Goodwill and Other Intangible Assets

At December 31, 2018, the Company had $534.7 million of goodwill on its consolidated balance sheet, all of which relates to the High Performance Materials & Components (HPMC) segment. Goodwill increased $3.3 million in 2018 as a result of $6.0 million from the acquisition of Addaero Manufacturing (Addaero), offset by $2.7 million from the impact of foreign currency translation on goodwill denominated in functional currencies other than the U.S. dollar.

On July 12, 2018, the Company acquired the assets of Addaero for $10.0 million of cash consideration. Addaero is a leader in metal alloy-based additive manufacturing for the aerospace and defense industries, located in New Britain, CT. Management expects the acquisition to expand the Company’s capabilities to provide comprehensive customer solutions ranging from the design of parts for additive manufacturing to the production of ready-to-install components. The acquisition of Addaero is another building block in the strategy to enhance ATI’s full specialty materials capabilities to provide end customers with finished products. This business is reported as part of the HPMC segment from the date of the acquisition. The purchase price allocation includes a $2.0 million technology intangible asset and goodwill of $6.0 million, which is deductible for tax purposes. The final allocation of the purchase price was completed in the third quarter of 2018.

The Company performs its annual goodwill impairment evaluations in the fourth quarter of each year. For the Company’s annual goodwill impairment evaluation performed in the fourth quarter of 2018, quantitative goodwill assessments were performed for the two HPMC reporting units with goodwill. Both of these reporting units had fair values that were significantly in excess of carrying value, and as a result, no impairments were determined to exist from the annual goodwill impairment evaluation for the year ended December 31, 2018. In order to validate the reasonableness of the estimated fair values of the reporting units as of the valuation date, a reconciliation of the aggregate fair values of all reporting units to market capitalization was performed using a reasonable control premium.

During the third quarter of 2017, the Company performed an interim goodwill impairment analysis on ATI Cast Products, a titanium investment casting business, due to impairment indicators including lower actual results versus projections. This reporting unit had a fair value that exceeded carrying value by 12% according to the 2016 annual goodwill impairment evaluation. For the 2017 interim impairment analysis, fair value was determined by using a quantitative assessment using a discounted cash flow technique, which represents Level 3 unobservable information in the fair value hierarchy. As a result of the 2017 interim goodwill impairment evaluation, the Company determined that the fair value of the Cast Products business was significantly below the carrying value, including goodwill. This was primarily due to lower projected revenues, profitability and cash flows associated with revised expectations for the rate of operational improvement and profitability of this business based on current customer agreements. Consequently, during the third quarter of 2017, the Company recorded a $114.4 million pre-tax impairment charge to write-off all of the goodwill associated with ATI Cast Products, most of which was assigned from the Company’s 2011 Ladish acquisition that was not deductible for income tax purposes. This goodwill impairment charge was excluded from 2017 HPMC business segment results.

There were no goodwill impairments for the year ended December 31, 2016. Accumulated goodwill impairment losses as of December 31, 2018 and 2017 were both $241.0 million.

Other intangible assets, which are included in Other assets on the accompanying consolidated balance sheets as of December 31, 2018 and 2017 were as follows:



	December 31, 2018					December 31, 2017
(in millions)	Gross carrying amount		Accumulated amortization			Gross carrying amount		Accumulated amortization
Technology	$	93.4	$	(31.9	)	$	91.4	$	(27.4	)
Customer relationships	35.7		(10.6		)	35.7		(9.1		)
Trademarks	64.6		(21.5		)	64.6		(17.2		)
Total amortizable intangible assets	$	193.7	$	(64.0	)	$	191.7	$	(53.7	)

Amortization expense related to intangible assets was approximately $10 million for the years ended December 31, 2018, 2017 and 2016. For each of the years ending December 31, 2019 through 2023, annual amortization expense is expected to be approximately $10 million.