| Goodwill and Other Intangible Assets | Acquisition, Goodwill and Other Intangible Assets Sumac Transaction On April 1, 2015, Thermon Canada, Inc. ("TCI"), a wholly owned indirect subsidiary of the Company, acquired a 75% controlling interest in the business previously operated by Sumac Fabrication Company Limited ("Sumac") for $10,956 , (based on the Canadian Dollar to U.S. Dollar exchange rate on April 1, 2015) in cash, plus a non-interest bearing note ("performance based note") with a principal amount of $5,905 (based on the Canadian Dollar to U.S. Dollar exchange rate on April 1, 2015) that matures on April 1, 2016, with the actual amount payable at maturity ranging from zero up to a maximum of $7,500 Canadian Dollars, subject to the achievement of certain performance metrics during the 12 month period ending April 1, 2016. Since the terms of the performance based note include continued employment by Sumac's principals, the estimated payout will be accrued on a ratable basis as compensation expense until the actual amount becomes determinable on April 1, 2016. Sumac is located in Fort McMurray, Alberta, Canada. Sumac's line of products and solutions are designed to provide a safe and efficient means of supplying temporary electrical power distribution and lighting at energy infrastructure facilities for new construction and during maintenance and turnaround projects at operating facilities. Sumac products include power distribution panels, master/slave sub-panels, power cords and lighting fixtures. Sumac products are sold to end-users operating in many of the same markets as our core thermal solutions, including heavy industrial settings, oil and gas refining and upgrading, power generation plants, petrochemical production facilities and mining operations. We believe we will be able to leverage our existing global sales force to further expand the reach of Sumac's product offerings. We recognized $9,255 of goodwill in connection with the Sumac acquisition that we expect will be deductible for Canadian taxation purposes. Consideration to or on behalf of sellers at close $ 10,956 Fair value of total consideration transferred $ 10,956 The following table summarizes the preliminary fair value of the assets and liabilities assumed: Assets acquired: Accounts receivable $ 1,693 Inventories 1,299 Other current assets 123 Property, plant and equipment 1,316 Identifiable intangible assets 2,645 Goodwill 9,255 Total assets 16,331 Liabilities assumed: Current liabilities 1,025 Noncurrent deferred tax liability 714 Total liabilities 1,739 Non-controlling interests 3,636 Total consideration $ 10,956 The fair value of accounts receivable represents Sumac's gross outstanding receivables as of the acquisition that we estimate will be fully collectible. In total, $134 of transaction costs were incurred related to the Sumac transaction, all of which were incurred prior to the three months ended June 30, 2015. Our provisional estimate of identifiable intangible assets at June 30, 2015 that were related to the Sumac transaction consisted of the following: Amortization period Gross Carrying Amount at June 30, 2015 Accumulated Amortization Net Carrying Amount at June 30, 2015 Order backlog 6 months $ 188 $ 80 $ 108 Customer relationships 3 years 1,890 157 1,733 Other 6.5 years 604 23 581 Total $ 2,682 $ 260 $ 2,422 The weighted average useful life of acquired finite lived intangible assets related to Sumac transaction is 3.6 years. At June 30, 2015, approximately $1,141 of the purchase price was held in escrow to secure the sellers' indemnification obligations in the event of any breaches of representations and warranties contained in the definitive agreements. 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 the foregoing expected 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 Total consideration $ 3,890 The fair value of accounts receivable represents Unitemp's gross outstanding receivables as of the acquisition that we estimate will be fully collectible. In total, $34 of transaction costs were incurred related to the Unitemp Transaction. At June 30, 2015, approximately $339 of the purchase price was held in escrow to secure the sellers' indemnification obligations in the event of any breaches of representations and warranties contained in the definitive agreements. Our provisional estimate of identifiable intangible assets that were related to the Unitemp Transaction consisted of the following: Amortization period Gross Carrying Amount at June 30, 2015 Accumulated Amortization Net Carrying Amount at June 30, 2015 Gross Carrying Amount at March 31, 2015 Accumulated Amortization Net Carrying Amount at March 31, 2015 Trademarks 8 years $ 769 $ 31 $ 738 $ 780 $ 8 $ 772 Developed Technology 3 years 105 23 82 107 3 104 Customer Relationships 5 years 363 14 349 368 6 362 Total $ 1,237 $ 68 $ 1,169 $ 1,255 $ 17 $ 1,238 Other intangible assets related to previous transactions consisted of the following: Gross Carrying Amount at June 30, 2015 Accumulated Amortization Net Carrying Amount at June 30, 2015 Gross Carrying Amount at March 31, 2015 Accumulated Amortization Net Carrying Amount at March 31, 2015 Trademarks $ 43,396 $ — $ 43,396 $ 43,034 $ — $ 43,034 Developed technology 9,945 2,613 7,332 9,862 2,469 7,393 Customer relationships 93,221 46,886 46,335 92,581 44,195 48,386 Backlog 9,198 9,198 — 9,129 9,129 — Certification 454 — 454 449 — 449 Other 1,630 1,381 249 1,630 1,317 313 Total $ 157,844 $ 60,078 $ 97,766 $ 156,685 $ 57,110 $ 99,575 Goodwill The carrying amount of goodwill as of June 30, 2015 is as follows: Amount Balance as of March 31, 2015 $ 105,232 Goodwill acquired 9,255 Foreign currency translation impact 710 Balance as of June 30, 2015 $ 115,197 The excess purchase price over the fair value of assets acquired is recorded as goodwill. Goodwill is tested for impairment on an annual basis, and between annual tests if indicators of potential impairment exist. We perform a qualitative analysis to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. In addition to the qualitative analysis, we also perform a quantitative analysis using the income approach. Our annual impairment test will be performed during the fourth quarter of our fiscal year. At June 30, 2015 , there were no indicators of a goodwill impairment. The Sumac transaction was structured as an asset purchase and the $9,255 in goodwill associated with that transaction will be deductible for tax purposes in Canada. All remaining goodwill at June 30, 2015 is not deductible for tax purposes. |
