Annual report pursuant to Section 13 and 15(d)

Goodwill and Intangibles

v3.19.1
Goodwill and Intangibles
12 Months Ended
Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure [Text Block]
Note 7 – Goodwill and Intangibles
 
Intangible assets, including goodwill, are comprised of the following: 
 
(in thousands)
 
Gross

carrying

amount
 
 
Accumulated

amortization
 
 
Net intangible

assets
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Amortized intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
Backlog – Construction
 
$
4,830
 
 
$
(4,830
)
 
$
-
 
Backlog – Service
 
 
880
 
 
 
(880
)
 
 
-
 
Customer Relationships – Service
 
 
4,710
 
 
 
(2,081
)
 
 
2,629
 
Favorable Leasehold Interests
 
 
530
 
 
 
(166
)
 
 
364
 
Total amortized intangible assets
 
 
10,950
 
 
 
(7,957
)
 
 
2,993
 
Unamortized intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
Trade Name
 
 
9,960
 
 
 
 
 
 
9,960
 
Total unamortized intangible assets
 
 
9,960
 
 
 
 
 
 
9,960
 
Total amortized and unamortized assets, excluding goodwill
 
$
20,910
 
 
$
(7,957
)
 
$
12,953
 
Goodwill
 
$
10,488
 
 
$
 
 
$
10,488
 
 
(in thousands)
 
Gross

carrying

amount
 
 
Accumulated

amortization
 
 
Net intangible

assets
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
Amortized intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
Backlog – Construction
 
$
4,830
 
 
$
(4,347
)
 
$
483
 
Backlog – Service
 
 
880
 
 
 
(880
)
 
 
-
 
Customer Relationships – Service
 
 
4,710
 
 
 
(1,359
)
 
 
3,351
 
Favorable Leasehold Interests
 
 
530
 
 
 
(99
)
 
 
431
 
Total amortized intangible assets
 
 
10,950
 
 
 
(6,685
)
 
 
4,265
 
Unamortized intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
Trade Name
 
 
9,960
 
 
 
 
 
 
9,960
 
Total unamortized intangible assets
 
 
9,960
 
 
 
 
 
 
9,960
 
Total amortized and unamortized assets, excluding goodwill
 
$
20,910
 
 
$
(6,685
)
 
$
14,225
 
Goodwill
 
$
10,488
 
 
$
 
 
$
10,488
 
  
The definite-lived intangible assets are amortized over the period the Company expects to receive the related economic benefit, which for customer relationships is based upon estimated future net cash inflows. The Company has previously determined that its trade name has an indefinite useful life. The Limbach trade name has been in existence since the Company’s founding in 1901 and therefore is an established brand within the industry.
  
Total amortization expense for these amortizable intangible assets was $1.3 million for the year ended December 31, 2018 and $3.6 million for the year ended December 31, 2017. Due to the Company's significant additional project write downs recorded during the quarter ended September 30, 2018 representing a triggering event, management performed an impairment test for goodwill and indefinite-lived intangible assets.  Based on the results of the analysis, the fair value of both the Construction and Service reporting units exceeded their respective carrying amounts.  This resulted in no impairment charge for the quarter ended September 30, 2018.  Management updated its annual assessment of goodwill and intangible assets as of December 31, 2018 due to the 
Company’s consolidated book value exceeding its market capitalization and concluded that there was no impairment to its goodwill or indefinite-lived intangible asset. Similarly, no impairment charge was recorded for the year ended December 31, 2018. Management’s analyses resulted in estimated fair values of 21% and 120% greater than the segment level book values at December 31, 2018 for the Construction and Service segments, respectively.
 
The estimated remaining useful lives of definite-lived intangible assets are as follows:
 
Asset
 
Amortization Method
 
Estimated Remaining Useful

Life
Customer Relationships – Service
 
Pattern of economic benefit
 
12.0 Years
Favorable Leasehold Interests
 
Straight line
 
10.17 Years 
  
Estimated amortization expense is as follows for the years ending December 31:
 
(in thousands)
 
Estimated Amortization Expense
 
2019
 
$
642
 
2020
 
 
525
 
2021
 
 
431
 
2022
 
 
357
 
2023
 
 
245
 
2024 and thereafter
 
 
793
 
Total
 
$
2,993