| Goodwill and Other Intangible Assets | 13.
Goodwill and Other Intangible Assets Goodwill and intangible assets with
indefinite useful lives are not amortized, but are tested for impairment at least annually. Goodwill represents the excess of the
purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. Determining the fair value of a reporting
unit requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates,
and future market conditions, among others. Goodwill and other long-lived assets are reviewed for impairment whenever events, such
as significant changes in the business climate, plant closures, changes in product offerings, or other circumstances indicate that
the carrying amount may not be recoverable. To determine fair value, we utilize
two market-based approaches and an income approach. Under the market-based approaches, we utilize information regarding the Company
as well as publicly available industry information to determine earnings multiples and sales multiples. Under the income approach,
we determine fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average
cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor
would expect to earn. In the second quarter of 2017, the
Company applied the qualitative assessment approach in performing its annual evaluation of goodwill and concluded that no impairment
provision was required. There were no amounts at risk due to the large spread between the fair, and carrying value, of each reporting
unit. In the third quarter, the Company decided
to discontinue the Bear Claw® line of hydraulic fracturing components used in the oil and gas industry, which was part of
the Harris aerostructures business acquired by AEC in 2016. This decision resulted in a non-cash write-off of intangibles
for $4.1 million to restructuring expense, which is presented as other changes in the table below for intangible assets and goodwill
as of September 30, 2017. The write-off represents the full carrying value of intangible assets associated with the Bear Claw®
product line as, based upon anticipated cash flows and the Company’s plan to exit the business, we determined the product
line to have no fair value as of September 30, 2017. Due to the decision to exit this product line, management performed an interim
assessment of goodwill and concluded that no goodwill was allocable to the Bear Claw® product line, and no impairment provision
was required. We are continuing to amortize certain
patents, trade names, customer relationships, customer contracts and technology assets that have finite lives. The gross carrying
value, accumulated amortization and net values of intangible assets and goodwill as of December 31, 2016 to September 30, 2017,
were as follows:
(in thousands) Weighted average amortization life in years Gross carrying amount Accumulated amortization Net carrying amount
Amortized intangible assets:
AEC trade names 15 $43 $27 $16
AEC technology 15 228 142 86
Customer relationships 15 48,528 4,956 43,572
Customer contracts 6 18,211 5,114 13,097
Other intangibles 5 742 516 226
Total amortized intangible assets $67,752 $10,755 $56,997
Unamortized intangible assets:
MC Goodwill $70,280 $- $70,280
AEC Goodwill 95,730 - 95,730
Total unamortized intangible assets: $166,010 $- $166,010
As of December 31, 2016 Weighted average amortization life in years Gross carrying amount Accumulated amortization Net carrying amount
Amortized intangible assets:
AEC trade names 15 $43 $23 $20
AEC technology 15 228 124 104
Customer relationships 15 49,490 2,481 47,009
Customer contracts 6 20,420 2,561 17,859
Other intangibles 5 1,720 258 1,462
Total amortized intangible assets $71,901 $5,447 $66,454
Unamortized intangible assets:
MC Goodwill $64,645 $- $64,645
AEC Goodwill 95,730 - 95,730
Total unamortized intangible assets: $160,375 $- $160,375 The changes in intangible assets and
goodwill from December 31, 2016 to September 30, 2017, were as follows:
(in
thousands) December
31, Amortization Other
Currency
Translation September
30, 2017
Amortized intangible assets:
AEC trade names $20 $(4 ) $- $- $16
AEC technology 104 (18 ) 0 - 86
Customer relationships 47,009 (2,475 ) (962 ) - 43,572
Customer contracts 17,859 (2,553 ) (2,209 ) - 13,097
Other intangibles 1,462 (258 ) (978 ) - 226
Total amortized intangible assets $66,454 ($5,308 ) ($4,149 ) $- $56,997
Unamortized intangible assets:
MC Goodwill $64,645 $- $5,635 $70,280
AEC Goodwill 95,730 - - 95,730
Total unamortized intangible assets: $160,375 $- $- $5,635 $166,010 Estimated amortization expense of
intangibles for the years ending December 31, 2017 through 2021, is as follows:
Annual amortization
Year (in thousands)
2017 $6,865
2018 6,232
2019 6,232
2020 6,232
2021 6,162 |
