accumulated Amortization		Net Carrying Amount at March 31, 2016
Customer relationships	8 years	5,962		1,242		4,720		10,720		715		10,005
Trademark	8 years	1,820		379		1,441		1,820		152		1,668
Non-compete agreement	3 years	807		448		359		807		179		628
Total		$	8,589	$	2,069	$	6,520	$	13,347	$	1,046	12,301

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

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



Assets acquired:
Cash	$	1,526
Accounts receivable	3,723
Inventories	474
Other current assets	204
Property, plant and equipment	119
Identifiable intangible assets	9,026
Goodwill	13,249
Total assets	28,321
Liabilities assumed:
Current liabilities	2,203
Uncertain tax position liability	1,119
Deferred tax liability	3,249
Total liabilities	6,571
Total consideration	$	21,750

Sumac

Acquired Finite-Lived Intangible Assets [Line Items]

Schedule of Acquired Finite-Lived Intangible Assets by Major Class

Our identifiable intangible assets at March 31, 2017 and 2016 that were related to the Sumac transaction consisted of the following:



	Amortization period	Gross Carrying Amount at March 31, 2017		Accumulated Amortization		Net Carrying Amount at March 31, 2017		Gross Carrying Amount at March 31, 2016		Accumulated Amortization		Net Carrying Amount at March 31, 2016
Customer relationships	4 years	2,551		1,275		1,276		2,612		653		1,959
Non-compete agreement	2 years	189		189		—		194		97		97
Total		$	2,740	$	1,464	$	1,276	$	2,806	$	750	$	2,056

Unitemp

Acquired Finite-Lived Intangible Assets [Line Items]

Schedule of Acquired Finite-Lived Intangible Assets by Major Class

intangible assets for the Unitemp reporting unit at March 31, 2017, and March 31, 2016 were as follows:



	Amortization period	Gross Carrying Amount at March 31, 2017		Accumulated Amortization		Net Carrying Amount at March 31, 2017		Gross Carrying Amount at March 31, 2016		Accumulated Amortization		Net Carrying Amount at March 31, 2016
Trademarks	8 years	$	419	$	142	$	277	$	373	85		$	288
Developed Technology	3 years	96		67		29		86		31		55
Total		$	515	$	209	$	306	$	459	$	116	$	343