Parker Wellbore Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Goodwill and Intangible Assets (Notes)

Goodwill and Intangible Assets (Notes)

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

Goodwill and Intangible Assets

We account for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining noncontrolling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, plus the value of any noncontrolling interests, is recognized as goodwill. We perform our annual goodwill impairment review as of October 1 of each year, and more frequently if negative conditions or other triggering events arise. As a result of our 2015 analysis, we determined that the fair value of the reporting unit exceeded its net book value and therefore, no goodwill impairment was necessary. Should current market conditions worsen or persist for an extended period of time, an impairment of the carrying value of our goodwill could occur.

As part of the 2M-Tek Acquisition we recognized $6.7 million of goodwill and acquired definite-lived intangible assets with an acquisition date fair value of $13.5 million. As part of the ITS Acquisition, we acquired definite-lived intangible assets with an acquisition date fair value of $8.5 million. During the 2015 fourth quarter, we sold our controlling interest in a joint venture in Egypt resulting in the write-off of $0.6 million of intangible assets related to customer relationships and trade name. All of the Company's goodwill and intangible assets are allocated to the Rental Tools segment.

Goodwill

The change in the carrying amount of goodwill for the year ended December 31, 2015 is as follows:



Dollars in thousands	Goodwill
Balance at December 31, 2014	$	—
Acquisition	6,708
Balance at December 31, 2015	$	6,708

Of the total amount of goodwill recognized, zero is expected to be deductible for income tax purposes.

Intangible Assets

Intangible Assets consist of the following:



		As of December 31, 2015
Dollars in thousands	Estimated Useful Life (Years)	Gross Carrying Amount		Write-off Due to Sale			Accumulated Amortization			Net Carrying Amount
Amortized intangible assets:
Developed Technology	6	$	11,630	$	—		$	(1,454	)	10,176
Customer Relationships	3	5,400		(264		)	(4,611		)	525
Trade Names	5	4,940		(332		)	(1,932		)	2,676
Total Amortized intangible assets		$	21,970	$	(596	)	$	(7,997	)	$	13,377

Amortization expense was $4.3 million, $2.6 million, and $1.7 million for the year ended December 31, 2015, 2014, and 2013 respectively.

Our remaining intangibles amortization expense for the next five years is presented below:



Dollars in thousands	Expected future intangible amortization expense
2016	$	3,448
2017	$	2,801
2018	$	2,306
2019	$	2,306
2020	$	2,030
Beyond 2020	$	486

- 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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