assets be classified as noncurrent in a classified statement of financial position.  ASU 2015-17 is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods.  The Company is currently evaluating the impact this guidance will have on its consolidated financial statements.

In September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805) (ASU 2015-16). ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments in this Updateupdate require that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this Updateupdate require an entity to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The Company adopted the provisions of ASU 2015-16 is effective for fiscal years and interim periods beginning after December 15, 2015.during the quarter ended April 30, 2016. The adoption of ASU 2015-16 isdid not expected to have a material impact on the Company’s consolidated financial statements.condition, results of operations, cash flows, or disclosures.

In August 2015,June 2014, the FASB issued ASU 2015-15,2014-12, Presentation and Subsequent MeasurementCompensation – Stock Compensation (Topic 718) Accounting for Share-Based Payments When the Terms of Debt Issuance Costs Associated with Line-of-Credit Arrangementsan Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, a consensus of the FASB Emerging Issue Task Force (ASU 2014-12). ASU 2015-15 clarifies2014-12 brings consistency to the guidanceaccounting for share-based payment awards that require a specific performance target to be achieved in ASU 2015-03 regarding presentation and subsequent measurement of debt issuance costs relatedorder for employees to line-of-credit arrangements. The SEC Staff announced they would not objectbecome eligible to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizingvest in the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement.awards. The Company has debt issuance costadopted the provisions of $7.7 and $5.5 relatedASU 2014-12 prospectively to its secured revolving credit facility included in other assets as of October 31, 2015 and December 31, 2014, respectively.  The Company will continue to present these costs in other assets in accordance withall awards granted or modified after the guidance.

In July 2015, FASB issued ASU 2015-11, Simplifyingeffective date during the Measurement of Inventory. ASU 2015-11 requires that inventory be measured at the lower of cost or net realizable value.  Net realizable value is the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Inventory measured using last-in, first-out (“LIFO”) or the retail inventory method are excluded from the scope of this update which is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.quarter ended April 30, 2016.  The adoption of ASU 2015-11 is2014-12 did not expected to have a material impact on the Company’s consolidated financial statements.condition, results of operations, cash flows, or disclosures.

In April 2015,March 2016, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs,2016-09, Improvements to Employee Share-Based Payment Accounting, which updated the guidance inamends ASC Topic 835, Interest.718, Compensation – Stock Compensation. The updated guidanceASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. The ASU is effective retrospectively for annual periods and interim periods within the annual periods beginning after December 15, 2015. Early2016, and interim periods within those years. Earlier adoption is permitted, including early adoption in an interim period. The amendment requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability.permitted. The Company is currently evaluating the effect this update will adopt ASU 2015-03 in the fourth quarterhave on our consolidated financial statements.

implementation of ASU 2014-09 by one year and is now effective for annual reporting periods beginning after December 15, 2017. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that period.  In April 2016, FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, and in May 2016, ASU 2016-12, Revenues from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients both of which provide supplemental adoption guidance and clarification to ASU 2014-09. ASU 2016-10 and ASU 2016-12 must be adopted concurrently with the adoption of ASU 2014-09. The Company is currently evaluating the impact this guidance will have on its consolidated financial condition, results of operations, cash flows and disclosures and is currently unable to estimate the impact of adopting this guidance.

Note 3.Business Combinations

During 2013, the Company acquired the assets of Blue Dot Energy Services, LLC (“Blue Dot”) and Bulldog Frac Rentals, LLC (“Bulldog”) (the “2013 Acquisitions”), providers of parts distribution, rental equipment and on-site services to the oil and gas industry, for a net purchase price of $114.0. The excess of the purchase price over the fair value of the identifiable assets acquired approximated $70.6, of which $33.2 was allocated to identified intangible assets, consisting of customer contracts and relationships and covenants not to compete, and $37.4 was included in goodwill. The useful life assigned to the customer contracts and relationships was 20 years, and the covenants not to compete were being amortized over their contractual periods of five years. The customer contracts and relationships and the covenants not to compete were both impaired and fully written off as of October 31, 2015. See note 5 for a discussion of the asset impairment charge recorded during the three and nine months ended October 31, 2015.

In January 2014, the Company acquired the assets of the LT Energy Services group of companies ("LT"), an Eagle Ford Shale provider of rental equipment, for a net purchase price of approximately $102.5. In February 2014, the Company acquired the assets of Wildcat Wireline LLC ("Wildcat"), a provider of wireline services primarily in the Eagle Ford Shale and also in the Marcellus/Utica Shales, for a net purchase price of approximately $153.4. In April 2014, the Company acquired the assets of the Vision Oil Tools, LLC group of companies ("Vision"), a provider of technical services and associated rental equipment to the energy sector. Vision established a new geographical base of operations for the Company in the North Dakota (Williston/Bakken) and Rocky Mountain regions. The total purchase price was $175.7,  which included a deferred payment of $35.0,  which was paid during the first quarter of fiscal year 2015 based on the achievement of 2014 financial results. In April 2014, the Company acquired the assets of the Marcellus Gasfield Services group of companies ("MGS") engaged in manufacturing and rental of equipment in the Marcellus/Utica Shales for approximately $44.0. During June 2014, the Company acquired the assets of the Cornell Solutions group of companies ("Cornell"), which provides technical services and rental equipment to the energy sector in the Eagle Ford Shale and Permian Basin. The total purchase price was $128.2,  which included a deferred payment of $56.0,  which was paid during the first quarter of fiscal year 2015 based on the achievement of 2014 financial results. These acquisitions are referred to collectively as the "2014 Acquisitions".

For the 2014 Acquisitions, the excess of the purchase price over the fair value of the identifiable assets acquired approximated $431.3, of which $162.0 was allocated to identified intangible assets, consisting of customer contracts and relationships and covenants not to compete, and $269.3 was included in goodwill. The useful life assigned to the customer contracts and relationships was 20 years, and the covenants not to compete were being amortized over their contractual periods of five years. The customer contracts and relationships and the covenants not to compete were both impaired and fully written off as of October 31, 2015. See Note 5 for a discussion of the asset impairment charge recorded during the three and nine months ended October 31, 2015.

The 2014 and 2013 Acquisitions were accounted for as purchases under FASB ASC 805, Business Combinations (“ASC 805”). The assets purchased and liabilities assumed for the 2014 and 2013 Acquisitions have been reflected in the accompanying consolidated balance sheets as of October 31, 2015 and December 31, 2014 and the results of operations for the 2014 and 2013 Acquisitions are included in the accompanying consolidated and combined statements of earnings from the respective dates of acquisition.

The following table summarizes the fair values of assets acquired and liabilities assumed in the 2014 and 2013 Acquisitions in accordance with ASC 805:

The majority of the goodwill and other intangible assets related to the 2014 and 2013 Acquisitions is expected to be deductible for tax purposes. See note 5 for a discussion of the asset impairment charge recorded during the three and nine months ended October 31, 2015.

On a pro forma basis to give effect to the 2013 and 2014 Acquisitions as if they occurred on January 1, 2013, revenues, net earnings and earnings per diluted share for the three months ended September 30, 2014 were  $453.2, $29.8 and $0.57, respectively, and $1,321.9, $133.1 and $2.54, respectively, for the nine months ended September 30, 2014.

Note 4.3. Inventories

Inventories, made up of finished goods, consist primarily of aerospace fasteners and consumables. The Company values inventories at the lower of cost or market, using first‑in, first‑out or weighted average cost method. The Company regularly reviews inventory quantities on hand and records a provision for excess and obsolete inventory based primarily on historical demand, estimated product demand to support contractual supply agreements with its customers and the age of the inventory, among other factors. Demand for the Company’s products can fluctuate from period to period depending on customer activity. Inventory reservesIn accordance with industry practice, inventories include amounts relating to long-term contracts with long production cycles, some of which are not expected to be realized within one year. Reserves for excess and obsolete inventory were approximately $37.9$42.7 and $33.0$40.4 as of OctoberApril 30, 2016 and January 31, 2015 and December 31, 2014,2016, respectively.

Substantially all of our inventory is comprised of aerospace grade fasteners, which support original equipment manufacturer (“OEM”) production and the aftermarket over the life of the airframe. Inventory with a limited shelf life is continually monitored and reserved for in advance of expiration. The annual provision for inventory with limited shelf life has historically not been material.immaterial.

Note 5.4.Goodwill and Long-lived Assets

Goodwill and indefinite life intangible assets are tested for impairment annually or on an interim basis if events or circumstances indicate that the fair value of the asset has decreased below its carrying value.  The continued downturn in the oil and gas industry, including the approximate 60 percent decrease in the price of oil, the approximate 60 percent decrease in the number of onshore drilling rigs and the resulting significant cut backs in the capital expenditures of our customers, represented a significant adverse change in the business climate, which indicated that the ESG reporting unit’s goodwill may be impaired and ESG asset

group’s long-lived assets may not be recoverable.  As a result, during the three months ended October 31, 2015, the Company performed an interim goodwill impairment test and a long-lived asset recoverability test.

The valuation of the ESG reporting unit goodwill step one impairment test was estimated using the guideline public company analysis and the discounted cash flow analysis, which were equally weighted in the fair value analysis. See “Note 9 – Fair Value Measurements” for additional information regarding the fair value determination.  The results of the first step of the goodwill impairment test as of August 31, 2015, indicated that goodwill was impaired because the carrying value of the reporting unit exceeded the fair value of the first step test.  Accordingly, the Company is in the process of finalizing the second step goodwill impairment test of the ESG reporting unit, which preliminarily resulted in a $310.4 goodwill impairment charge, which is included in the goodwill impairment expense in the condensed consolidated and combined statement of earnings and comprehensive (loss) income for the three and nine months ended October 31, 2015.

Long-lived assets, such as property and equipment and purchased intangibles subject to amortization are tested for impairment when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. An impairment loss is recognized when the undiscounted cash flows expected to be generated by an asset (or group of assets) is less than its carrying amount. Any required impairment loss is measured as the amount by which the asset’s carrying value exceeds its fair value and is recorded as a reduction in the carrying value of the related asset and a charge to operating results. Based on the impairment indicators above, we performed a long-lived asset impairment analysis and concluded the carrying amount of the long-lived assets exceeded the undiscounted cash flows of the ESG asset group.  As a result, we are in the process of completing a long-lived asset impairment test and have recorded a preliminary $329.8 long-lived asset impairment charge, $177.8 related to identified intangible assets and $152.0 related to property and equipment, which is included in the long-lived asset impairment expense in the condensed consolidated and combined statement of earnings and comprehensive (loss) income for the three and nine months ended October 31, 2015.

The charges reflect the full value of the goodwill and identified intangible assets attributable to the ESG segment, leaving the ESG segment with no intangible assets on its books. Due to the significant effort that is required to determine the implied fair value of the reporting unit goodwill and the fair value of ESG’s long-lived assets in the current market environment, the Company was unable to finalize the valuation of the ESG reporting unit goodwill and the long-lived asset impairment analysis as of October 31, 2015.  The Company will finalize the impairment analyses during the fourth quarter.

The table below sets forth the intangible assets by major asset class, all of which were acquired through business purchase transactions:

future acquisitions, impairments, changes in amortization periods or other factors such as changes in exchange rates for assets acquired outside the United States. The Company expenses costs to renew or extend the term of a recognized intangible asset.  Goodwill increased by $13.1 as compared to January 31, 2016 as a result of foreign currency translation adjustments offset by a purchase price allocation adjustment of $2.5 associated with a small acquisition made by the Energy Services Group (“ESG”).

Note 6.5. Related Party Transactions

The condensed consolidatedOn December 17, 2014, B/E Aerospace, Inc. (“Former Parent” or “B/E Aerospace”) created an independent public company through a spin-off of its ASG and combined statements of earnings and comprehensive (loss) income for the three and nine months ended September 30, 2014 include an allocation of general corporate expenses from B/E Aerospace.  These costs were allocatedESG businesses to the Company on a systematic and reasonable basis when identifiable, with the remainder allocated on the basis of costs incurred, headcount or other measures. 

Allocations for general corporate expenses, including management costs and corporate support services provided to the Company, totaled $13.1 and $27.7 for the three and nine months ended September 30, 2014, respectively. These amounts include costs for functions including executive management, finance, legal, information technology, human resources, employee benefits administration, treasury, risk management, procurement and other shared services.

Former Parent’s stockholders (“Spin-Off”).  Following the Spin-Off, we created in-house substantially all of the functions that were previously provided to us by B/E Aerospace. In addition, we have entered into certain agreements with B/E Aerospace relating to transition services and IT services for a transitional period of approximately 24 months following the Spin-Off. In addition, we entered into an employee matters agreement and a tax sharing and indemnification agreement with B/E Aerospace in connection with the Spin-Off. This transitional support enables KLX to establish its stand-alone processes for various activities that were previously provided by B/E Aerospace and does not constitute significant continuing support of KLX’s operations. TheExpenses incurred under those agreements did not have a material effect on the Company’s financial statementstotaled $2.7 and $2.4 for the three and nine months ended October 31,April 30, 2016 and 2015, and Septemberrespectively. As of April 30, 2014, and2016, the Company does not expect such agreementshas recorded a tax indemnity payable to have a material effect on our financial statementsB/E Aerospace totaling $4.7, of which $0.1 is classified in the future.other current liabilities and $4.6 is classified in other long term liabilities.

Sales and cost of sales to affiliatesB/E Aerospace for the three and nine months ended October 31,April 30, 2016 and 2015 were $5.7 and September 30, 2014 were not significant.$4.5, respectively.

Note 7.6.Accrued Liabilities

Accrued liabilities consist of the following:

Note 10.9.Commitments, Contingencies and Off-Balance Sheet Arrangements

Lease Commitments - The Company finances its use of certain facilities and equipment under committed lease arrangements provided by various institutions. Since the terms of these arrangements meet the accounting definition of operating lease arrangements, the aggregate sum of future minimum lease payments is not reflected on the condensed consolidated balance sheets. At October 31, 2015,April 30, 2016, future minimum lease payments under these arrangements approximated $102.0,$91.1, the majority of which related to long-term real estate leases.

Litigation - The Company is a defendant in various legal actions arising in the normal course of business, the outcomes of which, in the opinion of management, neither individually nor in the aggregate are likely to result in a material adverse effect on the Company’s combinedconsolidated financial statements.

Indemnities, Commitments and Guarantees - During its normal course of business, the Company has made certain indemnities, commitments and guarantees under which it may be required to make payments in relation to certain transactions. These indemnities include indemnities to various lessors in connection with facility leases for certain claims arising from such facility or lease and indemnities to other parties to certain acquisition agreements. The duration of these indemnities, commitments and guarantees varies, and in certain cases, is indefinite. Many of these indemnities, commitments and guarantees provide for limitations on the maximum potential future payments the Company could be obligated to make. However, the Company is unable to estimate the maximum amount of liability related to its indemnities, commitments and guarantees because such liabilities are contingent upon the occurrence of events that are not reasonably determinable. Management believes that any liability for these indemnities, commitments and guarantees would not be material to the accompanying combinedconsolidated financial statements. Accordingly, no significant amounts have been accrued for indemnities, commitments and guarantees.

the purchase of designated shares of KLX’s common stock at a price equal to 85% of the closing price foron the last business day of each semi-annualsemi‑annual stock purchase period. The fair value of employee purchase rights represents the difference between the closing price of KLX’s shares on the date of purchase and the purchase price of the shares. Compensation cost for this plan was not material to any of the periods presented.

Note 12.11.Segment Reporting

The Company is organized based on the products and services it offers. As a result of the ESG acquisitions, the Company determined that ESG met the requirements of a reportable segment operating in a single line of business. The Company’s ASG reportable segment, which is also itsan operating segment, is comprised of consumables management and is in a single line of business. The segmentsegments regularly reports itsreport their results of operations and makes requests for capital expenditures and acquisition funding to the Company’s chief operational decision-making group (“CODM”). This group is comprised of the Chairman and Chief Executive Officer and the President and Chief Operating Officer. As a result, the CODM has determined the Company has two reportable segments.

The following table presents revenues and operating earnings (losses) by reportable segment:

The following table presents total assets by reportable segment: